New Senior Generation seeks to provide senior citizens a user friendly service including physical outreach and tablet computer with phone app. geared especially for their needs along with an internet based ecosystem of products and services.
In the Czech and Slovak markets there more than 2 million senior citizens. A market share of as little as 1% or about 23,000 clients can generate more than €5 million in sales and open up further e-commerce opportunities in the senior sector.
One of the key drivers behind this product is the fact that elderly people have specific needs that mainstream products don’t often incorporate. A recent article in Smashing Magazine highlights this need, combined with general demographic trends. A report from the Pew Research Center in the US focused on similar issues. Publications geared for elederly readers feature reviews about tables and PCs designed for senior citizens.
Furthermore, one of the principles is the Czech Aging 2.0 global platform ambassador, which affords interesting potential for “first peek” opportunities at other senior related startup opportunities on the market. The Slovak interface is ready to be launched.
The entry point to this business is the sale of the tablet computer, either directly to the end-user or to a younger family member / relative (Patron) who a) sees the product as a way engaging the senior through involvement of technology b) is not in a position to provide prerequisite physical training.
The unique combination of HW / SW and training delivery ensures very strong traction in terms of future customer relationship management and leverage. Following on a general all platforms mobile app. is next in the pipeline, as are agreements with other senior product / service purveyors once a critical mass of clients are reached for reselling.
The money will be used to give the business a strong base of working capital. This business requires cash to fund purchases of inventory and cash to fund marketing expenses.
The business offers a compelling value proposition targeted at a market that is growing and eager to embrace technology. Seniors want and need such products, but the products on offer a) come at higher price points without any software embedded that is specifically geared for the senior user b) are sold without prerequisite physical training.
The business is led by a team of entrepreneurs who are highly experienced and have researched the product and the market well. Once the core product achieves success the business will have mutiple opportunities to cross-sell other products and services. The team has set up their own NGO for B2C senior IT training that has received media coverage and Google NGO support for online activities – this NGO is a soft lead developer for sales.
This is a product that must be sold with a push strategy. Experience proves that the company must reach the consumer with compelling marketing message that will drive a purchase decision – part of the outreach must be personal.
If sales unfold too slowly, fixed costs that the business incurs for marketing expense, staff and product development costs will create a drain on cash flows.
The management team is small, basically a partnership, so the business depends entirely on these two people plus a growing IT volunteer base that executes senior training.
New Senior Generation seeks to provide senior citizens a user friendly tablet computer, SW (app.) and training geared especially for their needs along with an internet based ecosystem of products and services.
In the Czech and Slovak markets there more than 2 million senior citizens. A market share of as little as 1% or about 23,000 clients can generate more than €5 million in sales and open up further e-commerce opportunities. Slovakia is “language-prepared” for a 2016 launch.
The Czech Republic is a market with 2.3 mn people over the age of 60, plus an additional 1.5 mn over the age of 50. Add in Slovakia and the market of people over 60 is about 3 mn in size. Many of these people do not own personal computers or notebooks. However, people generally are healthier than in the past, have longer life expectancy and of course, free time that can be used enjoying the product. A penetration rate of just 1% of the broad market indicates some 30,000 tablets can be sold.
The most unique selling point is the way it is uniquely packaged as a HW/SW/physical training proposition.
The tablet comes with a seniorphone app. and a web-based environment designed specifically for the senior user, supported by physical and personalised training. The product is promoted through internet advertising combined with strategy of media outreach so that the product and the services are mentioned in media. The product is also available via ALZA.CZ (https://www.alza.cz/search.htm?exps=Senior%20Tablet), one of the Czech Republic’s leading internet retailers as well as via an own e-shop: http://obchod.seniorhub.cz/ with attendant data / voice packages, extra training and consumer financing.
Target customers are firstly the seniors, but also the “sponsors” or “Patrons” – younger generation family members / relatives, such as children and grandchildren.
The Patrons see the product as an entry level product at a competitive price that will a) engage and entertain their loved one b) take away the issue of their having to “train-them-up” with the attendant familial relationship “baggage” that would impede home-training on consumer IT devices.
New Senior Generations has set up its own e-shop. Users will be driven to the site with an online campaign and through PR.
