Please note that the share price for this round is the same as the previous round, £540. Due to this high share price, investors will be permitted to hold fractional shares. This means that the investment multiple will be £5.40, with the minimum investment being £10.80. WeSwap will look to perform a subdivision of shares in the future to achieve whole shares for all those with fractional entitlements.
WeSwap is the world’s first peer to peer travel money platform. With the WeSwap app and prepaid Mastercard®, travellers can skip the banks and bureaux and simply swap currency direct with other travellers – all at transparent rates and at a fraction of the typical cost.
Last year we closed our record breaking crowdfunding campaign to welcome nearly 3,000 part-owners to the business. And since then the business has gone from strength to strength.
We now have over 280,000 users across Europe, swapping more than £75 million. Just this year so far, we’ve already exchanged £27million. This has grown by over 120% on the same period last year, and is more than double the amount we exchanged in the whole of 2015. Revenues have also increased by 160% (May-May 17).* This summer, we’re aiming to hit over £100 million swapped.
We’re striving to remove all the hassle and smoke and mirrors normally associated with currency exchange, by reshaping an industry that has seen little innovation in decades.
*source: unaudited management accounts.
We created WeSwap to make travel money cheap, fair and transparent for ordinary travellers everywhere.
In 2015 alone, it is estimated that UK consumers lost over £1 billion through bad holiday money rates, overseas cash withdrawals and card purchases abroad, thanks to the margins and fees charged by banks and bureaux.
So we built the technology to skip the banks and bureaux altogether. Our peer-to-peer platform and app swaps currency directly between users in different countries, at real interbank rates. We organise the swap automatically, so all our travellers need to do is spend.
This reduces operational costs for us, gives us efficiency advantages over the competition, and means travellers get a much better deal. Our growth to date means we already directly swap close to 20% of all volume through our platform, and we estimate that we've been able to save our users over £3.5million vs going to traditional bureaux.
We're already growing at record speed. At scale, we believe we can reshape the industry completely.
Substantial accomplishments to date
We piloted our platform in late 2013, fully launching in the summer of 2015. Since then we have:
- Built a world first - a robust and scalable peer to peer travel money platform, with over £75 million exchanged. This summer we’re aiming to hit £100,000 million swapped.
- Acquired over 280,000 customers, with reducing active user acquisition costs.
- Increased revenues by 160% in the year ending May 2017, compared to the same period in 2016.
- Maintained a five-star rating on Trustpilot.
- Launched Stripe, Apple Pay, next day cash delivery and our B2B API WeSwap Connect, in the last 6 months.
- Raised £11.5M from highly-respected VC investors to accelerate our product development and growth.
- Generated ongoing coverage from Martin Lewis, the BBC, ITV, The Daily Telegraph, Financial Times, Lonely Planet, The Sun and many more.
Our revenues come from our swap fees, ATM usage and a percentage of interchange – the fee charged to merchants by MasterCard when the card is used.
With the launch of travel cash and increasing activities with our partners, this year we are already seeing the revenue per user increase. It is our expectation that the launch of WeSwap credit should increase this further.
As we grow across markets and prove new revenue streams we plan to drive down the cost of currency to our travellers even more.
We are committed to offering great value to our users for many years to come. The best way for us to meet this commitment is to build a sustainable profitable business. As we identify new ways of generating revenue we promise to drive down the cost of currency to our customers - all the way to zero.
Use of proceeds
Being powered by everyday travellers has been key to our success so far, and we intend to keep it that way. Along with raising investment to help fund our growth, our main purpose in raising through Seedrs is to give our users the chance to share in our success, and involve them even more in building our product.
We are currently working on a larger fund raise to scale the business to breakeven and beyond. We expect this round to close towards the end of the year. This small investment round is a bridging round to give us time to close this funding and to boost the summer marketing. As you can see from the investment bar IWC have invested a further £400,000 in this current round.
In May, Ascot capital also provided further financing of £500,000 in the form of a convertible loan (key terms of the loan are set out below).
We'll use this money to:
> Continue to develop new features: we’ve built a unique technology platform, and our mission is to make travel money frictionless and amazing. We'll be making life easier with features like rate alerts, automated payments, instant transaction feedback, location-aware help & tips and more. Investment will be used to accelerate the development of these.
