[Crowdfunding] 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:

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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.

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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?

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I’m newbie to investing but as a user of chip decided to invest through Crowdcube late last year.

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Can Chip transfer the amount gathered on a monthly basis directly to Freetrade?(without specifying manually)

No. You can only withdraw money from Chip to your linked current account.

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Update from Chip / Simon today. Great progress on many fronts. Been invested since the beginning and right now is the most excited I’ve been about the future of Chip….

Dear Shareholder,

I’m delighted to update you on Chip’s progress through the second half of 2021 and on an incredible start to 2022.

Chip’s growth investment round in October has enabled us to expand our customer base even further. January saw record numbers of new savers with over 1,000 new accounts opened a day and tens of millions of pounds in new deposits in the month. This continued growth rate would see Chip double in size and triple its assets before the end of 2022.

I know many of you saw our TV advertising, the digital billboards across London and our largest “Out of Home” media campaign which resulted in enormous brand recognition and record positions in the App Store and Google Play charts. This all has a significant knock-on effect to the volume of new customers coming through other channels.

The growth investment round was 120% oversubscribed and saw the enlargement of our investor community to 23,000 individual investors, further securing our record as Europe’s largest crowdfunded company. As always, our investor community are our greatest advocates and the community is a strong marketing channel itself!

As stated in October, the intention was to close the majority of the £20 million growth round from an institutional Venture investor, with less than £5 million made up from our own investor community. Under our Articles, all new share issues need to be offered to existing investors first, who subscribed for over £11.5 million of the allocation. This exceeded all our expectations and rendered the remaining £8.5 million Venture allocation somewhat underwhelming for larger institutional investors.

We have consequently been able to enter venture negotiations for a much larger round from a place of strength, which we will be able to update you on in due course. The board are assessing as to whether we will be able to offer the remaining £8 million allocation to further crowd investors, and what impact this will have on anti-dilution rights for existing investors.

In the final part of the year, Chip was able to deliver a range of new features, as well as growing deposits to £498 million in 2021, maintaining our annualised deposit rate to reach almost £1 billion (£834 million at the time of writing), a monumental milestone we expect to cross within the next few months.

Revenues at FY21 were £1.5 million and £2 million ARR (annual recurring revenue) a 300% increase since December 2020, ending the year with positive gross margins of 24.7%. However, the decision to include many more features in the free Chip plan and sunset the ChipAI plan will see a dip in revenue for the short term. As well as being driven by shareholder community’s feedback, this decision was made to focus on top line customer growth. This is already paying dividends in the first two months of 2022; total registered users grew to over 500,000 at the time of writing, an increase of 250,000 (100%) from the end of Q4 2020. We are now highly likely to exceed the updated target of 700,000 registered users by the end of 2022.

After initially launching an investment platform with the support of the world’s largest asset manager, BlackRock, we have also continued to grow our investment assets under administration, expanding the fund selection and ISA offerings. Customers can open an ISA as well as a GIA, and obtain much more information on the performance of their portfolio and allocate their autosaves to these funds. We also have some exciting collaborations with BlackRock lined up that we’ll share with you in Q2.

In December, we saw the sunset of Chip+1 accounts in favour of deposits from a number of third-party banks. This enables Chip savers to earn compounding interest rates, with both interest and cash deposits covered by FSCS, without incurring ongoing costs to Chip.

We also launched a brand new promo code and referral engine, which enables our partners and savers to build their own savings when telling others about Chip. In January alone over 30% of new active savers were acquired via customer referrals.

The innovative new Crypto Companies fund for ChipX was also launched, which gives Chip savers the opportunity to invest in the burgeoning Blockchain and Crypto industries, without the volatility and speculation of trading the coins themselves. In just over a month since launch, this fund has already proven to be enormously popular, with both existing Chip savers and a big draw to new Chip savers. The popularity of this fund is a strong validation of our plans to bring Crypto assets to Chip by the end of the year.

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 ready to accelerate growth beyond the UK. I can confirm we are currently in discussion with several European entities and hope to announce our European expansion plans this summer.

Product Roadmap
In the first half of 2022 we will be expanding on our mission to build the best savings account in the world by launching;

Further market-leading cash deposits. Negotiations ongoing with several banks to bring even more table-topping rates. And technology now in the app to release this in much shorter time frames - Chip’s cash offering will always be aiming to maintain strong market positions.

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

New saving plans that enable customers to split their saves between different deposits, including cash savings and investment funds.

Faster deposit times with instant Open Banking payments.

Easier onboarding. The removal of the need to bank connect at onboarding and the addition of ApplePay and GooglePay to make depositing easier.

More investment funds. We’ll also be further expanding the range of funds available to include market indexes such as the FTSE and an S&P 500 Tech Fund.

Crypto . We have submitted a Crypto and digital assets registration to the FCA and intend to add a range of Crypto and De-fi digital assets to the platform for those looking to diversify their savings.

Alternative Assets. Finally, we have made significant progress on our Alternative Asset proposition, having worked with the community, listening to concerns around cash interest rates and inflation, as well as taking note of about opportunities around the emerging decentralisation of finance as a whole. We will launch our first fractionalised Alternative Assets in the coming months, with Chip investors of course getting priority access.

I look forward to an incredibly strong first half of the year and sharing in more success with you in the near future.

Simon

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Yes I thought this was a very good update from
The team. They seem to have found what they want to do now - EU expansion too :eyes:

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Impressive that they have rolled out auto invest and internal transfers.

Let’s see what the venture round brings.

Also really appreciate the regular updates and Q&A sessions.

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Is Chip going onto LSE?

Nothing has been announced.

Thank You

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again???

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Yeah this is getting out of hand now. No relevant VC money and want to expand into Europe with crowdfunding money. Chip sucking the crowd dry with a unsustainable business model. Don’t know how they keep getting away with this.

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How many rounds have they done now ?