Secondly, the company established a pilot sales channel for the seniorTAB via ALZA. Third, the company plans to work with specialty retailers. Additionally, the company has softly “partnered” with mobile telephone provider Vodafone (CZ) for sales of their data and voice tarifs via their NGO.
The SeniorTab is priced at Kč 5,549 or about €190 / US$230. This is about a 40% discount to most of the brand name, non-dedicated devices, such as are sold by Lenovo, Apple and Samsung. The pricing reflects the fact that many of the functionalities and features of the competiting products are not present in this device.
This said, the Senior Tablet is configured with applications that make the device user friendly for senior citizens. Second, the pricing and features built-in are designed for an entry level user. Third, none of the other devices come with the personalized customer support and training that this product comes with. The company has setup a net work of on-line and in-person tutors who help customers use the device via its own NGO – Moudra Sovička (the Wise Owl). Numerous references point to the training being the single key decision point for both target groups.
Demand is driven by the growing aging population, an increasing desire from elderly people to embrace and explore technology and the need of younger generations to engage with their parents and grandparents.
Second as technology advances the range of features and benefits that can be embedded into tablets is increasing, making the device inherently more marketable. However, information about this uniquely bundled HW/SW/training proposition now needs to be disseminated.
The key performance metric is tablet sales, which are at an early stage. The company began soft-selling units during the past few months. The goal is to sell 1950 units during the next 12 months.
Only a few companies similar to New Senior Generation have launched operations, mainly in the US market. All follow a “stand-off – fire-and-forget” sales and CRM model, which our NGO experience has clearly shown as not being optimal. The target group will sacrifice HW/SW performance over personalized physical interaction with the vendor. This enables HW pipeline planning / investment to buck the current “6 months and it is old” paradigm. In the EU, the key competitor, Oscar Care, is an app. only and is actually complementary as they deliver a service to a smaller market sub-segment, where the Senior is much less independent. New Senior Generation is developing a relationship with Oscar Care and are preparing a cross-marketing initiative. Another senior app. Koala Phone, has supplied the reworked SeniorPHONE version for the SeniorTAB.
There are three key inputs: SW development, HW sourcing and (initially) volunteer trainer.db development. SW/app. development is currently sourced externally. One of the partners has managed IT development and implementation projects in the past. External developers were hired for work required to-date with the simple web-based app. coded using industry standard developer language – there are many quality developers that can be subsequently employed. Part and parcel with this is secure server storage and hosting. Fortunately the server market has expanded dramatically over the last several years and there are many quality, reliable suppliers on the market, one of which is being used. HW sourcing can be streamlined with volume with the potential to tender out provision to minimalize purchase costs. The trainer.db is slowly being produced with preliminary discussions taking place for several larger corporations to donate employee time via their CSR obligations prior to critical mass being reached for an own paid network of skilled seniors.
A substitute product could be any tablet with someone willing to teach a senior how to use it. For example, in the US and the UK a software application called Breezie
is being marketed at a price point of about €150. The product requires a Samsung Tablet with Android operating system. However, market experience and personal references time and time again clearly demonstrate that the ability to successfully pass on IT consumer knowledge to seniors in a familial environment is extremely limited at best. Secondly, the seniorTAB comes equipped with software and a web-based app. for training purposes and a seniorPHONE app. with large buttons for free, that is installed during the introductory training session. New Senior Generation delivers REAL customer relationship management for 5499 Kč along with HW and SW, not just clicks in an enterprise SW solution.
New Senior Generation is raising capital to purchase stock from the producer, market said stock, develop a complementary app., but again for own 3rd party sourced HW bundled with training. Secondly, New Senior Generation plans to hire online marketing staff to reach more Patron customers. Sale of 2/3rds of current stock will ensure that New Senior Generation will break even in Q1 2016
The current business plan shows New Senior Generations generating cash profits as early as 2017. The current round of capital financing should cover Venzeo’s operating and capital expenditure needs through the middle of 2017.
Cost Base Flexibility
New Senior Generation’s cost base is extremely flexible. The company can accelerate or slow down development and sales according to capital availability. The company employs few staff at present.
New Senior Generation looks to diversify its funding base with a combination of pure financial investors as well as business angels who are active and add value. Investors should believe that they can make a difference in individual senior’s lives, help unlock an exciting CEE segment and a the same time make a fair and reasonable return.
