Investment Summary

Swapsy Ltd
Swapsy.com
January 2019

Trading for champs, not chumps.

Stage of Development: Start-up Capital

Sector: Online purchase and sale of used media
Total Equity Sought: Minimum £25k maximum £150k
Minimum Investment: £10k
Share Price: £1
Equity Valuation: £750,000 post-money
Location: Silicon Seaside, Worthing
Contents

03 Business Activity
04 Company Intentions & Apps
05 Value Proposition
06 Market & Opportunity
07 Sales & Marketing
08 Competition & Differentiation
10 Management
11 Technology
12 Business Flow
13 Summary Financial Plans
15 Funding & Use of Funds
16 Disclaimer

02
Business Activity
Swapsy is a simple-to-use integrated pricing and trading platform which will allow the
company to expand rapidly into the global market for buying and selling pre-owned
console games, Blu-Rays & DVDs - and ultimately CDs, books & collectibles.

Uniquely, the Swapsy marketplace is based around “crowd-fulfilment” whereby items

are traded peer-to-peer, like Amazon/eBay, but the crucial USP is that any given item is
anonymously fulfilled by the most efficient seller, chosen by proprietary algorithms and
a hierarchical seller structure.

Our mobile apps will allow customers to barcode scan, value and sell their collections of
games and movies at the highest trade-in values, whilst our recommendations engine
will drive sales of product at lower prices than any other marketplace.

Swapsy CEO Ben Hardyment is highly experienced in used media marketplaces, having
founded both the UK’s first online DVD Rental company, Webflix, and re-commerce giant
Zapper.co.uk which attracted a record offer of £250,000 investment from BBCs Dragons’
Den back in 2012.

https://youtu.be/1Og673x7ZqM

SEIS explained
https://youtu.be/Ez_GCPjCEFI

Key Points

• Rare SEIS Seed Investment opportunity – highly tax efficient

• Swapsy.com domain name and UK Trademarks secured
• Tech partner Make Machine, experienced minimal cost accelerated launch
• Efficient API – fast valuation & trading platform integrated with Amazon AWS
• Rapidly scalable global business opportunity - $1Bn+ in UK & $8Bn in USA
• Huge opportunity to scale into United States
• Highly capital efficient – massive economies of scale
• Strong cashflow efficiencies which will accelerate scaling
• Outsourced tech plan, rapid launch Q2 2019, low overheads
• Raising £150k now followed by £750k seed round in Q4 2019
• Yr 1 Revenue forecast £1.3M
• Great potential for significant investment gains via trade exits
• Sleepwalking competitors, entrenched with significant overheads

03
Company Intentions & Apps
Swapsy is a “break-through” app-based business which aims to massively disrupt the
current used media market of console games, BluRays & DVDs – we don’t seek to change
any of the habits of this $20 Billion dollar global market, but instead align existing
second-use purchase activity with millennial mobile-focussed behaviour.

Our MVP is being based around a custom

API that will service both iOS and Android
platforms, and will deliver a full consumer
experience. This product will be built
around powerful incentives to both list
entire collections, purchase items, and
also recommend the service to others. The
intent of this ‘virtuous loop’ is to engender
viral adoption of the app, and exponential
growth of the marketplace itself.

1. Scan collection of games and movies.

2. View market-leading trade-in and resale
valuations.
3. Print shipping labels for ordered items.
4. Spend free credits via recommendations
engine at lowest UK prices.
5. Refer service to others.

A user can earn credits to purchase games

and movies not only by shipping sold media,
but also, crucially, simply by the act of
listing media for sale.

Within the marketplace products can be

purchased for on average 40% less than
their used counterparts on Amazon, and
cash trade-in values will be 40% greater
than the next most competitive rebuy
service.

Swapsy commission is a straight 10% on

every item traded.

