THE BOSS The Betting One Stop Shop
Strictly Private & Confidential This document has been prepared by Brontide Innovations Ltd (BIL) and is being provided to a limited number of persons solely as a guide to give background information to recipients to assess whether they wish to enter into discussions with BIL regarding potential opportunities. This document is confidential and is only being made available to parties who agree to keep it confidential. Neither this document or any part of it shall be copied, reproduced or distributed to others at any time without the prior written consent of BIL. By accepting this document you are deemed to undertake and warrant that you will keep it confidential. IMPORTANT NOTICE
Contents Executive Summary 4 The Concept 6 The Gambling Market 12 The Boss 14 The Social Media Aspect 16 Development 18 Marketing 20 Financial Assumptions 22 Financial Forecasts 27
EXECUTIVE SUMMARY
The BOSS THE BOSS is a social media based application which will target online gamblers and give them a forum to interact with their fellow speculators, place bets and share their wagers across all markets. The Boss will grow its user base by marketing through social media and generate income through the existing online bookmakers Application Programming Interface (API) partnership schemes. An agreement is in place with Ladbrokes. The app will appeal to existing bookmakers and there is possibility of a future buy-out if the deal is right, giving investors a sizable return on their investment and an eventual exit route. The investment will qualify for EIS relief.
THE CONCEPT
The Boss is a betting smart phone application, designed to be a Betting One Stop Shop bringing all aspects of sports betting into one place. The app will be made up of 4 key features that will give the ability to: Check statistics on previous results and information on team news. Place bets through our affiliate links, offering the best odds through a range of bookmakers. Track your bets and keep up to date as the bets are in play. Interact and share bets with groups of friends through the interactive chat room. It is common in groups of friends to select and share bets and keep each other up to date with their progress. There is no other application of this nature on the market currently and there is a void ready to be filled. We already have a partnership with Ladbrokes where we have an agreed 45% profit share on bets staked through our App. The application will be available on ios and android, there will also be a desktop version through the website.
Placing Bets The application will give the user the ability to place a bet directly through the application across all markets, without the inconvenience of referral. The bet slip can then be shared within any chat groups.
Live scores The BOSS application provides real time scores The live scores area enables the user to keep up to date on all in play scores across the world as it happens. Keep an eye on your favourite teams and rivals, to encourage in play betting!
Instant messaging The group chat is the most exciting feature within the application it gives users the chance to interact and share bets with groups of friends through the worlds first digital live betting chat room.
Instant messaging Chat away within multiple groups that have been created by the group admin. Live bets can be updated directly to the chat feed as and when the action happens. Use the groups to plan joint bets, share tips, keep a track of your own bets and have general banter with peers!
THE GAMBLING MARKET
Online sports betting is a vibrant market that is being driven by the growth of in play betting and in particular, football betting. This has led to a rapid increase in customers using their mobile devices to bet online and it is those brands that are able to capitalise on this by delivering relevant content and services that are going to be the most successful. In 2012 online gambling broke the 2 billion barrier. This growth has been primarily driven by sports betting, which now represents 50% of the value of the market, in particular consumer expenditure on football betting has grown from 355 million to 600 million in the last year. Mobile gambling is the fastest growing area of digital gambling in the UK, accounting for 4% in 2008 and growing to 21% in 2013. The Boss s target market are males aged between 18 and 60, this is based on the age range of frequent users of mobile sports betting applications. In 2012 a total of 11 billion was staked on sports gambling in the UK. 60% of adults had a bet in that year. Excluding the 11.1 million children in the UK, this means that 31.8 million people in the county had a wager at some point. The average stake per person was 346 per year or 29 per month.
THE BOSS
The Boss heads up a Betting One Stop Shop which will be the most appealing way to place your bets through convenience. No longer will people need more than one device to check fixtures, statistics and compare odds throughout various betting applications or have to turn to Whats app to share bets with their peers or even research their own tips. The applications real time score updates will be the fastest on the market and the app itself so easy to use that it s inconvenient not to, thus revolutionising the betting industry.
THE SOCIAL MEDIA ASPECT
The use of social media will be instrumental in the successful launch and on-going marketing of the App. If we have one follower who shares the app through Facebook or Twitter and that one user has 100 friends/followers then our marketing can touch 100 potential new users, multiply that by ten shares through Facebook using the average of 100 friends then we are touching a potential 1,000 new users, 100 shares can touch a potential 10,000 new users and so on. In the first 6 days of the Facebook page, nearly 1,000 Facebook users had been touched by the boss. A user who likes to make regular bets however large or small tends to have a group of friends with the same interest, there are many thousands of groups of friends across the country who share their bets with each other through group messaging applications such as WhatsApp. There is no way for these group to keep track of each other s betting success without receiving updates from the individual user or flicking between applications on their phone/tablet to check scores etc. The Boss allows users to share within their individual groups their bets and gives real-time updates on the progress of these bets while allowing the users to chat using the built in chat function, all aspects are contained within the one application. The user also has the option to share winning bets on Facebook or Twitter which continues to power on-going marketing and product awareness.