Compelling product – The SeniorTAB product speaks to the desire of elderly people to embrace technology. The product addresses the needs of young and old to engage, for example, through e-mail, photo sharing and the intenet as an information sharing medium.
We’ve seen examples of this trend in other markets. In the UK, for example, an article in the Guardian, recently highlighted the surging demand among senior citizens for tablets. In the popular press we see articles often about selecting tablets and computers for senior citizens.
Unique selling point – Bundling the solution with the product creates demand. More and more potential customers (Patrons) are realizing they need help with seniors in getting them online and need the sort of bundle that only seniorHUB / TAB provides. Seniors themselves welcome the holistic approach of the well supported product.
Management experience – New Senior Generation is managed by its founders, who understand the demography and sector. They have a long career history in marketing, brand building and application development.
Small company – The company is run by its two founders and a small team of part-time workers. The business is reliant on these two key individuals. With additional capital and business development this should change, the business should be expanded and the company will have a stronger foundation.
Limited balance sheet – The company main asset is the inventory of tablets purchased for re-sale. The main source of cash for marketing and brand building will be the capital raised, plus revenues from the sale of the inventory. If the product takes hold in the market working capital to buy further inventory may be a challenge. At the same time, penetrating new markets will also be a challenge without additional capital. With a small capital base the company is vulnerable to the possibility that it can run out operating cash.
Complementary product environment – SeniorTAB provides an entry in the opportunity to market related products and services. The SeniorHub internet application not only supports the SeniorTAB, but provides a portal through which other products and services can be marketed
Scaleability – The product concept can be translated and placed into markets in neighboring countries. This can be done through organic development or by building a franchise.
Growing market – Generally the population of older people is expanding, both in absolute terms and relative to the overall population. Product marketers and brand builders who understand this market and can identify its needs will see an increasing array of opportunities and customers to serve.
Competition – Competition can come from two sources. A strong, well financed company can enter the market with similar product and at similar price. Thus far, no direct competitor has emerged. Secondly, branded product can feature and embed software that caters to the elderly user. In the Czech and Slovak Republics a software application called Oscar is available that can be loaded onto many types of tablet with Android operating system. The product is free, but the user must supply his/her own hardware and the product does not contain the tutorial and support elements that SeniorHub provides. To the extent the elederly user is tech savy and willing to pay for software and hardware features the market for tablets generally is highly competitive with many brands from well known companies with sizeable marketing budgets. On the other hand, SeniorTab speaks to the niche of customers who would otherwise likely not be in the market for tablet to start with. The appeal of SeniorTab is that it is an ideal starting ground for the senior citizen who has little or no experience with computer technology.
NSG was founded by a team of two. Pavel Kucera brings a wealth of marketing and business experience. Tomas Hublak has a strong base of skills in IT, application devleopment, training and programming.
Pavel Kucera, Founder
Paul (Pavel) Kucera has many years experience in PR and communication and specifically executing complex public outreach projects in the health sector, including initiation the still running Incoforum incontinence project in 2000, as well as local PR projects for (amongst other) international IT / consumer electronic clients, including LG, Siemens, Motorola, NetApp etc. He recently sourced the SEE PR team for Viber’s successful launch in those markets. Over the last decade he has been involved in several startups in different sectors including FMCG and Financial Services. He is currently the Aging 2.0 platform local ambassador.
He likes challenging tasks to fully use his potential and experience in different sectors and his ambition is to develop New Senior Generation as the “go-to” player in all things innovative in the senior sector for CEE, including mentoring and discovering other exciting senior startups and delivering them to the Aging 2.0 Generator Ventures financing platform and local investors. Paul is convinced that getting seniors online and active will help to unlock their “SoftGDP” potential.
Tomas Hublaek, Founder
Tomáš Hubálek has more than 7 years of project management experience and is the “god-father” of the seniorHUB / TAB concept. Tomáš is a unique IT guy, in that he understands seniors, has developed significant training skills and insight from being the heart and soul of the New Senior Generation NGO – Moudrá Sovička – and the patience and enthusiasm to make a real difference, one senior at a time. Tomáš is also an expert in complex solutions at a B2B level for energy acquisition and management via auctions, consulting and SW / HW implementations. This holistic approach is now being put to good use for seniors.