04
Value Proposition
Value Amazon Amazon CEX Swapsy CEX CEX
Matrix New Used Sell Price Trade Cash
PS4 Games
Overwatch £32 £26 £15 £12 £10 £7
Battlefield 1 £17 £17 £5 £4 £2 £1.3
Watchdogs £14 £4.3 £3 £2 £1.2 £0.7
Fifa 17 £6 £3.2 £1 £1 £0.3 £0.1
GTA 5 £18 £17 £15 £12 £10 £7
COD Black Ops £45 £41 £45 £42 £36 £32
Horizon £28 £22 £12 £9 £8 £5
Uncharted 4 £15 £11 £8 £6 £5 £3
Battlefront £11 £3 £3 £2 £1.2 £0.7
Doom £9.5 £7 £5 £4 £3 £2
Average £19.55 £15.15 £11.20 £9.40 £7.67 £5.88
Blu-Ray
Sing £7 £6 £4 £3 £1.6 £1
Moana £10 £8.5 £10 £8 £6 £4
Heat £8 £6.2 £8 £6 £5 £3
Guardians of the Galaxy £10 £8.7 £6 £4 £4 £2
Lion £5.5 £5 £4 £3 £1.6 £1
Goodfellas £7.6 £3.9 £5 £4 £3 £2
Up £7 £6.1 £3.5 £2 £1.4 £0.9
Suicide Squad £6.5 £3.1 £5 £4 £3 £2
Despicable Me £6.2 £3.5 £2.5 £2 £1 £0.6
Average £7.53 £5.67 £5.33 £4.00 £2.96 £1.83

Consumers will prefer the Swapsy system for three main reasons:-

1. It will be by far the cheapest place to purchase games online, beating Amazon Used
prices by over 40% and CEX cash trade in offers by 40%!

2. You will get over twice the value when you trade. For example with Cex you would
have to trade in THREE copies of Uncharted 4 to get sufficient credits to purchase
the same game back again! With Swapsy, you would simply need ONE such game, as
trade-ins are valued at the same price as straight purchases.

3. The convenience of beautiful mobile and tablet apps that require no more effort
than a few swishes of a finger to buy the cheapest games and movies online.

05
Market and Opportunity
The intention is to massively disrupt the global second-use media & collectibles market.

The UK Market for pre-owned games and DVDs (excluding Amazon & eBay) is estimated
at £112M and £138M respectively (Source: Kantar Worldpanel) and this is predominantly
shared by High Street ventures CEX and Game.

Amazon and eBay sales of used media (including books) is estimated to be in excess of
£1bn, again in the UK alone.

The US market is an early target and priority, and to put matters in perspective, the
biggest US retailer of new and used console games and Blu-Rays, Gamestop, has over
7,117 retail stores in over 17 countries. Their turnover is a massive $7.5 Billion.

Clearly this is a significant market, and one which is ripe for disruption via a mobile app-
driven marketplace geared specifically at both simplifying the trading experience and
beating the prices of these giants.

Used Physical Media Market Size

Games DVDs Music Books Collectibles
TAM = $22Bn £17 £17 £5 £4 £2

SAM = $400M UK second-use games and DVDs

SOM = $25M in 2 years and $100m within 3 years

EBITDA Margin = 7% (vs CEX 1.2%)

Valuation at Yr 3 = 20 x $7m = $140M

Naturally, music and film download and streaming services such as Netflix, iTunes and
Amazon Video have impacted sales of new physical media, but there is an increasingly
demonstrable resilience in tangible formats which, if we take Blu-Rays as an example -
have the following indefinite advantages:-

• Understood by all from infants to pensioners

• 90% of homes have a player
• They can be gifted
• They can be sold on
• They can be purchased at a huge discount vs downloads

The pre-owned market is based on gamers looking to make a saving. Shoppers can be
put off by a £40 price tag, but Swapsy buyers will save an average of over 100% on new
prices. The opportunity to purchase second hand games at a reduced price is clearly a
draw for those unable to justify the expense of a brand new release.

06
Sales and Marketing
The objective of the digital marketing strategy and channel management activity will
be to drive app downloads at a sustainable and cost efficient cost per download (CPD),
whilst consistently and profitably increasing download volumes and promoting brand
awareness.
Research will primarily be executed via Facebook Audience
Insights and Google Analytics, with the aim of identifying
competitors and users interested in similar products. The
analytics team will also use audience insights from existing
data to locate similar customers based on demographic,
interests and location.

