**Update on further Crowd investment**

Thank you to everyone who wrote to me following the investor update last week. As always, It’s so valuable to have the support and input of such a strong community.

As explained in the Investor Q&A, our VC investment negotiations are now for a much larger investment round at a significantly higher valuation than the £86m and £1.40 share price from October last year.

In addition, there is the remaining £8.5m of shares from October that ideally we would like to use to expand our investor community and further strengthen our negotiating position through this process.

Frankly the power of our crowd investor community ensures the ball is very much in our court when conducting these negotiations. Ideally I’d like to see our investor community grow in line with our customer base these last 6 months. Not needing to take VC money is a powerful position for us to be in!

To find a solution I’ve held discussions with our board of directors, the executive committee, lead investors and Crowdcube to navigate a number of quite complex factors. These include regulatory capital provisions for our current and future FCA permissions, the retail prospectus legislation around Crowdfunding as well as protecting the best interest of all our existing shareholders. To be clear, we have taken substantive legal advice on these matters too.

We have now come to an agreement that will allow Chip to offer the remaining £8.5m of shares (that are already accounted for within dilution calculations) to new and existing crowd investors.

The share price will be higher than in October to reflect the fact that the business is already 25% bigger and we have made significant progress on a number of fronts. However, the uplift in share price will still be lower than the expected larger VC raise - ensuring you all get a good deal! More details to follow in the coming days but I wanted to let you know first as I had many investors ask me about increasing their investment last week.

Very exciting times,

Simon

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Initial thoughts are:

  • is the EIS allowance already used up?
  • will crowdcube be reducing their selling fees?
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Thanks for the update @SimonChip, good to see this announcement is on this platform and not just on social media👍

Hi John

There is approx £470k EIS remaining which will be allocated on first come first served basis.

Crowdcube fees are fixed at 1.65%

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Let me at it dude :money_mouth_face::money_mouth_face::ok_hand::joy:

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It could be a race who ever presses the buy button at 10.00 on the 30th March or whatever day it happens :boom:

Surely the A share holders will get first dibs?

Very exciting times @SimonChip and more negotiation power in the long run if we don’t need any VC investment until further down the line :muscle:t2: :chart_with_upwards_trend::unicorn:

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Questions.

  1. What is the current burn rate - is it still 800k per month?
  2. Can you raise any more than £8.5m through crowdfunding or is ‘this it’?
  3. If you fill up this crowdfund round of 8.5m, would you be open to more investors, by allowing existing investors that would like to exit, to exit and allow new investors in, or existing investors to top up?
  4. VC negotiations have been discussed for a few years now. Do you have a timeline that you expect discussions to finalise in the yay/nay direction, and would this mean an exit of existing investors to make room for the VC, and give them a meaningful position?
  5. How are metrics tracking to the last crowdfund documents?
  6. How many active users do you have - those with a balance that have logged into the App at least twice in the past 3 months?
  7. What is your customer retention ratio vs signups from launch, and what are you doing to improve this.

Thankyou.

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Hi Rdougal

I hope all is well. I’ll do my best to answer your questions…

  1. The average monthly burn in Q4 was ~£1.15m. That will increase in Q1 and then reduce going into Q2 and Q3 this year.

  2. The laws around retail prospectus limits for crowdfunding are quite complex but in summary we can raise a maximum of £10,700,000 in this round from UK retail investors.

  3. Yes. We are working on a secondary (enabling existing investors to sell shares to new investors) in September.

  4. We are working on a much larger VC round now and as above would aim to have crowd secondary element to it in September.

  5. Broadly above target on customer growth, below target on balance build / AuA and on target for revenue.

  6. ~260k

  7. That’s a complex question to answer that can’t be addressed with one number. That said our 12 month active retention is approx 85%.

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I have purchased shares in Chip on Crowdcube. How do I get access to private topics/forums about company updates/plans? And how do I get the investor badge on here?

In the pull down menu next to your image logo at the top of home page (if no image added it will be a letter - yours is showing as an orange J on mine) - select Groups and request to join the Investor group. Sometimes takes a while to be accepted.