DEVELOPMENT
To get the App to market we will be contracting the services of Appitized Ltd www.appitized.com with head offices in Warrington and further offices in London and New York, Appitized are a very successful iphone and Android app development company who have complete many successful projects with the likes of the NHS, The co-operative and Countryside Properties to name a few well known clients. An initial 50% payment will be paid to Appitized Ltd to begin the development process, a further 25% payment will be paid on completions of the approved designs and the remaining 25% payment will be made on the receipt of the beta (testing) app. Tech support which will include bug fixes and operating system updates will be provided by Appitized and is part of the maintenance support contract. In the instance of operating system updates, Appitized will test the app one month before the updated operating system is released to the end user to ensure there are no bugs to affect the smooth running of the app. The app will work on both iphone/ios and Android platforms; a group of friends may be using different platforms therefore the requirement to develop both is of great importance to capture and maximise the target market.
MARKETING
Within the first month The BOSS will be looking to spend 100,000 on marketing through a broad range of media outlets including MPU s within Sky Sports websites and applications. This will allow us to reach their monthly unique mobile users of 1.6m through Sky Sports Football Score Centre, 1.1m through Sky News and 1.8m on the Sky Sports App. ITV have just released information on them televising all of this years Rugby Union World Cup fixtures and for around 40,000 The BOSS can produce its very own television advert which will be aired over a 30 day period. The Boss will also advertise through www.theladbible.com. The LadBible entertains 32 million unique visitors per year, currently at 7.5million per month and pride themselves on the fact that 80% of the UK s 18-34 have visited within the last year. Within the financials the marketing budget includes a provision for an MPU charged at 7 per 1,000 clicks per month and also one editorial per month. Within an editorial The LadBible will run a feature on The Boss and will be pushed through their social media sites, these are charged at 2,500 each and will also last on the website forever. Alongside this, the main point of marketing for The Boss is through social media Twitter and Facebook. Throughout the build up to the world cup The BOSS ran free entry competitions, giving away a mini fridge and a World Cup Final pack which consisted of steak and beer, which lead to over 1,100 followers through facebook and twitter. With this we aim to build up mutual relationships with tipsters that are already out on the market, such as Horse racing super tips who already have a following of over 150,000, the idea behind this is to build up a following prior to the launch of the application.
FINANCIAL ASSUMPTIONS
Initial outlay In order to get the app working there is an initial development cost, as well as supplementary costs including; the provision of information feeds from a recognised statistics firm, these are broken down as follows: App Development Net Cost Initial Cost UI/UX Design 3,020 +VAT 3,624 App Development 11,640 +VAT 13,968 Bach-End Development (CMS) 10,260 +VAT 12,312 Project Management 3,420 +VAT 4,104 Testing 3,910 +VAT 4,692 Chat Feed Build 4,000 +VAT 4,800 Monthly Cost 36,250 43,500 Information Feeds 750 Monthly+ VAT 900 Payable from launch On-going Maintenance & Support 4,350 10% of development annually 363 Payable from launch 43,500 1,263
Funding The company has applied for 250,000 of funding which will be spent on: Development of the application ( 48,300) Marketing and promotion ( 140,000) Web development and branding ( 26,000) Working capital until revenues are realised ( 25,700) Professional Fees ( 10,000) EIS The company meets the criteria for the EIS and are awaiting confirmation of eligibility from HM Revenue & Customs.
Income Income is generated through API partnerships. These schemes represent an agreement with any bookmakers where the bookmaker agrees to pay a fee to the affiliate based on the profits it makes through a new sign-up.. The scheme s differ from one bookmakers to the next but most run for the life of the player, so once signed up, the affiliate will receive a percentage of all profits made by the bookmaker until that player closes their account. An example of these returns are as follows: Bookmaker Conditions Returns Aspects covered William Hill First 3 months of the players life 30% Sports only Thereafter 20% Ladbrokes 0 9 players 25% Sports only 10 49 players 50 99 players 100 199 players 200+ players all for the life of the player 30% 35% 40% 45% Betfair For the life of the player 30% All aspects including Poker & Casino Bet Victor For the life of the player 30% All aspects including Poker & Casino Paddy Power For the life of the player 30% Sports only THE BOSS has an agreement with Ladbrokes which is negotiable as the amount of traffic increases through the application.
