Latest Update - 14.02.2020
Below is a copy of a letter from the Get Cycling team providing an overview of a revised business model for their raise.
Re: Revised Get Cycling Model
Dear Get Cycling Subscriber,
Thank you for subscribing to community shares in Get Cycling CBS. Get Cycling launched the community share offer last November with the intention of raising £200k in investment. We had intended to raise £100K from individuals such as yourself, with the remaining £100k coming from a match funder. Accordingly, we set the minimum target for our raise at £200k. To date we have raised £136K from individuals, which is beyond expectations. However, we had planned to have a further £100K from a social lender specialising in match funding. This lender closed its funds (to everyone) unexpectedly and we doubt they will reopen before our offer period closes in 30 days.
There is a way for us to proceed, which still provides almost the same working capital, yet allows us to get started without waiting until the end of the current offer period on the 11th March. We’d like to do this because the ‘season’ will soon be upon us and we need to ramp up sales and marketing, update our equipment and recruit and train new staff in time to make the best of the summer to come. Also, at this stage, all management time and marketing costs spent on securing further investors is time and money taken away from running the business. We will, however, keep the offer open through Ethex till full term – there will be further investors. The trajectory is good, but it will be tough to replace the missing £100K of match funding as quickly as we would like.
Here’s how we can start operations with £60K less investment income than planned, and yet begin with £95K of working capital – only slightly less than the £105K in the original business plan. The following is based on detailed new forecasting.
- Get Cycling CiC (the community interest company from which the assets are being transferred) has agreed to let us spread half of the asset transfer payment over (up to) two years, with no interest charged.
- We postpone some of the investment in new staff, and trim our projected income, with reinstatement when further community investment finance has come in.
- We can share premises and fixed costs with Get Cycling CiC for longer than planned.
- We can lease the proposed new College of Cycling roadshow vehicle rather than purchase.
The difference to working capital and annual profit is minimal, and we will make up for the slower start in years two and three. We will also have ongoing income from further community investors. We ask you to please bear in mind that it is Get Cycling CiC that is taking an additional risk here to ensure Get Cycling CBS gets off to a good start, even though Get Cycling CiC is forsaking a large part of its ongoing income as a result of this transfer.
This plan has another advantage: doing without the £100K match-funding from the social lender means no repayment of that money within ten years, as would have been their requirement.
Along with this summary letter, we provide a revised business plan and offer document with further details on the financials. The new forecasts tell us that we are still able to meet our interest commitments and repayment profiles as previous (expected interest rate of 4% and withdrawals at trustees’ discretion from y4). However, since drawing down funds at a lower minimum is a change, you do have the right to reconsider your subscription, and if you wish to alter your subscription or have any questions, please contact Ethex on 01865 403 304. If you have not been in touch in the next 10 working days, we will assume you are content with the altered offering.
Thank you once again for your continued support – and please spread the word about our community share offer!
Acting CEO, Get Cycling Community Benefit Society