Testing will involve investigation into the platform options for

app download to evaluate which is the most cost efficient and
drives high download volumes. Three platforms will be tested:
Facebook app installs, Google Universal app install Campaign &
PPC app campaign.

All activity will be tracked via one central performance

platform, such as Kochava or Appsflyer, which will allow us to
monitor KPIs such as engagement, downloads, and installs.

The Facebook prospecting campaign will be aimed at various personas and profiles,
and much like the app download testing, will be phased over a four-week period. This
activity will enable us to reach the most interactive and relevant users for the app, and
will identify a constant flow of new users. Whereas, the objective of the remarketing
campaign will be to target existing users and incentivise them to upload inventory or
refer friends to the app.

In order to generate brand awareness, Youtube true view

video(s) will be utilised targeting the personas identified from
the initial research phase. The trueview ads will be educational
videos based around app usage and community.

In order to generate brand awareness, Youtube true view

video(s) will be utilised targeting the personas identified from
the initial research phase. The trueview ads will be educational
videos based around app usage and community.

Launch Marketing Partners

Visionary start-up digital Leading-edge social media Award-winning Technology PR

marketing agency management company

07
Competition and Differentiation
Music Magpie is well known for its TV advertising and retail
outlets under the ‘That’s Entertainment’ brand. Established in
2008, its revenues for 2011/12 hit £63m following a £9m raise
from private equity rm LDC, with 191% annualized growth
since inception. Their Chairman, Allan Leighton, is ex-ASDA
and Royal Mail. They have expanded into Germany and have 27
retail outlets in the UK.

CEX, Established in 1992, they are the original high-street

presence, specializing in buying and reselling computer games,
DVDs & tech. Their 2016 turnover was £141m and they have 363
UK stores (mostly franchises), and 211 overseas.

CEX 2011 2016 Increase

Turnover (Millions) 66 141 114%
UK Stores 173 363 110%
Overseas 37 202 445%
These competitors currently account for less than an estimated 15% of the UK market
in sales of used games and DVDs. The rest of the market is provided by a fragmented
assortment of smaller players and individual consumers.

Competition Analysis

CONVENIENCE

VALUE

US-Based
The post series-A strategy will incorporate spring-boarding
into the very significantly sized US market where Gamestop
holds sway with over 4,400 stores and a $7.5 Billion dollar
turnover. Their business was built on used videogames, and
still depends on it. Our app will scale well over there as it
does not seek to change habits, but instead aligns existing
second-use purchase activity with millennial mobile-
focussed behaviour.

08
Competition and Differentiation contd.
Swot Analysis

Strengths Weaknesses
• Very strong value proposition • Zero Traction
• More convenient than High St model • No physical retail presence
• No risk to customer • Low brand awareness
• Huge range • ‘Old fashioned’ formats
• Crowd-fulfillment • High customer support and refunds
• Mobile-focused • Damaged discs = low customer
• Friction-free totally viral retail satisfaction
process
• Backed by winners
• Friction-free viral retail process

Opportunities
• First Mover Advantage
• Future buyout by existing player
• Low competition due to physical
media perception
• US market penetration possibility
• Expansion into all physical products
• Retro formats is CDs, Vinyl, Books,
Collectibles
• Sales on new products
Threats
• Copycat startups
• Current competitors adapting models
• New consoles drop physical discs
• Further format declines
• Gaming of system/hacking
• Fraud
• Streaming services

Key Swapsy Differentiators

• Online and app-driven.
• Lower prices for purchases
• Higher trade-in values
• Minimal overheads vs very high overheads of warehouses and retail outlets
• Potential to scale globally more quickly as it is a Peer to Peer marketplace

09
Management
Ben Hardyment
CEO & Founder
Founded Zapper.co.uk in 2009 which is still one of the leading re-commerce sites for
DVDs, CDs, Games & Tech products. Previously founded Webfliix in 2002, the first online
DVD rental business in the UK. Customers were sold to Lovefilm in 2006 and IP was sold
to Netflix. Previous to this, Ben worked in the Film and Television Industry as a music
video and film Director.

