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Pre-emption

YellowDog

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Releasing the spare processing power from computers and offering it to 3D animators & artists.

View more details of this business.
100%
 - 
Funded 10 Mar 2016
£195,648 target
£196,348 from 32 investors
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Business overview

Location Bristol, United Kingdom
Social media
Website www.yellowdog.co
Sectors Programming & Security Digital B2B
Company number 09381071
Incorporation date 9 Jan 2015
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Investment summary

Type Equity
Valuation (pre-money) £1.2M
Equity offered 13.63%
Tax relief

EIS

  • Idea
  • Market
  • Team
  • Updates
  • Investors 32
  • Discussion
  • Documents

Fundraising history on Seedrs

  • Pitch closing date
    Funding round
    Raised
    Pre-money valuation
    Equity offered
    Equity
    Investors
  • 1 Nov 2021
    £1,017,212
    £10,481,678
    8.85%
    81
    View pitch
  • 22 Jan 2021
    £1,000,000
    Convertible
    50.00% discount
    96
    View pitch
  • 6 May 2020
    £415,370
    Convertible
    50.00% discount
    112
    View pitch
  • 14 Mar 2019
    £2,011,233
    £11,950,712
    14.41%
    98
    View pitch
  • 18 Nov 2017
    £605,073
    £5,998,089
    9.16%
    352
    View pitch
  • 19 Oct 2016
    £630,516
    £2,999,056
    17.37%
    34
    View pitch
  • 10 Mar 2016
    £196,098
    £1,242,638
    13.63%
    32
    View pitch
  • 14 Sep 2015
    £12,102
    £1,007,334
    1.19%
    38
    View pitch
  • 2 Jun 2015
    £150,000
    £555,882
    21.25%
    133
    View pitch
View more details of this business.

Idea

Introduction

YellowDog releases the spare processing power from people’s computers, giving computer users money for nothing.

This is then offered to 3D artists and animators giving them their own personal supercomputer to improve how they render animations.

We believe this has the potential to create the world’s fastest super-computer. There are 8.8 million people in the UK between the ages 24 & 35; there are 2.3 million students in higher education, 89% have laptops. If we joined together all these laptops we would create the fastest supercomputer the world has ever seen, over 4x the current fastest. That’s enough processing power to render a film like Toy Story in 1 minute 20 seconds.

Intended impact

1. Predictability of time and cost to render. We consider this to be totally unique in the market.

2. Ease of use: compared to many technically complex render farms, YellowDog is very easy to use and interact with.

3. Control. Studios decide when their project would be completed: the faster it gets done, the higher the price.

4. Quality: every processed frame is checked using advanced algorithms to ensure its quality.

We believe this will help studios control and save costs, do more render jobs every week and, most importantly, keep their clients happy.

For the computers users, YellowDog essentially gives them money for nothing.

This could be a cash payment straight into the bank, or a donation to their chosen good cause. The amount would vary depending on the power of their computer and how long it’s available to YellowDog. A computer that’s less than two years old and is used eight hours a day would earn £5 a week. £260 a year.

Substantial accomplishments to date

January 2015.

• YellowDog was incorporated in January 2015.
• YellowDog was accepted into SETsquared – the Global #1 University Incubator.
• Proof of concept built.

March 2015.

• Product development ready for pilot launch in July 2015.
• YellowDog trailer website launched (www.yellowdog.network)

June 2015.
• Successfully raised £150K in just over two weeks after its public launch on Seedrs.
• YellowDog won the annual pitching competition at the SETsquared Innovation Showcase.

July 2015.
• Pilot launch to animation studios.
• Lord Redesdale and Francis Fitzpatrick appointed to the Board of Directors

November 2015.
• Finalist at the Duke of York's [email protected]lace 4.0.
• Commercial launch to 3D artists and animators.

January 2016.
• 54 3D artists and animators signed up online.
• 226 computers owners registered to join the Pack.
• First paying and repeat customers on YellowDog.

Monetisation strategy

The YellowDog business model is two-sided.

1. Animation Studios pay YellowDog for the amount of computer power used to complete their render.

The price is set per hour and is charged by the second. The more computing power the Studio requests, the higher the price and the quicker the render completes.

2. YellowDog rewards Computer Users whose machines are used to complete the render. 15% of the overall cost of the job is distributed across all the computers used to carry out the work.

3. YellowDog pays royalties to the providers of the render engines.

Use of proceeds

The investment will be allocated:

• Development costs: 50.1%.