A calm and collected person, his passion is to deliver a holistic a solution to getting seniors on the internet, saving money for products and services and being as active as possible via better management of (not only) online intergenerational relations.
New Senior Generation fits many of the criteria we established for the Angel investmens we make. We highlight our key considerations.
- Unique, compelling product with proven demand.
- Potentially attractive acquisition target.
- Inherent competitive advantages.
- Strong, focused, motivated management team.
Pricing for tablets has come down in recent years, making the product more affordable. The range of applications has broadened and new applications are continually being introduced. Data traffic and bandwidth are far more accessible than in the past, so the product can be used more often and with more comfort. Receiving, sending and viewing photos, for example, is a matter of seconds, whereas only a few years ago it was a matter or minutes. Content such as movies, music and TV can be more readily accessed now than in the past. The advance of technology has been rapid and a large segment of the population is underserved, but sees the possibilities and wants to explore them. Whereas in the past the monetary and non-monetary price point was higher, both elements of price have moved down to a point where people not only desire the product, but also they are willing and able to pay for it.
Company stage: Post-startup
Shares: Preferred & EIS/SEI Common
% of Equity: 13%
Pre-money valuation: £1,200,000
Use of proceeds: Product & business development
UK EIS/SEIS: Yes
Voting rights: Yes
Pre-emption rights: Yes
Anti-dilution clause: Yes
Corporate structure: UK Ltd
Shareholder structure: Founders & Management 48%, Angel investors 52%
Management location: London (UK), Prague (CZ), Warsaw (PL)
Angel Fund board membership: Yes
Company Website: www.symcredit.com
Angel Fund investment: The initial Angel Fund investment was made in October, 2013. The proceeds of our investment were used to develop the Company’s infrastructure and operations. Follow-on investment: The Angel Fund has agreed to make a follow-on investment up to £200,000. Subject to continued permission of the General Partner the Angel Fund will enable investors to allocate their investments to this follow-on investment round. Direct investment: UK investors wishing to take advantage of the EIS/SEIS tax incentive schemes may purchase Common shares directly from the Company. On a case-by-case basis investors may also purchase Preferred shares directly from the Company. Minimum investment: £2,500 or currency equivalent
Symfonie P2P Ltd (“SymCredit”) is launching a peer to peer finance platform focused on Central Europe. SymCredit will offer consumer and business loans to credit worthy consumers and businesses, initially in the Czech Republic and Poland. Savers will have the opportunity to invest in these loans and receive regular payments of principal and interest.
The Czech Republic and Poland, the first two markets where we will launch services, represent a combined market with population of about 48 million. Consumer lending in the two countries totals about €40 billion and is growing. Lending to the SME sector in the two countries is about €50 billion. On the investor side, savers in the two countries have amassed about €250 billion in savigs deposits and investment funds.
On the investment side, demand is driven in part by the low interest rate environment. Investors are simply thirsty for higher yielding investment alternatives, in our view. When interest rates risk demand for our investment product starts to become more a question or relatively low volatility compared to bond and equity funds. Overall economic growth and rising disposable income among investors are also favourable for demand. On the lending side, demand is driven by overall economic growth, rising consumer purchaing power that enables consumers to take on more debt. High interest rates and tight credit conditions in the bank sector also are good for our demand profile.
On the lending side our product is a consumer or business loan with relatively flexible terms and an interest rate that is competitive with rates found in the banking sector. In some instances borrowers will select us simply because they are underserved by a banking sector with tightening lending standards. On the savings side, there are very few alternatives that are relatively safe and high yielding. Bank deposits are safe but offer low yields. Also the client must lock up the entire principal in term deposit. Bond and stock funds are relatively volatile and risk. Our product should find a comfortable middle ground.
On the consumer lending side our target customers are middle market consumers looking for loans between €1,000 and €15,000. We believe the typical consumer will be looking to refinance relatively high interest rate bank loans. On the business lending side our target customers are small and medium size enterprises looking to borrow between €10,000 and €150,000. We see the typical profile being a family owned firm that has been in business for several years and is looking for capital to expand the business. On the investor side we believe our typical clients will be moderate and high income individuals looking for a relatively safe, high yielding alternative to bank deposits and classical investment funds.
