We recognize and appreciate the contributions of all our investors, and the inherent risk they take by investing in a new venture. While start-ups often provide the greatest potential for growth, they are also recognised as one of the riskier investments, and therefore it is important that any investor be properly educated on all aspects of the underlying company.
At CityFALCON, we are committed to making this fundraising campaign one of the most transparent crowdfunding campaigns ever. Most crowdfunding campaigns talk about the upsides, but many choose not to explain the downside and the risks. As part of this initiative, we’ll be publishing a series of articles before the campaign is officially open for investment:
CityFALCON is raising funds through equity crowdfunding on Seedrs. To know more, go here. Capital at risk.
Here is commitment to the investors in this round:
1. Monthly Updates by the 10th of Next Month
I’ve invested in 11 companies, personally, and only a select handful update me on a regular basis. That is quite disappointing. At CityFALCON, we guarantee that we’ll convey the good, bad and ugly news, each month. We’ve raised £420,000 to date, and already provide these updates to our current investors.
This monthly reporting initiative will also provide the CityFALCON team, and myself, with the opportunity to reflect on different financial metrics, user feedback, and overall company performance. Total transparency is beneficial to everyone.
2. Cash Flow Management
One of the common traits of failed start-ups is poor cash flow management. Our team has had to work tirelessly to source every pound that we have raised, and therefore any investment we make is only done after a thorough costs-benefits analysis.
Examples of how we’ve managed cash flow in the past:
- We monitor our burn rate very closely each month, and our financial statements are perpetually maintained and prepared monthly according to proper accrual accounting standards. You’d be surprised that in the case of several start-ups, you can’t even see a proper set of accounts each month.
- We closed our year-end within 20 days of the close of the year, which allowed us to receive our Research & Development refund from HMRC very quickly. We have received more than £60,000 in Research & Development refunds to date.
What we will NOT do following this round of fundraising is scale the team enormously, rent posh offices, and significantly increase our cash burn rate.
3. Stay Lean
A successful start-up needs to be able to maintain its day-to-day expenses, in order to pursue long-term growth. Reckless and over-ambitious spending has been the downfall of many past ventures, and we do not wish to follow their path. With any funding we receive, we will continue to operate in a lean manner to maintain ample cash reserves to undertake strategic growth projects when they present themselves. Maintaining operational expenses has been a key goal for us here at CityFALCON, and we employ different benchmarks to measure our cash burn rate to prevent unnecessary spending.
4. Break-Even and become Self-Sustainable
While we recognize that this is an ambitious target, and while we can’t absolutely commit to it; if we raise more than £500,000 in this round we will employ serious measures to become self-sustainable within the next 18 months. The advantage of this to current investors, is that it prevents further share dilution, and also a cleaner cap table with no fancy share classes, warrants, etc.
5. Contribute Significantly to the UK and the World
The UK has given us a lot in terms of tax benefits such as SEIS, EIS, R&D credits, etc. Unfortunately, however, with the limited amount of funds that we can raise as a start-up, and the rising costs of operating in London, we’ve struggled to give back in any meaningful way to the UK community. Our first challenge is to survive, and once we become self-sustainable there are many areas in-which we would like to contribute within the UK:
- Financial Education – We’ll continue our efforts to help people become more financially-educated and independent. We have already begun to work in this area, through our work with the London Value Investing Club, and also through content, events and solutions for Newbies.
- Training Young Students – We’ll look to create a internship scheme whereby we can train graduating students, especially in finance, and get them ready for the workplace.
- We’ll look to contribute our talent to many other social causes.
6. Complete Transparency
CityFALCON has made it its goal to be as transparent as possible with its investors, and that is especially important during periods of crowdfunding. We promise to communicate all relevant information with current and prospective investors, including the impact of various geo-political/economic events on corporate performance. During the economic period of uncertainty following the Brexit vote, CityFALCON made an effort to produce as much educational material as possible, to convey the effects that this event would have on our company. We will continue to maintain this policy of transparency going forwards, and will always work to ensure that the relationship with our investors is healthy of mutually-prosperous.
If you think that we are a business worth investing in, express your interest to invest in our upcoming crowdfunding round here.