When analysing our business, and before we launched our CrowdFunding campaign on Seedrs, we asked ourselves a lot of the same questions you must also have as investors. Have a look at our answers. 

Have we missed anything? Feel free to grill us further!

1. What is your USP?

I feel we are always saying “We are engineers, designing a site for engineers”, but its an important point. We understand the industry, so we understand how each job should be specified, the range the bid should sit within and we have a network that will allow us to find and attract the right people/companies to deliver, manage and review the work required. Because of this, the site is designed with our specific industry in mind. Our more established competitors view the industry as just another sub-set of outsourcing, with no regard for the nuances of this niche. Because of this we are confident we can capture the critical mass in the market, needed to make the business a success.

Our bidding process is fundamentally different to existing sites and that of our more established competitors (see point 3). We are committed to ensuring our site is the one people come to for high quality design, drawings or models. The ‘sealed’ bids approach, coupled with privacy settings and ‘selective’ bid/tendering options should ensure the client finds the correct outsourcing option.

2. I don’t know anything about the Engineering industry – why should I invest?

Our CTO (Philip) didn’t have any experience of the design engineering market either before he became involved. However, from our market research, market data and existing platforms we could demonstrate to him how a platform of this nature, could exploit and monetize a large and growing industry.

3. Why would people use your site?

More and more people are choosing to work in this way. Be it companies looking to grow and contract depending on their current work-load. We have written case studies on a client and a freelancer who used the platform during our BETA trial.

We have also put some numbers to the argument. This is why we believe companies will be attracted to the site.

We are not re-inventing the wheel. The business model works. The question is whether we can successfully niche and exploit this large and growing market.

4. What’s to stop ODesk/ ELance/ Freelancer.com doing this and wiping you out?

For the site to be highly successful you need a high number of both outsourcing companies and sub-contractors. Creating this double sided network along with the required ‘critical mass’ is challenging. However, it also creates a significant barrier to entry for any competing company/site that would want to compete against us for a share of the identified market.

Whist ODesk and freelancer.com do offer categories within the engineering sector it is currently a very small percentage of their offering. Their existing networks cannot be leveraged to compete with EngLancer as both sides of that network have different skills and requirements to the proposed network of EngLancer – there is no first mover / incumbent advantage. Further, a fundamental difference between these sites and the EngLancer platform is that they essentially conduct a Dutch auction for the services sought/offered. This is a major criticism of these sites (based on our market research) as it causes a ‘race to the bottom’ to secure the work. As a consequence, high quality freelancers/sub-contractors are driven away from the site as they cannot compete, with clients also often left disillusioned when the work isn’t to the required quality. At EngLancer all project bids are confidential, with guidance and restrictions also in place around project specification and bidding.

As is reiterated throughout our literature, we are engineers, designing a site for engineers. We therefore understand the market, the drivers and better appreciate how an engineering project should best be specified and controlled. We believe this industry, in addition to the alternative bidding approach detailed above, will enable us to establish a sufficiently large double sided network.

5. What’s to stop a tech giant such as Google, LinkedIn or Facebook setting up in this market and crushing you?

These giants have almost infinite resources to do as they choose compared to any small start-up, and have the ability to wipe out any small player they deem competition if they really want to. If this was the approach of such giants though, we’d see each of them with thousands of disparate product offerings as a result of them entering multiple markets simply because they felt there was ‘money on the table’. Clearly this hasn’t happened. Even Google’s fringe experiments and operations more than often tie in to their existing commercial operations.

These large organisations have a very clear vision and goal, Google – organise the world’s information, Facebook – connecting the world, Linkedin – professional networking. What we are doing does not encroach on them, but would also not fit well with their current portfolio and visions. Not only are we a poor fit, but our area of business is simply not the ‘edge-of-the-envelope’ technology that these businesses pursue – we would be unlikely to appear on their radar until such time we had created significant traction.

We are small, lean and what we are proposing will be our entire business, not some division of some larger lumbering organisation. Our laser focus enables us to test the market and adapt quickly based upon the results we gather from engaging closely with our customers. We can quickly react and iterate our product without the worry of upsetting an established and loyal customer base. This is the very approach that large established organisations struggle to replicate. Our lack of size and lack of corporate agenda is our very strength.

6. How do you arrive at such a post seedrs valuation?

Our anticipated turnover (ask us for our business plan), which was generated using a ‘bottom-up’ approach, predicts an EBITDA in the region of £1.2million. Using an EBITDA multiplier of 5, this would provide an ROI of 8 for the initial investment of £75,000.

We feel the value and the percentage of equity offered reflects the size of the market (£1.8bn in 2011) and the ability of the directors to exploit it. The figure also considers the barrier to entry and competition our product would establish, due to the nature and difficulty in establishing the necessary double sided network required. The £75,000 figure also accounts for the initial cash investment (in the region of £13,000) by the directors’, with over 2000 man hours also committed to the concept.

The value and the percentage of equity offered has been developed through communications with industry experts and potential investors, which were conducted with a view to finding a balance between what investors would find acceptable and what we believe is reasonable.

7. Number of subscribers:- what is critical mass and what is break even point?

We have an ambitious plan to grow and develop the offering, which will effectively big dictated by the success of the site in growing its network of engineering companies and contractors. Our initial plans suggest 100-120 active engineering companies posting 300-320 jobs per month to be delivered by 400-500 engineering contractors. The numbers of ‘registered’ companies and individuals is probably twice that of active users. Having quoted these number however, we also have plenty of scope to alter the rate of growth should these numbers come in either higher or lower than anticipated. We are neither bound to fail if results fall short of projections, nor will we fail to capitalise should the platform prove more effective than we forecast. Our skill will be in adapting our growth plans on the reaction of the market, which are ultimately very flexible

Break even is anticipated after 1.5-2 years but this accounts for on-going redevelopment and investment of the platform based upon data and user feedback.

8. What do you plan to with the money and will the directors be taking salaries?

We have a marketing and sales budget of £30-35k for the first two years until forecast break even point

A lump sum of £10-15k has been estimated for front end web-development, sub-contracted work and professional fees.

Currently the Directors are working full time on this project without any income, which is clearly not sustainable. The amount of money allocated towards director’s salaries for the first year post investment will be in the region of £20,000 between them. This will allow them to continue full-time efforts on the project, and deliver all the skills necessary to produce a fully working prototype capable of hosting spending customers. This small team, combined with the investment has all the skills required to take the business to revenues and onto positive cash flows.

9. What’s the expected exit for investors? Dividend plans?

We plan to grow the company in the UK market over the next 3 years at which point we will have a decision to take. We will likely consider a sale of the business, or alternatively seek further financing (either via an IPO or Series A) in order to grow the solution internationally. A dividend policy will be established as soon as the company has consistent profits, which will become increasingly generous inline with profit growth.

If we have missed anything, feel free to ask us!

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