Peer-to-peer travel app maker CityInsidr hits up crowd for $300k in AlphaCrowd's first offer

Thursday 19th May 2016

CityInsidr wants to raise up to $300,000 to market its soon-to-be-released peer-to-peer travel app in the first offer on equity crowdfunding platform AlphaCrowd.

The Auckland-based company this week launched its crowdfunding offer, selling shares at 25 cents apiece to raise between $200,000 and $300,000. The start-up has been in a testing phase for its app, which targets travel recommendations and reviews for users and enables peer-to-peer advisory services such as tours, and plans to launch in July, joint managing director and co-founder Matt Hockly-Holdich told BusinessDesk.

CityInsidr won't make recommendations in a city available under it reaches a certain number of reviewers as a means of quality control, and plans to focus on New Zealand and Australian travellers, with a global roll-out eyed in 2018.

The funds raised will primarily go into marketing and advertising to drive downloads, and wants to have 15,000 active users by the end of this year, rising to 133,000 at the end of 2017.

Hockly-Holdich, who is also a director of AlphaCrowd, said the company went down the crowdfunding route to try to build a user-base, while the equity crowdfunding platform operator's first offer was with a friendly client, he said.

"Our ideal investor would be a whole lot of retail investors investing $1,000," Hockly-Holdich said. "The best thing we could hope for is if you have a really good engaged user-base quickly."

The offer opened on May 17 and will close once the minimum amount is raised or the close of business on June 30. New investors will own about 22.5 percent of CityInsidr.

The company expects to generate revenue by taking a cut of downloadable content such as city guides, hotel bookings, tours, and advertising. It forecasts a loss of $393,000 on revenue of $76,000 in 2016, and a loss of $497,000 on sales of $1.3 million the following year, the offer's information memorandum said.

Hockly-Holdich said CityInsidr's pathway to profitability will take a couple of years and any earnings will be poured back into the business.

"We'll really focus on user-base and then probably get more aggressive on how to monetise that," he said. "There will be revenue starting from the beginning but we'll focus on reinvesting that for the next couple of years until we've got a really solid user-base."

The offer document said CityInsidr will have to raise more capital, which could be debt, equity or a combination of the two, and it will aim to ensure those future offers will be at a higher valuation.

BusinessDesk.co.nz

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