Investment 4, Feb 2022: Savvy Navvy
Investment 3, Jan 2022: Cushon
Investment 2, Jan 2022: Hectare
Investment 1, Jan 2022: DeadHappy
Total portfolio size
As already announced in January: Savvy Navvy also made it into the Seedrs Portfolio Favorites 2022 - with a smaller 3% allocation. The campaign is currently still live and likely to close towards the end of week 7 (approx. February 20th).
Savvy Navvy develops and sells charting and navigation software for sailors and boaters in the recreational sector. Over 15,000 paying customers pay an annual fee of around GBP 40, resulting in an ARR (Annual Recurring Revenue) of around GBP 600k for 2021. The income booked in 2021 is GBP 307k, but the ARR should be used for the evaluation here. The customers pay the annual subscription fee in advance and the startup immediately receives the positive cash flow. However, only one twelfth of the annual fee is booked as sales each month, so that the sales lag behind the actually better development of the company. Provided the campaign reaches the maximum funding target of GBP 1.5MM, the post-money company valuation will be GBP 11MM after the round. This corresponds to approx. 18 times the annual turnover, which represents a rather high valuation multiple. Provided that the high growth targets are achieved, the valuation is appropriate in my view. By the end of 2022, paying customers are to be increased from 15k to 50k (3.3x YoY). The ARR is expected to grow from GBP 600k (2021) to GBP 4.4MM or by a factor of 7.3x in two years (by the end of 2023).
The seasonal nature of the product (sailing season, mainly summer) will be balanced by allocating advertising budgets per continent within the respective seasonal months. The churn rate (terminations) was 0.8% per month in Q3/2021. This results in a customer's LTV (Lifetime Value) of around GBP 270. The CAC (Customer Acquisition Cost) is around GBP 54 per customer, giving a reasonably good LTV/CAC ratio of 5:1 results.
In my conversation with founder & CEO Jelte, I got a consistently positive impression: Jelte is a former Google employee and all arguments are factual and understandable. The team currently consists of 10 people and will grow to around 15 FTEs (full-time employees) in the short to medium term. Further potential arises from strategic partnerships, which the startup intends to specifically consider in the future. In addition, the possibility of placing advertising will be built into the software as a further source of revenue in the future. Another positive factor is that Savvy Navvy has higher internal sales targets versus those indicated in the business plan. Several gworth scenarios were simulated by Savvy Navvy, of which the published plan reflects the most likely outcome. If Savvy Navvy is successful as a business, I would expect a valuation increase to a factor of roughly 5x (GBP 55MM) over the next 3-4 years.
It remains to be seen whether the good LTV/CAC rate can actually be scaled unchanged and whether the low churn and thus the high LTV will be maintained. It also remains a challenge to achieve the high customer growth targets. On the other hand, the current annual fee of around GBP 40 is still relatively cheap, which should also leave room for future price increases. It is rather a small team and a specialized niche product, so that the development towards a unicorn/billion company will not be possible. In the ideal case, however, a valuation increase by a factor of up to 10x seems possible in the long term.
Disclosure of conflicts of interest: I have invested in some of the startups mentioned at an earlier time and/or at a lower valuation or better terms.
Risk warning : This is my personal sample portfolio 2022. The content is for general information only and does not provide any guarantees. This is not investment advice nor a recommendation to buy or sell any particular startup. This is not intended to be a promotion of any individual investment opportunity and is not an offer to the public. You decide for yourself how you proceed. Investments in startups are high-risk investments and regularly lead to total loss of capital invested. This is an illiquid investment class. It is often not possible to recover the capital invested before the company is sold or at all. Please also note the disclaimer.