Newco

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A source of worry might be the heavy reliance on grants. NewCo remains a web-application and there is no guarantee that they will receive it. If they don’t, it seriously compromises their financial viability and ability for investment (They’d have to begin 2017 in red numbers, at -568’019$ -> cashflow statement). This might push the company to look for loans which is not necessarily desirable for investors. The same logic applies to their partnership with Unilab as there is no guarantee that it will happen. However, we can tell from the balance sheet that the company would still have some cash left every year (even in 2014 and 2015 when cash flows are negative as seen in the cash-flow statement) which is good as it diminishes the need for new investment rounds (that is if the assumption that they receive the grants is correct). The account payables position in the balance sheet, gives us an indication that the firm is building a credit file, which is a good thing. Finally, we can see through the use of proceeds that most of our investment would be use of the product development and marketing, with only a little part going into administration which is how it should be.

The website being the main visibility tool for the company is quite classic in its concept but we believe that it might be a problem. Indeed, for it to be sufficient the website is required to figure within the first results in search engines. This can prove to be difficult to achieve for a start-up. Following this visibility issue, the number of users and nutritionists used to estimate cashflows seems too ambitious: the worst-case scenario predicts that B2C and B2B users increase 70x between 2015 and 2016, 20x between 2016 and 2017 and 2.5x between 2017 and 2018. The ad revenue that is predicted can also be compromised if the website doesn’t make it into the top results in search engines. However, we trust that the early-phase consultancies are a realistic addition to the revenue sources. Indeed, not only does it generate cash, it simultaneously contributes to the development and core of the product. The membership fees provide a foreseeable source of revenue which is excellent.