Chirp is an award-winning platform for sharing data with sound, and a top download in 56 countries worldwide. Devices ‘sing’ data to each other with a tiny audio clip called a chirp, designed for quick and easy data transfer. The Chirp platform can send any data – pictures, videos, web pages, even payments. Our business sits at the heart of rapidly expanding markets in mobile marketing and payments.
Chirp is a new way to share information. Data such as a web page, a media file or payment ID can be sent as a sonic link, using your mobile’s loudspeaker and microphone. Chirp is an audio trigger with a very broad range of uses.The Company was established in November 2011 with technology developed at University College London. Chirp owns related IP and has patents pending in Europe, USA, Japan and Korea.
In a world where connected devices are proliferating and mobile transactions are exploding, the challenge is how to connect things intuitively and cheaply. Only a 25% of devices support NFC and a low amount of devices support iBeacons. Even when available, the consumer experience is in our opinion often poor. In short, proximal data sharing is a huge and currently under-served opportunity, requiring an easily deployable, universally available, insanely simple-to-use solution.
Chirp solves this problem with sound. Our technology is designed for quick and easy data transfer between devices in the same location.Chirp is a platform. Our developer tools allow anyone to integrate Chirp technology into their apps or devices.
**Positive consumer response
The Chirp app was launched in 2012 as a showcase for our platform. The app became a #1 download in 6 countries and a Top 20 in 50 more, picking up prestigious awards for design and innovation along the way. We thus validated the consumer need for simple, frictionless sharing.
“Wow!” – Rory-Cellan Jones, BBC TV
The Chirp app has been downloaded many thousands of times a month since launch, with very little marketing investment. The app’s success to date simply reflects its appeal to consumers wanting to share content and being happy to tell their friends about us.
A new version of the iOS app has recently been released on the Apple store. The new app allows the sharing of many more types of content including video, rich media and text links that can trigger a phone call or email. The app is intended to be a great showcase for the Chirp technology – something to drive awareness of Chirp more than as a source of revenue in its own right – but we believe that the new app will greatly enhance the popularity of Chirp and will be a great marketing channel for the business.
**Developer tools Launched
We recently released tools to drop Chirp technology into third party applications – meaning developers can use Chirp for mobile payments, mobile games and much more. These software development kits (“SDKs”) have been released for both iOS and Android platforms.
We have a small number of trial customers already piloting the SDKs covering use cases from mobile payments to mobile games to conferences and events.
**How it works
The Chirp platform comprises two parts: an audio protocol, which encodes a 50-bit character sequence as a series of tones; and a network protocol, which stores any data and assigns it a unique shortcode of ten characters.
Radios, browsers, ATMs, YouTube movies and toys can now chirp – and decoding only requires a modest amount of processing power. The world is a noisy place, so our decoder is highly resilient to background audio, and can even work on heavily compressed media found in mobile.
Chirp leverages the ubiquitous availability of microphones and speakers. Chirp is not just a platform, but a protocol-level technology available to developers via SDK. Chirp is highly flexible, totally data-agnostic (anything can be chirped), platform-agnostic (anything that makes sound can chirp) and can be used for both 1-to-1 and one-to-many communication.
We believe this unique feature matrix puts Chirp in an excellent position to capitalize on the growing global demand for interconnected objects and leverage the forecast explosion in ‘always-listening’ devices.
We plan for Chirp to play a central role in connecting mobile applications and low-end connected devices across a range of sectors and use cases.
Our initial target customers are large-scale businesses with consumer-facing mobile propositions. Whilst the Chirp technology has applications across a broad range of sectors, we have chosen to focus initially on three target sectors where we believe Chirp has significant differentiation. These are: payments & vouchers; mobile games including digital-to-physical interactivity and brand campaigns.
We intend to address other sectors through partnerships, those providing a range of proximity technologies to retail, conference, education, broadcast and digital outdoor advertising sectors. We have recently announced a partnership with Lumi, a global leader in the conference sector, and our technology is now being tested in banking and retail applications by Accenture R&D.
As a second phase, we plan to broaden our reach by making more ‘self-serve’ tools and services available.