Our service is internet based. Mainly our customers will transact with us via the internet, but we will support our internet services with in bound customer sales and support classically with telephone and on-line chat. We will use the internet for highly targeted brand building efforts. We will focus our marketing efforts on internet sets and print publications that specifically cater to middle market consumers in the lending space and relatively sophisticated savers who are most likely to relate and understand our investment product. In business loans segment we plan on hiring in-house commercial loan officers with established relationships to credt worthy borrowers.
Loans generate an origination fee. Typically this between 1% and 3% of the loan amount. Additionally, the business earns a loan servicing fee for administering loans, collecting and distributing payments. This fee is typically 1% of loan value annually.
The key metrics for our business are the number of loan contracts closed annually, and the number of investors served, the value of loans originated and the value of loans serviced. These metrics drive the revenue and cost structure for the business. In other markets where peer to peer lending has taken root the peer to peer lenders have typically gained between one and five percent of loan origination volumes past few years. Given the size of our markets (about €10 bn in consumer loans and about €50 bn in business loans, in next few years similar penetration implies a peer to peer lending market of about 250,000 consumer borrowers, lending volume of about €500 mn.
Our product is an alternative or substitute for bank deposits and bank loans. Our competitors by definition are banks. As a peer to peer loan company we have a built in advantage. We can find a middle ground between savers and borrowers that banks cannot profitably find. We can provide investors higher rates than they can obtain in bank deposits. With respect to borrowers peer to peer lenders offer both an alternative and a complementary product to what is offered by the banking sector. We need not provide steep discounts to bank interest rates. Rather, we can offer more flexible terms and conditions and fewer service charges. We believe also there is a large base of credit worthy borrowers who are systematically underserved by the banking sector. This has been one of the drivers of peer to peer lending globally. In the peer to peer space we would be the first genuine middle market peer to peer lender to take hold in the Czech Republic. In Poland a few peer to peer lenders have begun operating. Our product is fundamentally different in that we offer investment into an automatically diversified pool of loans. Our consumers need not spend time getting educated about the bulletin boards and the process of investing. Second, we differentiate ourselves with our credit process, which we think we will be more robust and more transparent than that of our competitors. Finally, we are likely to be the first entrant into the business loans space.
We are using the money to complete installation and testing of our systems and launch operations. We expect to be operational in the coming months.
We budget that we would be generating profits with three years after we launch. We are performing in line with or better than the capital expenditure and startup cost budget we envisioned. Our capital requirements could be subject to change if we fail to generate as munch revenue as we anticipated or if we have to incur more costs to develop our business faster than we anticipated.
We have a strong investor base, having been seeded by an angel investment fund. This fund is our lead investor and provides us a supervisory board of knowledgable, well connected professionals who can help us develop our business. More recently we’ve obtained financed from sophisticated, high net worth individuals who share our vision and have direct finance and corporate governance experience. Our core strength is in our understanding of credit and the credit process. Our key management members have been in the business of analysing and investing in credit instruments for more than 10 years. Second, we’ve put in place a high quality management team that is focused on executing the business plan. We are finding that the peer to peer space allows the opportunity to expand the business not only into new markets, but across the product spectrum into equity finance. Being a startup we are constrained by a low capital base, especially relative to banks, but also relative to our peer companies operating in other markets who are well funded with venture capital finance. The threat is that one or more of these well financed competitors will come into our market more quickly than we can develop an entrenched position. We have a strong management team. Our key inputs are internet technology and people. Our operating systems are developed and managed in-house by a team of dedicated, experienced professionals. We obviously depend on a well motivated, talented base of employees to handle our operating processes and develop sound lending models. We are fortunate to operate in a market where well trained, highly educated people are the norm.
We are startup operation. We are not as well capitalised as larger, established firms in other markets. We don’t have a track record of proven performance originating loans and generating returns for investors. Our credit models must be tested and adjusted based on actual experience issuing loans.
There are a wide variety of investment alternatives to choose from and a wide variety of lending products to choose from. Customer loyalty in our business is maintained by providing investors relatively safe, predictable investment returns they can rely on, and by providing borrowers flexible terms and conditions that suit their needs. The business opportunity in our region extends beyond peer to peer lending and into a wide range of investment and financial services products. In other markets we have seen equity crowd funding companies move into debt finance. We have also seen peer to peer lenders move up the credit spectrum into larger loans, property loans, secured loans and receivables financing. By serving our customers well and generating a reputation for being a reliable, well managed financial services firm we can launch products that expand the scope of our business.
