The plot thickens?????
The only thing of substance I could see in the offer doc is the that founders suddenly become very rich. My main take home points from prospectus are:
1. Prospective 2008 revenue from customers of $550k does not look compelling. This eqautes to straight line growth over year from zero to 1833 customers each paying $50 per month. This seems a little light for software that is set to take over the world.
2. Operating expenses forecast to be $5.4m.
3. Total shares outstanding will be 55m so this company is valued by the offerers at time of IPO of $55m.
4. $300k of the cash raised will be used to lend to the directors at 4%, so they can buy shares.
5. No forecasts or projections to support valuation.
My take on the service as an SME owner [ie I am their target market]
1. Accounting software is a highly competitive busines dominated by large incumbents, switching costs are high in terms of time. You would need to see a large benefit to switch, its worse than switching banks.
2. SME’s who don’t already use accounting software usually have good reasons for this. Being available on the internet is not a good reason.
3. Simple to use means only useful for simple things.
4. No fixed asset register
5. No payroll
6. No inventory
7. Each county has its own standards and requirements so its not quite as easy as alluded to in the prospectus, to transfer accounting software from country to country.
1. Is Hamish getting paid good appearance money.
2. Did Chris know his comments would be headlined in the prospectus?
3. Who was the ad agency who wrote the prospectus?
My overall take on the IPO
1. I find it difficult to see where their customer base will come from
2. $600 per year seems expensive for what most of us SME’s can do on a simple spreadsheet… and with internet banking
3. Most of the writing is in the special language of advertising and marketing people that sounds like it is saying something but it isn’t really.
4. I think you will get a better risk adjusted return betting on the Africans to take out the RWC with the TAB at $6.00.
5. Makes my BIO shares look attractive.
6. If you have a compelling offer you dont need ad people to write your prospectus or to refer to other successful companies/people to try and get a pseudo halo effect.