Big Sofa is a technology platform for managing visual content. Video and images are at the heart of modern life, and Big Sofa seeks to provide the tools to curate, manage and use visual content across any language, on any device, in any country. With clients such as British Airways, Volkswagen & Unilever, Big Sofa is led by veterans of the marketing industry from Avon Cosmetics, lastminute.com and the former CEO of Research International (TNS)
Big Sofa is a technology platform for managing visual content.
Smartphone culture has put the creation and sharing of video and images at the heart of modern life. However, our ability to create this visual content is far bigger than our ability to manage it.
Over the last 18 months we have seen a strong and growing demand for new ways of storing, managing, searching and making sense of the huge volumes of content now being produced. Companies increasingly want to use visual content to better understand consumers as people, engage employees, tell stories and build brands. The more content there is, the greater the opportunity – and the bigger the challenge.
Big Sofa’s technology is the answer. We believe that it has the potential to fundamentally change the way organisations work. It provides an elegant solution for managing and analysing large volumes of video and images by making it simple to securely upload, curate, mine, share, tag and comment on any kind of visual content. It works on content in any language, from any device in any country.
Structure
The Insight Exchange Partnership LLP has been trading as Big Sofa for the last 18 months. To allow us to take the next step in our growth (and to accept investment), we have restructured the business as a limited company, Big Sofa Ltd and all assets/trading relationships and employees have been novated to the new company into which investment is being sought.
Clients and revenue
Big Sofa Ltd’s & Insight Exchange LLP’s (trading as Big Sofa) clients already include Unilever, British Airways, Barclays, Volkswagen, SC Johnson, Government Digital Service, Direct Line Group, Ofgem and Public Health England. We also partner with global market research agencies such as Ipsos MORI, Hall & Partners, MMR and Mizzouri.
Big Sofa’s business model comprises three main areas of revenue-generation:
Commercial benefits
Big Sofa strives to provide many benefits which include:
User feedback & awards
We are consistently humbled by our user responses with regard to our platform’s features, design and ease of use. In our early days, we conducted exploratory research with 20 Global Heads of Insight of major brands. Their response was unanimously positive. Three years of development later, the 4 judges who selected Big Sofa as the winner of the 2013 Market Research Society’s Best Innovation Award were similarly impressed, saying, “It’s a real game changer…We were amazed by the potential of this product to change the way we do our jobs- it is something we could see ourselves using tomorrow”. We have also recently been announced as Everline Future 50 Winners 2015: chosen by a panel of expert judges from hundreds of hopefuls to be one of the 50 most disruptive young British companies of 2015. Which puts us alongside Crowdcube who are fellow Everline Future 50 Winners 2015.
Why we need investment
We are seeking further investment to accelerate growth. We want to be known as the best visual content management company in the world. To achieve this we have to keep our technology at the cutting edge, incorporate new features that increase our power and appeal, and improve the core functionality of our platform; we need to broaden and deepen our sales and marketing activity; we want to make our brand powerfully magnetic; and we need to strengthen our client management team and to capitalise further on our impressively strong position with major clients and partner agencies.
Market trends
Big Sofa foresees three big, related trends on which to capitalise:
Market size
We estimate that the global market for visual content management is worth in excess of £3.45bn. Visual content management is dispersed across many sectors rather than being counted and measured as its own sector. To give an initial estimate of market size, we have used 2 sectors where documented figures exist, and provided our own estimate for other sectors.
Consumer Research
We believe there is a need for visual content management in qualitative research where video and images are increasingly captured using smartphones and tablets. Our research suggests that there is also a fast growing demand for the capture of 20 seconds to 2 mins of video + multiple pictures in online/digital quantitative research.
ESOMAR’s ‘Global Market Research 2014’ report – states that online and mobile are the two leading consumer research methodologies, accounting for 43% of all spend. GRIT 2014 and CAMBIAR 2014 reports identify mobile as the fastest growing methodology: it is expected that over 30% of global market research will be conducted this way within 18 months. This represents over £8bn in revenues. Qualitative methods accounted for a further 16% of global research spend in 2014 (ESOMAR). This represents £4bn.
Overall, we believe the digital consumer research market amounts to £12bn. We estimate that the visual content management market will represent 10% of this total i.e. £1.2bn.
E-Learning
Docebo estimate the self-paced learning market to grow to £32bn by 2016: The report states that:
“Thanks to the greater technological maturity trend in 2013 in the learning technologies sector, a boost in the usage rate of videos among our customer base was also evident. Ultimately, this is also consistent with the idea that learning processes need to leverage humanization, and reduce the amount of flat and impersonal PPT decks”. Alessio Artuffo, COO, Docebo NA (pp. 18-19)
Based on the assumption that visual content management takes a 5% share of LMS and Packaged Content markets (£25bn in 2015) we estimate it to be worth £1.25bn
Other Sectors
There are many more sectors in which visual content is used in volume e.g. conferences, legal digital evidence management, news reports, and knowledge management. We estimate that, together, these sectors are worth at least £1bn globally.
