Chip

Anyone invested in Chip. I’m an early stage and repeat investor and here’s the latest from Simon today. Super positive / impressive update. Thoughts?

Dear Shareholder,

I’m delighted to update you on our progress through the first half of 2021 and share with you the exciting plans we have for the second half of the year.

Our funding round in September 2020 ended up including the biggest crowdfund participation Europe has ever seen (https://sifted.eu/articles/top-crowdfunding-rounds-2020/). This has funded our rapid expansion and development of our team to over 120 people across many parts of Europe.

The continued support for our vision from our own customers as shareholders is fantastic. It’s amazing to build a product that so many of us use, but also own a piece of too. There is no greater validation of our mission to build the best savings account in the world.

The first half of 2021 saw Chip go from strength to strength, delivering many new product features, as well as;

Growing deposits an incredible further 350% to £220 million;

Increasing the annualised deposit rate to £744 million in April, a further 100% growth from the £370 million in December 2020;

Growing the total amount of saves processed to over half a billion pounds (£547 million at the time of writing), far exceeding our annual targets only 6 months into 2021.

In addition, we have introduced a full-stack investment fund platform into the app, scaled our premium offering, accelerated revenues to £3 million ARR (annual recurring revenue) a 500% increase since December 2020, and saw positive gross margins for the first time in the company’s short history.

Although customer growth was not our focus for the first half of 2021, total registered users grew to 413,000, a 100,000 and a 33% increase from the end of 2020. We remain on track to exceed the 500,000 target by the end of 2021.

On the product side we saw the rollout of FSCS protected Chip+1 accounts to all Chip savers, and the sunset of our e-money accounts at Prepaid Financial Services.

However, the biggest achievement by far was the introduction of the full-stack investment fund platform enabling our savers to seamlessly deposit into inflation-beating investment funds. Teaming up with BlackRock, the largest investment manager in the world, has given us a distinct offering of global, diversified funds for our savers.

ChipX, our premium tier was introduced, offering an ISA wrapper and a range of high return thematic investment funds. Take up of ChipX has been incredibly high with over 40% of paying customers on the premium tier already.

In December 2020 I made it clear to the entire Chip team we had to introduce investment funds, whilst materially increasing the revenue and profitability of the business. We discussed the delicate navigation around fair fees and charges based on a lot of your feedback. Across our community forums there were countless conversations and contributions. I’m proud to say that, hand in hand with you all we were able to achieve these goals, launching the features, whilst massively driving revenues and profitability. Thank you for all your support and for helping us do this.

Now the product infrastructure is in place; FSCS covered core-banking, market-leading cash deposits, investment funds, ChipX, alongside a fair and profitable fee structure, the business is now ready to accelerate growth beyond the UK.

Product Roadmap

In the second half of 2021 we continue on our mission to build the best savings account in the world by launching;

Further market leading cash deposits. Expect to see a market leading 0.70% Easy Access account and a 0.85% 35 day notice account in the app soon. With active negotiations ongoing with several banks to bring even more table-topping rates.

The ability to have an ISA, as well as a general investment, or savings account.

Account to account transfers, giving savers the ability to move funds seamlessly between cash deposits, investment funds and vice versa.

A brand new shiny promo code and referral engine, that enables our partners and savers to build their own savings when telling others about Chip.

A blockchain fund for ChipX. Crypto and Blockchain has the potential to revolutionise the world’s finances. We want to give Chip savers exposure to the opportunities of Crypto without the volatility and speculation of trading the coins themselves.

With all these amazing products does come a need to simplify, unify our user experience and make it purely ‘magical’. Work has begun on improving the user interface and making Chip as easy to navigate as possible. This will include autosaves to all accounts, auto-investing, as well as speeding up deposit times.

Finally, we are working on something a little secret right now that I can’t say too much about, but really has the potential to revolutionise how we all build wealth from our savings.

Our goal always has been, and remains, to build the best savings account in the world. Together we have made great strides in that direction. We should all be very proud and excited for what the future holds.

To do all of this, I’m pleased to confirm we are in the process of raising a significant round of Capital from Venture Capital investors, and of course we have negotiated an allocation for our crowd shareholders to participate too.

I look forward to sharing more details with you in the near future.

Simon Rabin

CEO & Founder

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Thanks for sharing the update. I am invested in the 2018 round but have not received the update. I am particularly impressed with the ARR @£3m; hope that they can keep the fast growth up in product, users and revenue with the new raise. Any guesses as to the likely valuation?

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‘Robo investment’ app for anyone else curious but not heard of it - https://www.getchip.uk/

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I’m going to suggest an opening offer of £120-150M valuation but that’s a shot in the dark :dark_sunglasses: :dart:

Thanks TickTock! If Chip hits £100m+ valuation, does that mean the 2020 Convertible will convert at a £80m (long stop valuation)? That would be quite nice.

I believe the convertible already took place back in February of this year due to regulatory requirements around how much cash the company needed on it’s books for the investment products they brought out.

What’s to stop Freetrade using the same techniques as Chip to collect the change/pennies from bank accounts and adding it to our FT balances (or investment pies in the future) ?

Is it a collossal undertaking or something that can be done fairly easily with the open banking standards?