SnapDragon

SnapDragon

STRUCTURESingle company deal
SECTORTechnology (Software)
The content below has been provided by Mercia Fund Management Ltd who are authorised and regulated by the Financial Conduct Authority under firm registration number 524856.
Mercia Fund Management Ltd
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Summary

SnapDragon Monitoring Ltd protects brands and businesses online by identifying and removing copycat, counterfeit and other [intellectual property] infringing product from sale on the world’s leading ecommerce marketplaces. Its proprietary, AI-powered software, Swoop, constantly monitors online platforms and marketplaces (from Amazon and Alibaba to Walmart and Wish) and, using sophisticated algorithms, supply chain intelligence and multi-lingual capabilities, analyses product descriptions, prices, images and trademarks to quickly and accurately identify and report on intellectual property infringements.  


This is a £750,000 fund raise to enable the company to scale their business.

Highlights

  • Building on its strong foundations, the company is looking to scale, to grow the leadership team (notably in sales and digital marketing), and the board, making the most of valuable traction in key sectors and its already excellent reputation.
  • Customers include Stella McCartney, ITV Love Island, Glencairn Crystal, Hippychick, Red Paddle Co, Harris Tweed Authority and Johnstons of Elgin
  • SnapDragon has close and strong relationships with all key platforms, enabling continuous, successful takedowns. Over 96% of all links reported for removal are removed, permanently.
  • With high customer satisfaction levels and continuous technology improvements reflecting customer needs, zero customer churn is seen after 6 months’ relationship.
  • With an increased sales focus to drive revenue growth and a disruptive proposition in a rapidly growing market, the SnapDragon team is confident that, with additional investment, its financial goals are both realistic and achievable.
  • Identified links are categorised according to the type of intellectual property infringement (trademark, design right, patent, copyright etc) and, using the genuine IP right as proof of originality, items are reported for removal – a process which can take the SnapDragon team as little as four minutes to achieve their removal from the site in question.

Investment strategy

The company has raised £1.75m to date from investors including Mercia, the Scottish Investment Bank and private individuals to fund the growth of the business.

• SnapDragon is now looking to raise a further £750,000 for working capital and to invest in the following areas to achieve scale:

Sales and Marketing

• Senior sales person and digital expertise to be recruited

• Online marketing campaign alongside existing activities

• Low level office/legal infrastructure for EU and USA expansion

Technology

• Bookend self-service for full SaaS

• Enable roadmap of value adding initiatives

• Appoint additional tech expertise

• Increase UI/UX expertise

Exit strategy

With recurring revenues, forecast sales of c£4m+ and a GP margin of 82% by 2024, the management team expect a number of exit options to be available. This could be by way of a trade sale to a competitor such as Yellow Brand, Red Points or Opsec/Mark Monitor, or corporate acquisition by an IP/Law firm such as Murgitroyd or Marks and Clerk.

• Major recent acquisitions in the brand protection market include:

Jan 20 – Opsec completed the acquisition of MarkMonitor’s brand protection business from Clarivate Analytics.

Nov18 – Corsearch acquired Yellow Brand Protection.

In addition, the brand protection market saw a number of significant investments in 2018 e.g. Incopro raised $21m from Highland Europe and Red Points raised a further $38m, led by Summit Partners.

Products and services

Product Expansion Examples

• Increase social media monitoring offer with new platforms and domains

• Add market insights into repeat offenders

• Expand insights into non-infringing activity, in terms of monitoring competitors & pricing

• Add IP rights manager, enabling customers to store documentation and easily identify gaps

• Monetise data from cross sector/seller

• Increase automated take-down capabilities

• Continue development of AI and machine learning


The Market

• Trade in counterfeit and pirated goods now stands at 3.3% of all global trade, equating to $0.5 trillion in lost revenues, according to the OECD and the EU’s Intellectual Property Office. The problem is growing by 25% YoY.

• In tandem, online shopping is also growing at an exponential rate, and is predicted to hit $4 trillion in 2020. Of note, Amazon sold over 175 million items on Prime Day alone in 2019.

• With an increasing number of online shoppers, and marketplaces, the opportunity to sell and buy fake goods has never been greater.

• Fakes divert revenues, cause brand and reputational damage and, more importantly, can harm the unsuspecting customer. In addition, the big money behind fakes is funding prostitution, drug smuggling, people trafficking and terrorism.

• In reaction, the global online brand protection market is growing at an estimated 20% perannum, and is expected to reach a value of $960 million by 2027


Competition

• SnapDragon’s main online competitors are Yellow Brand Protection, Incopro and Red Points. All have traditionally targeted luxury goods and larger corporates and, with large teams, are driven by detailed consultancy offerings. All also offer legal services and solutions.

• With a focus purely on online intelligence, SnapDragon works closely with legal and IP firms around the world – both as referrer and referee – and is not seen as a competitor to the firms in this space.

• Swoop is a user-friendly, cloud-hosted, AI/ML enhanced solution offering both managed portal, white label and self-service access. Further development will enhance SnapDragon’s full SaaS product – accessible to all.

Financial overview

Revenue Model & Customers

SnapDragon offers 3 different subscription levels all providing 24x7 monitoring by the Swoop algorithms:

1. Basic: 1 brand/10 platforms – £300pm

2. Advanced: 1 brand/30 marketplaces – £1000pm

3. Tailored: Unlimited brands – from £1800 pm upwards

• The range of subscriptions makes the solution attractive to both small businesses and larger corporates.

• New SnapDragon customers are encouraged to address priority marketplaces first – those where sales are being the hardest hit. In most circumstances, these are the Amazon, eBay, and Alibaba platforms. Once fakes are identified and removed from these platforms, and the brand’s export and growth strategy is understood, new marketplaces and territories are added, and the

subscription upgraded accordingly.

• The average monthly fee is £700 per month, with a top range of £8000/per month.

• Swoop provides customers with intelligent learning, backed by data driven analytics. Seller insights on repeat offenders yield additional monetisable value for the company. Consolidated data from multiple sources will, in the future, also enable industry action against known criminals, as well as being of value to border forces/crime fighters and HMRC.

Key team

Rachel Jones - Head Dragon

Rachel created the Totseat, the babychair harness, generating retail sales of£10m before becoming a victim of counterfeiting: the experience that led to the founding of SnapDragon. Rachel won Innovator of the Year and was Highly Commended as CEO of the Year at the 2018 Computing Women in IT Awards. She was also a finalist Entrepreneur of the Year at the Amazon Growing Business Awards.

Jet Doran - Director of Engagement

Jet has a background in law andcriminology. She is part of the original founding team, responsible for building SnapDragon’s Brand Protection department. She has strong relationships with IP enforcement teams and senior staff within key online marketplaces.

Paul Chung - Head of Brand Protection

Paul previously worked as a intellectual property investigator at Ceberus IP, specialists in IP and Corporate examinations for global brands and businesses. Prior to joining SnapDragon, Paul worked at competitor company Incopro, leading a team of analysts.

Documents

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