Boring is Best!

By David Stevenson on Wednesday 22 July 2015

Alternative Lending

A new business targeting Lone Workers via an app is never going to set the world alight but we think this new CrowdCube campaign is worth watching….

More on crowdfunding campaign: StaySafe

Web address :

Summary:  new app based service helps protect 'lone workers' against accidents or incidents while on the road from job to job. This is through a secure cloud-based hub which turns a smartphone into a safety device. The company has 80 business clients so far.

Investment target: £500,000

Equity offered: 16.67%

Location: London

Tax Relief: EIS

Current Status: £252,000 (50%), 22 investors

Anyone who’s invested in technology stocks over the last few decades will cherish one single idea. Boring is best and the long term winners in the software space are those focused on working with businesses. To understand this argument consider the difference between Microsoft and Facebook. For the last few years every one and their Auntie has been raving about the irresistible rise of social media and its undisputed ruler Facebook. But many tech investors have begun to have second thoughts. Its sexy, hundreds of millions of people use it, but getting the posters to actually do stuff that generates huge piles of revenue is not a slam dunk. Facebook is winning this battle, partly through astute use of video, but our sense is that it’s a bit of an uphill slog which is not helped by the fact that so many younger consumers are incredibly fickle (with Instagram and Snapchat becoming insanely popular).

Microsoft by contrast is as boring as they come. Most consumers know them as the purveyors of Windows and Office software but the Redmond, WA giant makes most money supplying software for businesses.  Business users need reliability and they need software that either generates them revenues or allows their staff to work more efficiently. Deliver either and they’ll pay handsomely month in month out. Outfits like Microsoft, Salesforce and SAP are now worth tens of billions by remaining very focused on servicing business needs. And what’s true for these giants is also true for smaller British software businesses as well, many listed on AIM. Find a market where business needs solutions and as long as your product is flexible, keenly priced and works (not forgetting the need for absolute security) and you should be able to anticipate a long, steady stream of recurring software license fees.

This boring world of business software has even started to have an impact on apps based businesses. Sure, we all love the latest game involving a first person shooter or killing cute creatures, but businesses will pay good money for an app based solution that solves a problem.

Cue StaySafe. Being honest this is one of the most boring ideas we’ve encountered for a long time. Put simply an app based on either an iPhone or Android keeps lone workers safe. That’s it. The next time you see a meter inspector rooting around for your water meter, consider the challenge. They spend their time wondering around the country, visiting all sorts of unsavory clients. The employer wants to make sure the worker is safe – in fact they have an obligation to make sure. The employee also wants to know that their employer is keeping a watchful eye out for them. The cynic might at this stage ask what’s wrong with a good old fashioned phone call but that rather defeats the exercise. The member of staff has a job to do, not spend all their time on the phone checking back with base.

The Lone Worker challenge isn’t though a new one. There are already existing solutions on the market including dedicated devices provided by the likes of Identicom (with 135,000 users) and SkyGuard but carrying a dedicated device doesn’t sound quite so attractive in an age where the phone in your pocket does everything. App based solutions, especially those designed for the smart phone, seem eminently scalable.

StaySafe is also crucially not a proof of concept firm. It’s not asking for money just to get a product up and running. It says its already spent £600,000 getting a product to market, has 80 business customers and has sold 1500 licenses to businesses (big and small, public and private) for its app based solution. Its generating actual revenues now but it needs to scale up fast to grab a market.

The Crowdcube raise is based on a £3 million pre money valuation which isn’t super cheap in our opinion but arguably not completely unrealistic for  a) a business already ramping up revenues b) boasting impressive managers and directors and c) a global market opportunity based on a scalable app based architecture. We also think its estimates for future sales growth (from just under £650k in the coming year to £7.8m in 2018/2019) look doable with all the usual caveats applied.

Of course as this is an early stage business the whole investment proposition involves risks. Existing businesses might eat this newer business for breakfast, pushing a price and development features war just to run the newbie out of the market. Maybe the product will be superseded by an even cleverer solution. Perhaps the amount of money being raised - £500,000 for a 16.66% stake – is not enough to stay in the race to be number one. It’s also worth noting that although investors in this campaign (which is already half funded with help from the London Co-investment fund) get A shares if they invest more than £10,000, smaller investors get less attractive B shares.

But overall we suspect this is a business to watch in a focused, business orientated sector that seems to have great potential!

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