Monday, 1 October 2018

Go Henry or Gone Potty? Crowdcube are at it again.



Kids love Fudge. But investors dont. Or so we thought. The new Go Henry Crowdcube blockbuster proves us wrong again. Paint a pretty picture, air brushing the facts  - that's all you need to do.  


This is bonkers. Go Henry is a neat idea and has a little traction. Although this traction is no where near to the traction if promoted just over a year ago. Now readers, who dont have their last projections, will not know this - but it is a fact. One that Go Henry do not mention in their latest fairy tale. 

Take for example the sales numbers for Apr 2017 to Mar 2018. Crowdcube allowed them to produce this forecast the last time  - it showed revenues of £15m. Now we are told that the revenue for CY 2017 was in fact £6m and that this was an increase of 115%. Nout about where it was supposed to be. Again the projections from the last time showed revenues for Apr 2018 to Mar 2019 as £37m. Now we are told the revenue projected for CY 2018 is just £8m. A fall of ~ 78% (!anon) on a 18 month old projection. Wow. 

On the back of these falling numbers, the share 'price' has risen from £1.50 in 2016 to £3 now - a price increase the company incorrectly identifies in a footnote as a 50% increase. Is it any wonder they cant get their sums right. Back to school boys and girls.

Children are even included in their metrics  - so their active members are stated as 550k - broken down into 226k parents and 330k children. Is that supposed to be some kind of joke? Of course the fact that this imaginary split (so obviously used to up the 500k figure) doesnt appear anywhere in the new fairy tale says it all. ALL. 

A neat idea that may get traction in the US - although is more likely to get copied - is worth £55m without traction. If traction fails to hit targets in the US, then kiss goodbye to this dream. 

6 comments:

  1. I am not sure it is a neat idea.

    Your child gets a prepaid card that can stop them using it in wetherspoons, or stop them taking all their money out in cash in one go.

    Ok, but, it will take two averagely sneaky children about 10 mins to work around that if they are of such a mind.

    and this costs you about £40pa?

    1 - I do not see there is a big market

    I can see that there will be a number of parents who think that this is a useful training tool for later life and budgeting, but would remind them that most schools has cashless cards that children use to pay for lunch etc already.

    2 - If there is a big market, the banks will take it - there is no moat.

    If the market for this takes off, the banks will move in, not least as if you get that customer age 13, likely that person will still be a customer at 31.
    There is nothing stopping a bank doing this for nothing.

    3 - Your customer has a fixed, short term relationship.

    Customer acquisition costs will be high relative to a bank - the average for a bank seems to be 17 years.

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  2. In all honesty, I actually really like the Go Henry concept. I am a customer of two young teens that use the card and was invited to invest.
    The USP is not that it’s just a U18 pre paid credit card, it’s the fact that as a parent I can set tasks for them to do to earn pocket money which I tick off end of the week. Also, if my daughter age 14 is going shopping, she can save and buy make up for example with it in the shop as a visa purchase whilst her mobile phone will tell her how much money she has left to spend or save. In all, it helps her become more financially aware.
    Despite the positives above, I am not buying shares in Go Hentry. I am shocked thet it already has 4.5 million secured already and are looking to close at 7.2 million. Fool and money soon parted comes to mind!
    They claim that banks pay £200 per customer acquision and their valuation equals £150 per customer. They are not on a multiple of EBITDA (made a loss last year 0f c 700k I think they said on £6m revenue???) but on forward value of 7x revenue. So my reason for not investing is simply I don’t see any upside, even if they crack America with the projections it’s more than factored in already.
    I cant we why others can’t see this simple fact.

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    1. Thanks - a very useful comment from a user. I agree about the usefulness and the valuation. Crazy stuff. Im not convinced they will make it in the US ad if they do they will most probably we wiped out bu others with deeper pockets - it is not exactly rocket science.

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  3. I invested in the two previous rounds and thought about investing in this round until I looked at the numbers! I had quite a heated discussion with a few investors on CC about just the things mentioned above: 1) 7x estimated revenue is nuts, especially when they've failed to meet estimates so dramatically in the past; 2) valuing each user at £150 which they claim is reasonable given that banks value their customers at £200 is also nuts given the short relative relationship and the so far non-existent ability to cross sell other products (mortgages, credit cards etc) to these account holders. The customers clearly have some value but with no apparent plan to monetise this they are worth nowhere near what customers are worth at a bank. I have three kids using GoHenry and love the concept but my eldest at 13 is already saying he doesn't want to use a "little kids'" card. So he might be ditching his account -- especially if I can move him over to a standard children's bank account which is both free and likely to be able to pay interest as rates start to rise.

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    1. Always very interesting to get a users perspective - not the only one here saying the same thing. I think a key os that banks could very easily offer a similar package of their own which would them provide with new adult customers. Go Henry customers grow up and disappear. It will be interesting to see. This is exactly the sort of conversation we hope will be active on our new, to be launched, forum and equity crowdfunding information site. Hope you will take a look.

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