Our primary revenue is intended to be a recurring licence fee for access to the Chirp platform. Our fees scale with usage (per-transaction) but are made affordable (even freely available) to smaller players, in order to encourage early adoption and drive awareness.
In addition, we generate fees for managing campaigns for clients, developing bespoke variations to the underlying Chirp protocol and accrue subscription or advertiser revenues from our consumer and professional apps.
This funding round represents an opportunity to participate in an innovative technology business, with a wide range of applications at the intersection of some high growth markets. As the technology expands to run on additional operating systems we believe that revenue opportunities will be established quickly and the business will then be able to launch self-serve tools to enable it to scale efficiently across multiple sectors and broader geographies.
We have been focussed to date on developing the core Chirp technology and IP. We are now raising funding to enable us to commercialise our technology and build on the great technology platform that we already have. Our plans therefore focus on improving awareness of our technology, on business development activities and on establishing product-market fit in a number of use cases. This will primarily be focussed on the UK and a small number of target sectors. Once commercial applications have been established here, we will look at opportunities to expand geographically and into new sectors. At this stage, our plans include further funding from Series A investors to support us as we develop a growing base of recurring revenue.
Proximity technologies and a gap in the market for Chirp
Connected devices are proliferating. The core challenge is how to connect things intuitively and cheaply. How should we enable proximity marketing, mobile payments and the Internet of Things?
Discussion about proximity technologies normally considers NFC, iBeacons and RFID. But many handsets don’t support these technologies. When they do, the functionality is often switched off by default. We believe the user experience is poor and a significant barrier to adoption.
So, proximal data sharing is potentially a huge, under-served opportunity. It requires an easily deployable, universally available, insanely simple-to-use solution.
And we believe that’s Chirp!
Chirp solves the proximity problem with sound. Our technology is designed for quick and easy data transfer between devices in the same location. No requirement for Bluetooth, NFC, or for passwords and pairing.
Size of the market
As a platform technology for proximal interactions, we consider that Chirp sits at the intersection of a number of rapidly growing markets including indoor location, mobile payments and mobile games.
The Indoor Location sector is forecast to be worth $3.9B globally by 2019
50% of top 100 US retailers tested beacons in 2014 with 33% of store locations predicted bythe end of 2015
Mobile transaction numbers predicted to grow from 72Bn in 2015 to 195Bn in 2019
The mobile game market is expected to reach revenues of $30bn in 2015 and is poised to overtake the console games market
By facilitating interactivity across these markets, we believe that Chirp can generate value from every transaction that it underpins.
The Chirp management team are located in the UK and consist of:
Richard Mann, CEO.
Previously COO of Mobile Interactive Group from launch to exit to Opera Software and Velti. Formerly PwC audit and corporate finance.
Patrick Bergel, Founder & Head of Product.
Previously, founder of a mobile search business and creative director for brands including Microsoft and Ray-Ban. Marketing, audio & UX specialist.
Professor Anthony Steed, Founder & CTO.
Deputy Head of Computer Science at UCL and Head of the Virtual Environments and Computer Graphics group.
John Graham, VP business development.
C – Level experienced commercial executive with International experience in digital marketing and mobile application development.
In addition, the team is supported by 3 non-executive directors:
Richard Harris, Non-Exec Chair.
Experienced CEO and non-exec in the telecoms and mobile sector.
Marina Santilli, Non-Exec Director. Representing our shareholder, UCL Business.
Mark Cheverton, Non-Exec Director. Representing our shareholder, Red Gate Software.
SALES: Key sales drivers
Our primary revenue model is to charge a recurring licence fee for access to our SDKs and APIs. Fees scale with usage starting at less than £200 per month and increasing to maybe £5000 per month for our largest customers. We forecast that we will acquire approx 100 SDK customers by the end of 2015 and approaching 1,000 by the end of 2016. However we assume that only 15% of SDK download customers will move to a paid licence fee. As our technology platform is easy to scale, we expect high margins from licence fees of 90-100%.
We also plan to generate campaign fees for managing Chirp projects for clients. These non-recurring revenues are forecast at between £1000 and £10000 for a project. Campaign fees require resource to deliver and are therefore expected to generate typical agency margins of 60-70%.
