Curve is a fintech that allows users to make payments from several accounts under one card, with the added bonus of cashback rewards.
Given theyāve recently raised 55m on a 250m (post money) valuation, I dont see them willing to raise more than Ā£7m, else theyāll need to create a prospectus - an expensive undertaking.
Look forward to kicking the tyres (will likely share my notes) and possibly investing. I worry they wonāt be forthcoming with financials and growth metrics, citing the āsensitive natureā of the info like Nutmeg did earlier this year Still, pretty excited for this one. Anyone else? whatāre your thoughts?
I have an account with them but do not see how it adds enough value to the users. The cashback was an incentive and I stopped using the card after cashback period ended. Itās a hefty valuationā¦
I was a big fan when I still had a card with most challenger banks + 1 incumbent bank where I received my income. After switching everything to Starling for personal and business, I no longer see a use for it.
There was some hope when they were re-introducing Amex, but I assume thatās scrapped now
A lot of people have brought up the valuation. On the whole i agree, but ill try to throw in some balancing arguments; 250m is certainly high at face value, but without financials its hard to say if curve is truly over or undervalued, so Iām waiting until I read the pitch deck and finish due diligence to judge if the valuation is sound. Itās somewhat reassuring that VC have co-invested, thereby validating the valuation a bit.
Still, Id need far more information and wouldnāt be surprised if curve is overvalued after a bit of digging, but so is every fintech start-up rn given investor optimism imo. Even Freetrade was valued on a ~40x forward revenue multiple last crowdfund, which is very steep imo.
@Marsares fair enough. Me personally, I feel later stage companies are more attractive on a risk-reward basis, ignoring EIS relief. The failure rate of seed stage businesses reminds me its truly only for the stout hearted investor imo.
500k āsignupsā. I love how startups always obfuscate the real metrics with fancy words. āSignupsā is meaningless to me - how many of those are active users, of those how many are revenue positive, and of those what is the LTV?
I am on the advisory board for two startups, one is also D2C and has the equivalent of 300k āsignupsā (ie downloads, installs and registrations) - they see their valuation as a fraction of that of Curve.
When you come in at this valuation, taking into account further dilution down the line, and factoring capital gains tax due to the lack of EIS/SEIS, youāre lucky to double or triple your money and for that youāll be locked into them for a number of years.
Yes, early stage has more risks, but EIS/SEIS make it so attractive. For example, with SEIS I can claim 50% of my investment back through tax relief, if they were to go belly-up I can claim higher rate tax relief of 45% on the other 50%. So in reality, only c.25% of my initial investment is āat riskā.
The multiples you can get on an early stage is much higher as well, on two of my investments I am already at 30-40x. And on those gains I do not pay capital gains tax due to EIS/SEIS.
It just doesnāt make sense for me as a crowdfunder to get in at such a late stage as Curve. I do wish I would have gotten involved with them early on!
Yes, we know the math and the advantages of EIS/SEIS. Itās true that you can make 30-40x your initial investment, but you are completely ignoring the probability of default of a company.
In the end, Iām not so sure that expected value of the payout from your investment is higher in the case of a young startup valued at 1M (i.e., say 95% probability of default).
I struggle to see how their product adds value. Iāve already got a 0% FX card without monthly transaction caps or weekend surcharges. Iāve got Apple Pay to consolidate cards on one device. The ability to recharge MasterCard transactions to an Amex was an interesting feature for extra points and cashback but since that was discontinued Iāve havenāt found a need to use my card.
I am not ignoring the probability of default. In fact, I said āearly stage has more risksā.
But as only 25% of my investment in principle is at risk, and I pay no CGT on gains, I will take my chances.
In order to make a sizeable gain on a company with a valuation of Curve, you will have to make a sizeable investment as well, given further dilution and CGT. I rather split that in ten, do ten early stage investments that I believe have a decent chance of success and take the SEIS/EIS.
By splitting smaller bets across multiple investments, you mitigate the default risk somewhat, and you only need one or two to go up and youāre significantly in the money.
I have done 27 crowdfunding over five years. Two have defaulted. None of them have to reach unicorn status for me to get a good return. Some I doubt will have a valuation higher than Ā£50m, but even then I will have 10x returns after dilution and no CGT on that.
