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Football INDEX -Short Report-
Crowdfunding, Equity, Seedrs
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Date: 18 April 2016

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Company Name: Football INDEX (Fame Ventures Limited)

Company Information:

Betting on the celebrity of athletes

The company is the operator of www.footballindex.co.uk, creating a tradeable market where punters can buy and sell futures contracts on 200 football athletes. The contracts are issued by the operator, paying dividends linked to the fame of the athletes and with the operator taking a commission when contracts are traded between punters. The price of the futures contracts will depend on the popularity of the athlete (more news coverage gives more dividends which again influence how attractive it is to buy/hold the futures contract). Punters can therefore realise a return on capital appreciation of the futures contract, if selling before the career of the athlete goes downhill.

Key Data:
Company Established: Incorporated November 2012
Industry: Gambling
Sector: Sports betting
Instrument: Equity Investment
Tax Status: EIS
End Date: 28th of May 2016
Equity on offer: 15.10%
Target: £800,009
Pre-money valuation: £4,497,268

Platform: Seedrs
Stage of Development: Validation/Growth – early scaling phase 1st product
Proof of Concept: Live for 5 mths, 13k paying users depositing >£850k
Digital Footprint: Twitter followers: 3.4k, 857 Facebook likes
Previous Funding: >£700k spent on developing software platform

Abbreviated accounts were filed with Company’s House in December 2015, showing £228k Shareholder’s funds as of 31st of October 2015. Next Accounts made up to 31st of October 2016 are due by 31st July 2017.

All Street  Comments:

Product/Service & Product Risks:

  • Fame Ventures has created a somewhat complex product/service to attempt to create a tradeable market for the popularity/fame of football athletes. If successful. this type of product/service can then be expanded to other sports or celebrity sectors with large followings.
  • The price of the futures for each footballer is however not directly linked to either their personal earnings/earnings potential nor directly to the performance on the pitch; fame/demand on one side will not necessarily reflect the skill/performance/results achieved of the footballer.
  • Risks for the punter and product, and therefore the company/idea also includes that athletes are prone to injuries, could transfer to other leagues with less followings (therefore being out of the limelight), besides risk of athletes being involved in criminal activity (e.g. Adam Johnson), all influencing the demand and price of the futures contract quickly. • Furthermore, the price of the futures contract (and therefore potential for punters to make a profit through appreciation) is also dependent on the popularity of Football INDEX itself, not just the athlete. If users prefer other (future) competitor alternatives or the popularity of the site decreases, there will be less opportunity for appreciation, which will likely again lead to less punters and potentially a vicious circle.

Market:

  • The aim is to capture users/punters who are betting on sport results (events), which represents a significant volume in the UK alone, and/or participants in fantasy football leagues, a very popular pastime in many countries.
  • There are no identified matching services available, although multiple substitute services/products in very competitive markets.
  • Although there would be overlaps, the punter who walks in to his local Paddy Power to place £20 on the next game would not necessarily like his/her chances on FootballIndex as an alternative.

Technology/Progress:

  • Fame Ventures’ software platform is licensed as a regulated product by the UK Gambling Commission with UK & Jersey gambling Operator Licenses issued for the wholly owned Jersey subsidiary.
  • The platform is built for a much higher volume than seen so far, indicating high scalability, although there would be pressure to keep the availability/full functionality of the service at near 100% for risk of losing users.
  • Although it may be quite possible to replicate the business model and technology, Fame Ventures has achieved a head start, a meaningful number of users to fine-tune the service as well as developed partnerships, which perhaps represents more value than the funds invested in the technology at this stage.
  • Use of funds appears sensible insofar as 20% of funds are to be applied to develop technology and infrastructure further with 80% to be deployed for marketing. For a new product/service, converting the marketing budget to paying users involves high uncertainty, and substantial investment in marketing may be required to deliver the targets sought.

Management/Owners:

  • The major shareholders are Adam Cole & Eleanor Cole with 61%, BGG Holding LLC holds 17% and Vanessa Tuersley & Joseph Tuersley 13%.
  • Management Team are as follows: A. Cole (CEO & Founder), M. Bohan (Director of Marketing), C. Rowan (Director of Product & Operations).
  • Founder and CEO holds several non-executive directorships in other companies and is an experienced entrepreneur and angel investor.
  • Overall, the management and key team members appears to have relevant backgrounds/experience, supported by non-executive director K. MacDonnell who is a 2.5% shareholder

Sources: available public information, https://www.seedrs.com/football-index, http://trade.footballindex.co.uk/get-started/

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