We consider our business to be highly regulated. Applicable ares of law and regulation include financial services authorities supervision and consumer protection laws. However, the regulations are not uniform from country to country. Generally speaking there is a well developed regulatory and commercial framework that we can operate in.
Our revenue stream is difficult to predict. We may have trouble attracting and keeping customers. Our expenses may be greater than we anticipated and our capital might not be sufficient to incur a long period of operating losses. The regulatory and legal environment may change so as to prevent us from operating as we planned to operate. We may incur higher legal costs as a result of changes in regulations and laws. Our ability to attract and keep investors is a function of our ability to attract borrowers whose behaviour is consistent with our lending models. If credit losses are larger than we anticipate our investors may suffer poor or negative returns and we will have difficulty attracting and keeping customers as a result. We are dependent on well functioning, fast IT systems. If our systems don’t function as we anticipated we can incur high costs and have difficulty attracting customers.
Michael Sonenshine, Excutive
Mr. Sonenshine has more than 20 years of experience in finance and investment management. He is a specialist in credit analysis and structuring credit portfolios. He has a track record of success managing high yield credit funds. His career experience includes senior positions at Credit Suisse First Boston, ING Bank, and ING Investment Management. He has an MBA in Finance from the University of Rochester.
Jitka Rombova, Finance
Ms. Rombova has a career in finance spanning more than twenty years. She is a Partner in CQK Invest which provides financial and business support to innovative startup companies. Her professional experience also includes 10 years in senior management positions in HBO Europe, where she was ultimately promoted to Chief Financial Officer. Ms. Rombova holds an MBA from University of Pittsburgh.
Stepan Alexa, Information Technology
Mr. Alexa has 15 years of experience developing, testing and implementing database software solutions. His held senior positions at major software and systems providers such as Oracle and Sitronics. Mr. Alexa was chief architect and director of R&D for telecommunications solutions for delivery to tier one companies such as MTS, T-Mobile and Vodafone. He holds a Masters Degree in Computer Science and Psychology from the Prague University of Economics.
Ewa Chronowska, Business Development
Ms. Chronowska has ten years of experience in corporate finance, strategy consulting, business development and capital transactions. Prior to joining Symfonie she was CEO and co-founder of Capital Ventures, advising and providing financial and business support to start-up, early stage and SME companies. She was also CEO at Grasp Capital, which provided consulting and seed capital finance to Polish companies. She holds a Master’s Degree in Finance and Accounting from Warsaw School of Economics.
Peter McGregor, Operations
Mr McGregor has over 20 years of banking operations experience. He was Chief Operations Officer on assignment at Banco Nacional de Guinea Ecuatorial, overseeing implementation of banking and risk management IT systems, policies and procedures. He also spent 14years with ING, managing operations at ING installations in Central Europe and Monaco. He has a BSc (Hons) in Mathematics from the University of Witwatersrand, Johannesburg, South Africa, and a D.Phil in Computer Science from Oxford University, England.
Katerina Stanikova, Business Development
Ms. Stanikova has more than ten years of experience in journalism and communications. Her career includes producing and reporting for broadcasters such as Czech Radio, FTV Prima. She also worked for U-Turn Media Group, one of the first providers of mobile news in the world. She works with Helgi Library, a start-up company providing economists around the world with statistics and data. She holds a Master Degree of Journalism and Media communication from Charles University, Prague.
Symfonie Angel Ventures is the lead shareholder in this company. SymCredit fit many of the criteria we established for the Angel Fund. We highlight our key considerations.
- Unique, compelling product with proven demand.
- Potentially attractive acquisition target.
- Inherent competitive advantages.
- Strong, focused, motivated management team.
- A business the leverages our core competence.
Symfonie Angel Ventures invested in this company because we believe in the potential peer to peer finance has if done well in the Czech Republic and Poland and in Europe generally. Second, we think the management team is strong. They understand the business and how to execute the strategy. Third, the business is scaleable. It can expand into other markets and into other product lines. Fourth, given the developments in peer to peer lending generally, we think this business can attract premium valuation in time. Symfonie Angel Ventures brings expertise to this venture. We are helping the business implement sound financial and management practice. We are also bringing knowledge and understanding of retail financial product marketing.