Although not the initial focus, we also expect to generate some revenues from consumer-facing services such as our smartphone apps and Chrome extension. Consumer revenues are expected to generate 60-70% margin.
USE OF FUNDS:
Our goal is to use the funds we raise to commercialise the technology we have already built. We will therefore increase our commercial resource in order to develop business opportunities direct with potential customers and channel partners in our target markets. We will also increase self-service support for customers. Note that the figure of circa £900k of investment shown in our model for 2014/15 reflects £500k raised in 2014 and the target of £400k to be raised in this new fundraising.
We plan to increase awareness of the Chirp technology through PR and marketing, primarily around product launches.
Whilst our short-term plans are focussed on the UK market opportunity, we plan to start exploring a small number of international opportunities – most likely starting in the USA where our consumer apps already have good traction.
EXPENSES AND PROFITABILITY:
Gross margin is forecast to vary from circa 95% for licence revenues down to 60/70% for campaigns.
The majority of our overhead costs relates to staff and contractors. For the 15 months to September 2015, we have benefited from an R&D match-funding grant from Innovate UK of up to £155,000 (paid quarterly and accounted for as a credit against operating costs). As that development project is coming to an end, we are reducing the amount of technical resource and increasing the commercial team to exploit the technology.
Other significant costs include continued costs of pursuing our pending patent applications and for travel & entertainment associated with our team’s operations.
We expect to report a loss in the short and medium term as we build revenues and to need to raise further financing in 2016 to continue to develop the business.
EXISTING DEBT OR EQUITY INVESTMENTS:
The Company has approximately £230k of debt relating to deferred payments to suppliers and directors prior to fundraising in 2014 which is currently due at the end of 2015, although some amounts may be deferred further into 2016.
The Company expects to have deferred approximately £40k of additional fees / salaries pending completion of this funding round and these will be repaid immediately after funding closes.
Current monthly recurring burn is approximately £30k (£25k for staff and £5k for other costs). This is offset by grant income of approx £10k per month.
By December 2015, our burn rate will have increased to £45-50k per month (£40k for staff, reflecting an increase in business development resource). Our grant will have finished by then and we are not forecasting additional grant income.
We plan to raise the next round of funding in late Q1 2016 at circa £1m.
Are you in any form of insolvency proceedings? Have you established any form of payment plans with creditors?None other than the deferral of creditors as discussed under section 4 above
The Exit Strategy
Our plan is to build a business with revenues of £9m by 2019-20 with significant further growth potential. At this stage, the headline financial indicators will support an attractive valuation. In addition, we aim to buid a technology platform that has significant value from the following assets:
– Proven IP
– Technology that continue to scale efficiently
– The Chirp developer community
– Broad consumer adoption of our technology
– Proprietary data and insight
To fully capitalise on the opportunity for a global technology platform, our strategic plan includes raising further funding beyond the current round. However this will happen after we have established product market fit in a number of sectors which will enable us to justify a significant increase in valuation. We consider that the most likely corporate liquidity event is a trade sale.
An acquirer could come from a number of different directions, but we consider the most likely to be in the following categories:
– A specialist proximity technology provider. Our technology is complimentary to NFC, iBeacon and other technologies in many cases. As leaders in the proximity technology market emerge, Chirp will represent a rare opportunity for a business to own a platform rather than that works a proprietary technology– most of which are still early stage, but leaders will quickly emerge. For example, AIM-listed Proxama PLC.
– Developer-centric businesses providing self-serve software tools. Businesses such as Twilio in payments and IFTTT or Zap in internet automation have access to sizeable developer communities that could benefit from access to Chirp’s developer tools.
– Leading players in our target vertical markets. Where we demonstrate the most traction, we may represent an opportunity for a leading platform or technology provider to roll-out the Chirp technology more aggressively than we can alone. For example, leaders including Unity3D in mobile games development and any number of global transaction processing businesses in the payments sector.
– Mass-consumer audience business with complimentary applications. A D2C business underpinned by content sharing (such as any social network) or media interaction is a critical part of its offering (such as Shazam or any second-screen application) could generate significant value and differentiation if it had exclusive access to the Chirp technology.
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