Competitors
We perceive our competitors are as follows:
How we are different
As evidenced by feedback from our clients, we seek to differentiate ourselves from our competitors as follows:
Big Sofa offers an experienced, hands-on management team supported by industry-leading NED expertise.
Simon Lidington – CEO
Simon is co-founder of Big Sofa. With many experience working with clients and research agencies he is regarded as a thought-leader in the consumer intelligence industry. Simon started his first company when he was 31 and has years of experience leading large and small companies. Prior to setting up Big Sofa, he was CEO of Research International, now TNS, one of the world’s largest research companies.
Simon has an Honours BA in Sociology and a Masters in Interorganisational Relations from Exeter University, and an Honorary Doctorate from Middlesex University. He is a Fellow of the Market Research Society, a Fellow of the RSA, and sat on the Advisory Council for the Economic & Social Research Council’s ‘Cultures of Consumption’ Programme.
Matt Lynch – CSO
Matt is co-founder and Chief Strategy Officer of Big Sofa. He is responsible for finding new ways of delivering value for clients through our platform and our people.
Matt spent 10 years in marketing and category management with FQ LLP and Avon Cosmetics Inc, before broadening his experience in a range of hands-on research and consulting roles.
Matt holds an MA in Languages from Oxford University and an MSc in Organisational Behaviour from Birkbeck, University of London.
Marcus Jemmotte – Finance and Commercial Director
Marcus is a Chartered Accountant. He brings a wealth of commercial and financial knowledge gained from working across Marketing Services, Digital Media, E-Commerce, and Financial Services.
Marcus started his career with the Bank of Ireland, where he honed his analytical and regulatory skills. He then moved onto roles with Smythson of Bond St., lastminute.com, and Acxiom.
Andrew Larssen – Head of Development
Andrew has many years experience as a software developer, with deep expertise in video management. Before joining Big Sofa he worked at the Money Advice Service. He has since established our digital team with specific areas of expertise across development and design. Andrew has a background in eCommerce, with responsibility for developing high traffic sites for numerous household names.
NED: Terry Back (former Global Partner, Grant Thorton – Financial); further announcements to follow
These notes should be read alongside the Financial Snapshot
SALES: Key sales drivers:
Corporate use of video as a data collection medium by large organisations
USE OF FUNDS: Outline how you plan to use the funds you raise on Crowdcube?
Growth capital is required to increase our video/image capture, processing and analytical functionality. In addition to increased business development and marketing activity this will enable us to increase our global footprint.
EXPENSES AND PROFITABILITY: Please comment on your expense levels, gross and EBITDA margins
Expenses level are predominatly centred around Tech resources being utilised to further develop the application. Gross margins are constant at c. 83% with improvements planned in the coming years based on scale.
EXISTING DEBT OR EQUITY INVESTMENTS: Please outline the background to any existing debt or equity finance on the company balance sheet
Big Sofa currently have an Angel equity investment from a Canadian Research group, who currently own 16% of the company, the company also carries a Term Loan due to expire in FY17.
CASH: Cash burn rate, Operational cashflow, when will you need to raise the next round?
Current cash-burn is at c.£45k per month, Operational inflows have been as expected. It is anticipated the next round of funding would be in FY18 as we take the business on its next stage of growth.
CREDITORS: Are you in any form of insolvency proceedings? Have you established any form of payment plans with creditors?
We have no insolvency proceedings against us. We have agreed payment plans with 2 over our largest suppliers but solely to enable management of our cash position.
We forsee two possible options for our exit strategy, both of which we would target within a 2 – 3 year timeframe:
1) A private equity buyout. The current valuation is based on a conservative multiple of 8; we are aware, however, that our sector can attract multiples of anywhere between 10 and 20.
2) Acquisition by a trade partner, most likely a global Consumer Intelligence business, for whom visual content management is an increasingly important and central concern. To give just 3 recent examples, we would point to the recent deal between YouEye and GfK, the acquisition of Decipher and Research Reporter by FocusVision, and the investment by WPP in ZappiStore.
http://www.research-live.com/news/gfk-invests-in-youeye/4013015.article
http://www.research-live.com/news/m-and-a/focusvision-buys-research-reporter/4013072.article
This company is offering both A and B shares. If you invest £5,000 or more you will receive A-shares which have full voting rights. If you invest less than £5,000 you will receive B-shares which have no voting rights or pre-emption.
Big Sofa has submitted their plans to raise money, details of their structure and trade etc. to HMRC and is awaiting advice on whether or not the proposed share issue is likely to qualify for Enterprise Investment Scheme (EIS) tax reliefs relating to their shares.
Tax relief is available to individuals only, who subscribe for shares in an Enterprise Investment Scheme (EIS). Relief is at 30 per cent of the cost of the shares, to be set against the individual’s Income Tax liability for the tax year in which the investment was made.
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Please visit the HMRC website for further information on EIS tax relief
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