• Staffing costs: 30.0%.
• Advertising & Marketing: 5.9%.
• Admin: 10.7%.

• Office costs: 3.3%.


Market

Target market

YellowDog has a two-sided business model that means there are two markets it needs to serve.

On one side you have the Studios, the people purchasing the processing power. These are small and mid-size animation studios (less than 15 employees).

On the other, you have ‘The Pack’, those who rent out their processing power to YellowDog and get rewarded for their participation. For the pilot, students in full time higher education in select Universities with animation courses are the target market.

Please note that only the UK market is considered here despite there being animation studios and students across the globe.

Characteristics of target market

Studios.

In 2014, we believe there were 4,127 companies carrying out rendering in the UK with 89% having less than 5 employees. 93% of those interviewed have problems with rendering.

We believe the total addressable market for render services in 2014 is £50.1m and is growing at 14.1% a year.

The Pack.

There were 2.3 million students registered to study in the UK in 2012-2013. In 2014, 89% students owned their own laptop.

Financial concerns are a priority for the majority of students - shown by an increase in the proportion of students who work during term time, plus usage of credit cards and bank overdrafts as a main source of income.

74% of students believe that ethics are very important.

These beliefs translate into practice with students being 51% more likely than other adults to choose to purchase brands/products that have ethical credentials or demonstrate ethical values.

Marketing strategy

YellowDog’s go to market is two-sided, just like its business model.

For Studios, the messaging focuses on the personal supercomputer that’s completely in their control and is easy to use. This is supported by.

• Transactional sales – short sales cycle driven by month-on-month demand in studios.
o Online.
o Direct sales person.

• Flexible pricing to suit the studio’s need: standard power would be £1 per hour (equivalent to two servers). This can be more expensive for more power, or less expensive for less.

For The Pack, the proposition centres on getting money for nothing. Tactics are different to the Studios, using.

• Social media.
• Online promotion on moneysaving websites (both general and Student).
• Referrals & word of mouth.
• £260 a year if used 8 hours a night – which pay’s for a Student’s laptop during university, or mosquito nets for 16 children every month, through Oxfam.

Competition strategy

The differentiators, we believe make YellowDog stand out in the market are;

1. Predictability of cost and time taken. Studios would only get charged what is quoted and the time taken to process is precisely calculated up front. We have found that current render farms’ costs and time to process always differ from the initial estimate.

2. Its ease of use: compared to many technically complex render farms, YellowDog would be very easy to use and interact with.

3. Control. Studios would decide when their project is due to be competed: the faster it gets done, the more it costs. In our experience some render farms have the ability to prioritise jobs, however nobody guarantees when the job will be completed.

4. Reward for The Pack. As far as we know YellowDog is the only solution on the market that uses spare computer power to create a render farm whilst rewarding the computer owner with money for nothing.

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Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.

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Tax Relief (SEIS)

This business is eligible for SEIS relief - providing qualifying investors with income tax relief of 50% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Tax Relief (EIS)

This business is eligible for EIS relief - providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Valuation (pre-money)

Valuation rounded from £1,242,638

This is the fully-diluted pre-money valuation of the business (i.e. before the new investment comes in and including issued options and other equity interests). In contrast, the post-money valuation is based on inclusion of the new investment in the value.

It is calculated as the pre-money valuation plus the amount of new investment. e.g. If Company A is ascribed a pre-money valuation of £1,200,000 by prospective investors investing £300,000, its post-money valuation is £1,500,000.

Pitch type

There are 5 types of investment pitch available on Seedrs.

  • Equity
  • Convertible
  • Fund
  • Cohort
  • Secondary

Investing in a regular equity campaign is the simplest and most common way to invest in a startup. You decide which business you want to invest in, and if the campaign hits its funding target then you will become one of their shareholders. As the company becomes more valuable, so do your shares; allowing you the opportunity to share in the future success of the business.

Learn more about pitch type on Seedrs

Equity Offered

The equity offered is the percentage of the company’s shares being issued in return for the amount of investment raised.

When the amount raised is less than 100%, the equity offered is based on the target raise. Once the company has raised over 100% it is based on the total raised.

In some scenarios, entrepreneurs may accept additional direct investment after closing their Seedrs campaign. Provided this is within 6 months of the closing and on the same terms, we do not typically offer pre-emption rights on that extra investment (where you have the opportunity to invest again to maintain your percentage shareholding).

Learn more about investing and pre-emption rights.

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