Pete Hall
Technical Lead
Over 15 years’ experience building and managing digital products for clients such as
O2, Sony, NHS, Vodaphone and Universal. Pete worked for multiple busy South East
agencies, pushing his career from Developer to CTO. Co-founded Make Machine in 2017,
a remote development agency specialising in mobile apps, games and complex web
applications, where he acts as the Technical Lead.

10
Technology
Launch Technology Partner
A leading mobile consultancy and app development agency.
Previous clients include Island Records, Universal Music,
Warner, the V&A and NHS, and they have a deep understanding
of data, repricing, barcode scanning and E-Commerce UX
design and implementation.

Our MVP will be based around iOS and Android initially and have the following
functionality:-

• Basic User Sign Up – Email Sign Up

• User Login – Login utilising email / password, password reset done via email
• Product Listing – User can list a product for Swaps via manual input and lookup of the
product within the product database
• Find / View Products in the Store – Basic view, allows users to navigate through the
store to find their desired products.
• Product Search - Ability for users to search the store listings via free text input, and
advanced filtering
• Camera Functionality – Allows users to scan barcodes and input products quicker
then the manual process
• “Purchase” Transaction – Ability for users to purchase / initiate a trade from a product
listed in the store
• Edit Profile – Ability for users to edit their profile information, for example delivery
address etc.
• Basic Payment Process – Users can add credit to their accounts utilising a single
payment method (E.g. PayPal / Bank Details)
• Wallet – Ability for users to view the value in their wallet
• Analytics – Analytics to understand what is working within the app and what isn’t
• Order Fulfilment Process – At the MVP stage the order fulfilment process will not
be within the app, this can be done via email generated from the back end with all
necessary information to fulfil the Swap
• Notification – Email notification to alert users that one of their listed items now
needs to be sent to another user (all delivery details will be listed in the mail)
• Simple Customer services - An email link for users to contact Swapsy should they
have an issue.
• Referral Mechanism – A referral system to allow the app to grow quickly.
• Order History – User profile shows their transaction history, and movement in their
wallet values.
• Product Recommendation – An algorithm that provides product recommendation to
users about what new items they should purchase

11
Business Flow

SELLER BUYER
Downloads App

Scans collection

Views shop & live

orders

Accepts order

Emailed label Orders DVD

Receives order
Drops DVD off at shop
confirmation

Receives confirmation
DVD delivered Hermes API
of shipping

Receives notification
Account credited Hermes API
of delivery

DVD added to shop

Becomes “Seller”

12
Summary Financial Plans

Swapsy Model Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
New Customers 100 150 200 250 250 339 460 625 848 1,151 1,562 2,120
Total Customers 100 250 450 700 950 1,289 1,750 2,375 3,223 4,374 5,936 8,056
Items Listed 30 30 30 30 30 30 30 30 30 30 30 30
New items added 3,000 4,500 6,000 7,500 7,500 10,179 13,814 18,747 25,443 34,529 46,861 63,598
Total items 3,000 7,500 13,500 21,000 28,500 38,679 52,492 71,240 96,682 131,212 178,073 241,671
% sold each month 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
Sold per customer/month 6.0 6.0 6.0 6.60 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0

Items sold 600 1,500 2,700 4,200 5,700 7,736 10,498 14,248 19,336 26,242 35,615 48,334
Average sale price 7 7 7 7 7 7 7 7 7 7 7 7
Cash input 4,200 10,500 18,900 29,400 39,900 54,150 73,489 99,735 135,355 183,696 249,302 338,339 1,236,968

Commision 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Sales commisions 420 1,050 1,890 2,940 3,990 5,415 7,349 9,974 13,536 18,370 24,930 33,834 123,697

Gross Profit 420 1,050 1,890 2,940 3,990 5,415 7,349 9,974 13,536 18,370 24,930 33,834 123,697

Travel 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Wages 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Customer support 90 225 405 630 855 1,160 1,575 2,137 2,900 3,936 5,342 7,250 26,506
Rent 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Tech 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 19,200
Phone 250 250 250 250 250 250 250 250 250 250 250 250 3,000
Advertising 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Cost of viral promotion 1,000 1,500 2,000 2,500 2,500 3,393 4,605 6,249 8,481 11,510 15,620
Interest 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Financial Charges 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Accountancy, Legal 250 250 250 250 250 250 250 250 250 250 250 250 3,000
Depreciation 50 50 50 50 50 50 50 50 50 50 50 50 600

