Shavekit is now 2.5 years old. We’ve grown to 8000 members and more than doubled our monthly revenue since our last Seedrs raise.
We’ve continued our philosophy of lean growth, keeping overheads low and focusing on improving the key drivers of our business performance. This has put us in a great position of burning minimal cash. Since last year we’ve moved out of our central London office to a combined warehouse and office in Surrey, cutting our rent and fulfillment costs, hired a warehouse team, taken on two flexible customer service staff.
The next stage is to build our product range and speed up our marketing and improvements to our existing products and technology.
The key drivers of the business have continued to improve, our churn, CPA and key metrics are at all time lows (best).
We’ve started with razors because there is a very clear problem to solve. We feel that the existing choice is very limited, prices are very inflated and the majority of men don’t enjoy the process of remembering and shopping for replacement blades.
We restock our customers’ blades monthly, bi-monthly, every third month or whatever suits them. The first delivery includes a free handle too. Members can easily upgrade, change their delivery, pause, restart and manage their account online.
Razors are just the beginning, the long term plan is to build a range of distinct men’s grooming brands to restock the entire bathroom.
We planned on launching Jack’s Shave Cream in Q4 2015, but we made the decision to focus on growing the business before putting in the substantial MOQ. The testing, development, packaging are now paid for and complete however and we plan on launching our shave cream in September 2016.
Substantial accomplishments to date
Our model has never been in better shape. While we have been capital constrained, we would be able to acquire more customers with more cash, but we have seen consistent sustainable growth. We believe the business is in a strong position for accelerated growth with realistic projections based on historical averages of our key business metrics.
- Doubled in size since our last Seedrs round in August '15
- Now 8000 active customers.
- Lean, capital efficient. Year 1 was self-funded.
We sell razors on a membership basis. Margins on razors, including delivery and associated packing costs are good, margins on “software” and liquid products are much better.
Our long term vision is to build a range of products which we believe will increase the value of Shavekit as a brand, increase the loyalty of our customers, further differentiate the offering and increase margins/basket sizes. We aim to launch 2 products a year.
Use of proceeds
Our investment target is £500k at a valuation of £3m.
(The 2015 valuation was £2.57m.)
We will be using the funds for
- Marketing - Our best performing channels are not maxed out.
- Product development - Investing in new products (Moisturiser - Post shave balm).
The company has an outstanding loan of £26,000, however none of the proceeds of investment are intended to be used to repay this.
We are a mass-market proposition. We are focusing on the quality of our products combined with excellent flexible service, Shavekit isn’t constrained as a brand by wrapping what is already a simple, great product in faux-luxury. Shavekit is simple, unfussy and does not alienate the average guy.
Our target market is any man who spends money on bathroom supplies.
Characteristics of target market
Men’s grooming in the UK is estimated to be worth £1bn and growing. The EU shaving market is estimated to be worth in excess of £2 billion.
We have proved that we can acquire customers in a cost effective way and retain them. Our key drivers (CPA and Churn) have improved since our last raise based on the average for the most recent 6 months against the same period before. Our financial model maps out the benefits and impact on revenue/growth of constantly improving the key drivers of the business (available on request).
We're now at a stage where we are growing organically by reinvesting income, but are cash constrained with the only barrier to faster growth being cash to invest in acquiring more customers.
This round of investment will allow us to speed up our growth and aim for a target of 20,000 members by December. Given the size of the market and opportunity, we believe that the potential for further growth is significant.
Our projections are based on our detailed financial model, underpinned by the historical averages of the key drivers of the business (CPA, churn, revenue per customer) and overheads.
We view our main competitor as the existing shaving duopoly that currently has a 80%+ market share, almost entirely in physical retail. The overwhelming majority of our customers have never subscribed to a razor subscription before.
Future competition might come from either of the US shaving clubs launching in the UK. If they do eventually launch in the UK, we believe that Shavekit would be an obvious acquisition target.
The existing monopoly players have seen their market share be eaten up by the likes of Dollar Shave Club. With Unilever acquiring DSC for $1bn in cash, it's an exciting space to be in.