Growth The financial forecasts include growth figures based on the number of users achievable over the first 5 years of the application life. As the application becomes established, users will naturally drop and be replaced by new downloads. The growth projection therefore takes into account the net new users (new users less those leaving). We have assumed a 5% usage of the application by new users in the first 2 years of the application. This usage is expected to grow as continuing users maintain their usage while leavers will generally be those who did not use the app. The table below shows the expected user base over the first 5 years of the application. Net New Users Total New Total Usage Active Per Month Users Users % Users Year 1 20,000 * 160,000 160,000 5.0% 8,000 Year 2 15,000 180,000 340,000 5.0% 17,000 Year 3 10,000 120,000 460,000 5.5% 25,300 Year 4 5,000 60,000 520,000 6.0% 31,200 Year 5 5,000 60,000 580,000 6.5% 37,700 * The application is expected to launch in month 4 of year 1 hence only 8 months of new users.
FINANCIAL FORECASTS
Profitability Forecast Profit & Loss Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Total Income Affiliates 84,564 362,921 627,888 832,955 1,012,302 2,920,629 84,564 362,921 627,888 832,955 1,012,302 2,920,629 Expenses Info feeds 7,200 10,800 10,800 10,800 10,800 50,400 On going maintenance 3,267 4,356 4,356 4,356 4,356 20,691 Wages & salaries 22,300 80,280 160,560 160,560 160,560 584,260 Travel & Motor costs 11,000 24,000 24,000 24,000 24,000 107,000 Phone & Broadband 825 900 900 900 900 4,425 IT & Office costs 6,350 4,200 4,200 4,200 4,200 23,150 Marketing 160,000 126,600 141,000 155,400 169,800 752,800 Web Development 10,000 - - - - 10,000 Branding 20,000 12,000 12,000 12,000 12,000 68,000 Domain costs 550 600 600 600 600 2,950 Accountancy fees 7,000 6,000 6,000 6,000 6,000 31,000 Legal Fees 5,000 - - - - 5,000 253,492 269,736 364,416 378,816 393,216 1,659,676 EBITDA (168,928) 93,185 263,472 454,139 619,086 1,260,953 Deprecition/Amortisation 5,160 7,740 7,740 7,740 7,740 36,120 Tax provision (33,786) 18,637 52,694 90,828 123,817 252,191 Retained Earnings (140,302) 66,808 203,037 355,572 487,528 972,643
Cash Flow Forecast Cash Flow Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Total Income Affiliates 65,772 341,780 608,391 819,096 997,033 2,832,072 Finance 250,000 - - - - 250,000 315,772 341,780 608,391 819,096 997,033 3,082,072 Expenses App Development 58,300 - - - - 58,300 Info feeds 7,200 10,800 10,800 10,800 10,800 50,400 Chat feed 3,267 4,356 4,356 4,356 4,356 20,691 On going maintenance 825 900 900 900 900 4,425 Wages & salaries 6,350 4,200 4,200 4,200 4,200 23,150 Marketing 160,000 126,600 141,000 155,400 169,800 752,800 Web Development 10,000 - - - - 10,000 Branding 20,000 12,000 12,000 12,000 12,000 68,000 Domain costs 550 600 600 600 600 2,950 Accountancy fees 7,000 6,000 6,000 6,000 6,000 31,000 Legal Fees 5,000 - - - - 5,000 Tax - - - 37,546 90,828 128,374 278,492 165,456 179,856 231,802 299,484 1,155,090 Net Cash Flow 37,280 176,324 428,535 587,295 697,549 1,926,982 Bank Balance 37,280 213,604 642,139 1,229,433 1,926,982 1,926,982
Balance Sheet Projection Balance Sheet Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Assets Intangible Fixed Assets 53,140 45,400 37,660 29,920 22,180 53,140 45,400 37,660 29,920 22,180 Current Assets Trade Debtors 18,792 39,933 59,430 73,289 88,557 Cash at Bank 3,980 76,024 319,999 722,733 1,235,722 Current Liabilities Trade Creditors - - - - - Taxation 33,786 15,149 (37,546) (90,828) (123,817) Net Current Assets 56,558 131,105 341,883 705,194 1,200,463 Net Assets 109,698 176,505 379,543 735,114 1,222,643 Share Capital 250,000 250,000 250,000 250,000 250,000 Profit & Loss Reserve (140,302) (73,495) 129,543 485,114 972,643 Shareholders funds 109,698 176,505 379,543 735,114 1,222,643
THE BOSS The Betting One Stop Shop