Total Costs 8,440 9,575 10,255 10,980 11,705 12,010 13,318 15,092 17,500 20,767 25,202 31,221 186,064
Profit/Loss (8,020) (8,525) (8,365) (8,040) (7,715) (6,595) (5,969) (5,118) (3,964) (2,398) (272) 2,613 (62,367)
Cum Profit/Loss (8,020) (16,545) (24,910) (32,950) (40,665) (47,260) (53,229) (58,347) (62,311) (64,709) (64,981) (62,367)

Amount cashed % 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70%
Amount cashed £ (2,674) 2,452 6,394 12,395 17,572 26,260 36,761 51,528 71,363 98,364 134,976
Balance remaining 4,620 (1,146) 1,051 2,740 5,312 7,531 11,254 15,755 22,083 30,584 42,156 57,847
Cashflow (21 day cycle) (3,820) 14,224 18,338 25,946 31,495 41,993 54,579 72,948 97,363 130,703 175,868 237,197
ACTUAL BALANCE 3,503 9,134 17,706 25,102 37,514 52,515 73,611 101,947 140,520 192,822 263,823

Balance per customer average £19.01 £25.30 £30.29 £31.42 £34.10 £35.01 £36.00 £36.63 £37.13 £37.48 £37.75

KPIs
Cost of Viral Promotion 10
Items listed per customer 30
% sold each month 20%
Amount cashed 70%
Commision 12%
Average Sale Price 7

13
Summary Financial Plans cont’d
Notes to Financials
• Revenues are driven by average number of purchases per customer per month
• Customers will pay a postage charge of £1 per order.
• Assumes significant active trading and ongoing repeat custom.Margins are driven by
cash sales via ‘Stripe’ & Paypal mobile payment gateways
• SG&A is driven predominantly by sales and marketing expenditure along with
headcount costs linked to the growth of the business
• Capex is linked to additional headcount, and expansion of IT infrastructure.
• Cash balance includes new money from this funding round during Q1 2019, excluding
£40,000 cost of developing launch MVP
• The company anticipates a further funding round during 2019 in order to accelerate
the growth potential both in the UK and internationally.

14
Funding & Use of Funds
The company has been funded to date by personal funds from the founder.
The funds received from this round will be used for working capital to develop the
business and specifically:

• Development of MVP iPhone and Android Apps and splash website

• Additional development sprints derived from MoSCoW
• Monthly PPC/Social Marketing spend

In 2019 we anticipate a Seed Round of £750,000 in order to further market and develop
the business including launching a fully functional bespoke responsive eCommerce
platform.

Shareholder Cap Table

Shareholder Cap Pre-issue Pre-issue % age New £150k Issue Post £150k Issue Post issues % age New shares cost
ordinary shares shares fully diluted fully diluted
Ben Hardyment 100.0% Ben Hardyment 600,000 80.00%
New Investors 0.0% 150,000 New Investors 150,000 20.00% £150,000

Total 100.0% 150,000 Total 750,000l 100.0% £150,000

The company has pre-approval in respect of this pre-seed round qualifying for tax
relief under SEIS regulations, which allows for investors to claim income-tax rebates
and capital-gains exemptions under certain conditions. The following link explains it in
simple terms:-

https://www.youtube.com/watch?v=Ez_GCPjCEFI

Shareholder Protections
The shareholders agreement will include terms limiting decisions that may be made
without recourse to the board and to the shareholders.
Investors will receive regular progress reports and shareholder presentations.

15
Disclaimer
The content of this document in respect of Swapsy (the “Company”) and the information contained within it (together the
“Investment Memorandum” or “IM”) have been prepared by the Company.

This investment opportunity is not made available or offered to the public and is not directed at or offered to persons
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This document has been communicated by the Swapsy Founder and his associate(s) on the basis of such recipients’
status as either (i) self-certified ‘high net worth investor’, (ii) certified ‘sophisticated investor’, (iii) self-certified as a
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16
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17