Satago

Idea

Summary

As this is a pre-emption round open to existing shareholders only, limited details about the business are being provided.

Debtor-tracking CRM
Satago’s CRM automates and manages the process of chasing customers for payment. All communication is centralised in Satago providing users with a full history of all actions taken to collect payments.

Integrated Credit Risk Analytics
Satago provides credit risk data on UK limited companies which helps SMEs understand the credit risk profile of their accounts receivable, warn them when their customers exceed recommended credit limits and lastly whether their customers are paying them faster or slower than other suppliers.

Selective single invoice finance
If users want to get paid even faster, Satago will advance payment for up to 85% of the value of invoices. Satago’s risk engine is based on a combination of credit risk and user’s own payment performance history. Satago effectively provides a flexible credit line.

Key Terms of the Convertible

Satago recently raised £250,000 pursuant to a convertible equity arrangement. As an existing shareholder, you now have the right to also participate in the convertible round on the same terms.

The key terms that apply to the Satago convertible are as follows:

• Valuation cap - £6m
• Discount - conversion at a 30% discount to the valuation set by a Trigger Event.
• Conversion is triggered by ("Trigger Events"):
o An Equity Fundraise – defined as the Company raising investment capital of at least £3m from one transaction or a series of transactions. The Seedrs fund raise does not count as a transaction;
o A Change of Control of the company; or
o An IPO – being a listing of the company’s shares on a recognised stock market or secondary market.
• If conversion has not been triggered by the longstop date of 29 June 2017, shares will be issued based on a pre-money company valuation of £4m.
• On conversion, investors in the convertible round will receive Series S shares, which have a 1x preference over ordinary shares in the company if the proceeds available for distribution on liquidation or exit is less than £2m. However, they will rank below the preference shares to be issued to the new investor in the equity raise outlined below.

Disclosure of current negotiations

Satago is in advanced discussions with an institutional investor in relation to combined equity investment and debt financing facility.
The current term sheet with the proposed investor provides for:
• An equity investment of up to £1.3m over two tranches. The initial investment will be £600k. The remaining £700k investment will be subject to certain milestones being met within 6 months. The investment will be made at a pre-money valuation of £6m.
• The investor will also provide a debt financing facility of up to £3m for the purpose of lending to clients of the Satago Finance business.
• As this investment is not more than £3m in equity, it will not be a trigger event for the convertible when it is made. Unless Satago raises further equity funds prior to 29 June 2017 to get it up to the £3m threshold, the convertible will convert on the longstop date as described above.
• As communicated to investors, Seedrs and other existing shareholders in Satago have agreed to waive pre-emption rights on this equity investment in order to allow it to go ahead.
• The new investor will receive preference shares with a 1.5x non-participating preference on liquidation, winding-up or exit. These will rank ahead of the existing Series S preference shares being issued under the convertible.