INVESTOR SUMMARY LON N. 1762 AIN
LZ, digital loyalty for independent merchants
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Summary
LZ is the UK’s largest loyalty app for independent retailers and businesses. It replaces traditional loyalty cards, and provides the tools currently only available to the big brands and chains, such as customer analytics, push promotions and social marketing.
The independent retail sector, which constitutes about 80% of the retail outlets in the UK, is under extreme pressure from the big brands, which are investing heavily in the mobile space to increase customer retention and engagement. The LZ app solves this with a very simple package, designed for the specific requirements of smaller retailers and chains.
- Over 270 businesses in the platform, across 5 continents;
- Signing deals with 3 large merchant service providers, with a reach into 90,000 merchants;
- Now integrated on 99% of legacy point-of-sale systems;
- In April 2014, raised £204k on the Seedrs crowd funding platform in just over a week; now raising £350-400k, of which £250k have already been committed by two angel investors plus asecond crowd funding campaign (ongoing).
The founders have extensive experience in retail, payments and channel partners and are now raising funds to boost growth through large sales partners. The company is expected to get in profit around the end of 2016, and run with EBITs greater than 50% after that. It is also a particularly appealing acquisition target for payment / merchant services companies and marketing agencies in the independent retail sector (tier-2 to tier-4 retailers).
Management Team
- AB, CEO:20 years experience in the payments industry (NCR, Wincor Nixdorf), most recently Global Sales Director for a banking software firm; very experienced at managing channel partners.
- CD, CMO:formerly, head of marketing at Eveve, a large Opentable rival, especially in the US. Spearheaded the successful campaign to break the Open monopoly in the US Midwest.
- EF, CTO:Mobile app development expert and Titanium platform specialist
- GH,non-Exec:ex-SVP at First Data and NCR
- IL, non-Exec:Sales Director at Vocalink
Market Overview
In the UK alone there are over 200,000 independent retailers, 60% of which use paper based loyalty cards. And there are more than half-a-million B2C businesses that live on repeat customers. Globally the opportunity is vast indeed, especially in North America, where the market is more mature.
Product and Services
LZ is the easiest way for independent businesses to create their own digital loyalty program using a mobile app. Merchants get to know their customers by name, know how much they spend and how often they visit, while customers get to keep all their loyalty cards and points in one place.
Using our patent pending "kiwi" links, LZ can also be used by online/mobile businesses, professionals and product manufacturers.And now it also integrates into any legacy (Windows-based) point-of-sale system, making it even easier for staff, and providing product-level real-time analytics.
Business and Revenue Model
We charge merchants £27 per month (or £57/month for the EPOS integrated plan), and we will soon introduce new revenue streams related to branding features, payments, promotions, etc. The business model is designed to be scalable, meaning our gross margins tend towards 100%.
Competition
At present there's no serious competition from within the UK. There is more competition in the USA, but they focus exclusively on bricks&mortar businesses. LZ's key advantages are:
1)Focus on simple, friction-less experience
2)Can integrate with POS systems
3)Points can also be given by email/text/social media, etc.
4)100% scalable, merchants can get up and running in 2 minutes.
Funding Requirement and Growth Strategy
After perfecting possibly the best loyalty card app on the market, we are now raising £350k to focus on growth, particularly through channel partners. Current growth is based on digital marketing, but we are about to sign agreements with 3 merchant acquirers / merchant services companies that will upsell LZ to almost 100,000 retailers in the UK and Ireland. And we are currently integrating with First Data's Clover platform, which will give us instant access to 35,000 merchants in the US and UK.
Exit Timetable
This will be a very sellable business. Merchant acquirers, merchant services and payments companies are the most likely candidates. But companies in the vouchers space and marketing agencies have strong interest in this space too. A US rival - Perka, sold one year ago for $30m, at an earlier stage than we are now. On the other hand, we are confident that the business on its own can get to profitability by the end of 2016, and then run on EBITs comfortably greater than 50% of revenue.
Financials2014 / 2015 / 2016 / 2017 / 2018
Number of merchants / 225 / 951 / 6,443 / 24,096 / 57,093
Total revenues / 7,829 / 47,648 / 646,509 / 4,313,927 / 14,557,116
EBIT / -188,954 / -320,205 / -638,849 / 1,871,712 / 11,577,971
/ Investment History
- Apr 14: £204,000 raised through the Seedrs crowdfunding platform at a post-money valuation of £1m;
- Now raising £350-400k at a pre-money valuation of £1.8m (£250k have already been committed)
Ownership structure / Contact details
Name / Michele Mazzitelli
Telephone / 07736572241
Email /
A more detailed deck about LZ can be available on request.
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