Crowdfunding later stage companies like Curve and NutMeg just doesnāt make any sense to me.
Ps am not trying teach you how to suck eggs or to be disrespectful, I just may have a different risk appetite.
I suppose itās just a matter of risk tolerance, I invest at early stage and seed stage crowdfunds too, but am happy to add later stage companies to that mix. I have gone for a maximally diversified approach , over varying sectors, vintages and geographies, across seed, venture and growth stage, totalling >100 businesses, with the goal of improving the risk profile of my overall portfolio.
I suppose i just dont have the stomach for a more concentrated portfolio - way i see it, crowdfunding has ridden a bull market, and when a downturn comes a sh*t ton of these businesses will fail when the capital they live off retreats.
On the subject of tax relief, iāve found that EIS/SEIS carry risks themselves and is by no means gauranteed after share issuance. For example, if a business does extremely well and exits within three years of EIS approval, you have to repay the tax relief. Bittersweet.
250m is way above where I want my investments as the scope for growth is severely limited in my view unless they can show the growth potential of say Revolut.
Thought some people might be intruiged to know Curve have announced some important details:
As intended, The raise has already proven to be a cheap customer acquisition channel - their onboarding/card delivery service experienced delays owing to exceptional demand, a previous email tells me.
The ātrueā pre-money valuation for the crowdfund is ~Ā£200m ($250m), as they have already secured ~Ā£40m as part of their series B. Iād previously assumed the 250m boasted in the press was in GBP not USD, so this is a pleasant surprise. Under or Overvalued? Ive no opinion on that until Iāve finished kicking the tyres.
Hi @anon1435622 ! By way of introduction my name is Charlie Hammond. I work for Curve in the Business Development team and am managing the crowdfunding raise so thought Iād hop on here and try and answer some questions you may have! To clarify - our pre money valuation for the round is same as our Series B pre money price of $195m USD - (GBP conversion is Ā£158,870,400 as the email says). To further clarify, the Series B monies of Ā£43m will be placed alongside the crowdfunding round at the same valuation.
Honestly, itās impossible to say without more information - i need to know their financials, terms and KPIs. They almost certainly will not do a prospectus raise (i.e. they are raising less than Ā£7m) so they are not legally obligated to disclose thorough, audited financials - As we saw with nutmeg earlier this year, who were very opaque (the crowd still lapped this up, which was quite worrying). Having said that, even with limited information, you can infer alot. Nonetheless, I hope to attend the event they are holding in London on Monday, have a gander at their pitch deck, etc
Whilst Iām still doing some research, Iāve definitely not written it off. Iām fond of Curveās founder/CEO - he is incredibly ambitious. Their business model concerns me - freemium models are proven (Big data models less so), but the premium offering seems weak to me. Again, still researching and awaiting more information.
How about you?
@herbsandspicy thanks for posting - My main question for now is how transparent will the raise be? What will be disclosed in the pitch deck/campaign ? I appreciate you canāt disclose exact figures here, but the nature of the figures would be greatly appreciated
Weāve tried to strike a fair balance between releasing as much information as possible and retaining sensitive information. There will be an investment deck which I canāt reveal the contents of for now that will be available when the raise opens. For anyone else interested, we are hosting an event Monday night before the raise goes live if youād like to come along and ask some specific questions. Link is on Curveās community forum (I think around 40 spaces left).
I am sorry to be a little bit of topic, but could you help me out with Curve or refer to somebody competent since your work there.
The service seemed to have been meant for me with a lot of cards and traveling within Europe, however it has been a year since I am not able to use it properly.
I am unable to add a card that I am relying the most for my day to day.
And I am unable to reach customer service within the app to take a look at my problem and have been updating the app regularly this whole summer. Check the image to see what I get every time I tried to reach customer support.
I have been blaming the iOS13 beta but since we are couple of weeks before the release can not do this anymore. I think the card for some reason might not be supported but still would like to get some feedback in writing which confirms this. I almost gave up on Curve.
Still, pretty excited for this one. Anyone else? 
whatāre your thoughts?
!