> Market Expansion: increasing our marketing activity across Europe, as well as launching in one Asian market.
> Launch new product lines: we have a number of new product lines scheduled to launch, including a new business product, currently projected for Q4 2017.
*Ascot Convertible Loan Terms
As mentioned above, Ascot has invested £500,000 by way of a convertible loan. The key terms of the loan are as follows:
- 20% interest per annum;
- convertible at a 20% discount to the next equity financing round (subject to a minimum share price of £540, the same as the current round).
Please note that as a term of Ascot's equity investments in WeSwap, Ascot has the right to a preferential payment of £1.8m on any exit or winding up of the company. This would be distributed to Ascot prior to remaining proceeds being distributed amongst shareholders.
Our current focus is on holiday travellers, who represent the most significant proportion of the travel money market. Within this, we have proved successful at attracting travellers from a variety of segments and we plan to continue to target this market.
The majority of our travellers (50-60%) are older millennials (28-35 year olds), but we also have a significant proportion of families taking a few big trips a year, older empty nesters and 18 year olds travelling with friends. All are fed up with unclear fees and rates and need a cheap and stress free way to spend abroad.
We are also currently working on our product for business travellers – enabling savings to be made on business travel spend and aiming to solve pain points like receipt submission, managing expense claims and reimbursement.
We’re also doing research into supporting students studying abroad, who often struggle to open a bank account and access currency cheaply and quickly.
Characteristics of target market
Travellers exchange billions of dollars across the globe each year. In 2014, travel money spend globally was estimated to be more than £500bn.
More often than not travellers will use a variety of methods to pay abroad – taking cash before a trip and supplementing it with credit and debit cards abroad. In the UK, a significant proportion of total travel cash is still exchanged in airports.
Behaviour across Europe varies by market, but they still use the same methods in varying degrees. In many regions of the world, the travel money market remains completely offline.
Whatever method travellers use, ultimately they are buying currency from a bank. One consistent message from all of our research is that travellers find currency exchange confusing, opaque and an unwelcome hassle - no-one quite knows if they’re getting a good deal, but are aware that they’re probably not.
We believe the only way to change this in the long term is to disintermediate and fundamentally change the model for the market.
We have already proved successful at signing up users at volume across a variety of channels at relatively low cost. We will continue to use cost effective digital, social, mobile channels in tandem with key travel partnerships and PR to drive customer acquisition in the UK.
We have also signed distribution deals with key travel businesses to allow us to scale overseas quickly and efficiently, and recently launched our B2B solution WeSwap connect.
We plan to leverage these relationships and expand the reach of existing digital channels to expand internationally and capture further swap corridors.
The market is fragmented and localised, with few truly global players. Despite innovations in finance over the past few years, the current incumbents with the largest market share are still the established high street bureaux such as Travelex and local post offices. Consistent characteristics of these business are:
• High cost of doing business – they have big expensive leases for properties in airports and on major high streets.
• Expensive for the customer – With so many costs to cover, the major incumbents are very pricey.
• Lack of transparency – The rates are often confusing. Customers never know how much they are paying, or what is a good deal.
• Volumes matter, not customers – Incumbents count transactions rather than individuals. They build systems for transactions only and not for customer engagement.
We are also seeing exciting digital money businesses emerge too, such as Revolut, Monzo and Atom, who offer a range of current accounts, savings and banking services. It is critical that we stay ahead of these too.
Our competitor strategy is as follows:
• Focus on the swap – We're rebuilding travel money from the ground up with swapping at the centre. This gives our business cost and efficiency advantages over the competition. Ultimately we expect that this will allow us to build a profitable travel money business.
• Travel money. That’s it – We're not a digital bank dabbling in FX. We're focused purely on this huge market. Our opportunity is to develop products that support our customers throughout the whole travel experience.
• Growth – We intend to continue to grow rapidly through our digital travel partners. They allow us to scale globally without leases and buildings in every country. Each partner gives us access to large numbers of travelling customers through exclusive deals.
• Technology – We build for scale. We don’t have legacy systems to maintain. We have built WeSwap from scratch with global scalability always at the front of our minds.