Noice Care

I really like this product, the market in which it is operating and the company achievements to date.  The whole ESG angle is also very appealing.  It is such a shame, therefore, that the campaign content does not do a better job on stimulating investor interest. 

Where is the campaign video that lets me get to know the promoters and gives me all the reasons to invest?  All we get is a 20 second product video – you’re not selling me the product; you’ll selling me shares in your company!!!!

Rightly or wrongly, the way in which you run a fundraising campaign tells me (or at least signals to me) how you also run the business.  It raises a question mark over commercial acumen if your fundraising campaign does not do your business justice.  What’s most annoying is that this isn’t even an issue of cost.  You can make a top-quality face-to-camera video today at no cost, and every self-respecting consumer brand, especially a start-up that is bootstrapping its way to success must know how to make short-form videos for social channels. 

If the lack of a campaign video is bad enough, a glaring inconsistency between the Slide Deck and content on the Crowdcube website really is sloppy.  This is your campaign ‘shop front’!!!  You typically don’t meet investors face-to-face when crowdfunding, so your online content has to be perfect.  On the Crowdcube website, the campaign says the company is looking to raise £190,000.  In their Slide Deck, it says that the company is looking to raise €350,000 “to get towards profitability by 2024 …”.  This is not a minor difference between two pieces of content for the same campaign.  Investors must assume that the £190,000 figure on the website is the correct figure of the two, but how long does it take to change the figures on a Slide Deck?  20 minutes?  (I will return to that sentence in the Slide Deck “to get towards profitability by 2024 …” later in this note.)

But, back to company basics.  Although the company has been around since late 2019, it has only really started to generate meaningful activity in the last 12 months.  But this activity is very impressive and there would appear to be strong potential to build on this. 

Noice has sold more than 18,000 bottles to over 3,000 customers.  That’s well beyond ‘proof of concept’ stage and the promoters deserve great credit for this.  Of equal significance is that 79% of those sales have come from subscribers, suggesting a level of repeat business which is considerably more valuable than one-off orders. 

On top of this, the promoters have managed to keep their average Customer Acquisition Cost (CAC) down to just £13, well below industry comparables.  This bodes well for the business if it can maintain or reduce this number and continue to attract subscribers, as opposed to one-off purchasers.  These metrics are all very positive for the company and should fill potential investors with a high degree of confidence.  

The other critical metric for a business like this is its projected Customer Lifetime Value (CLV).  Some analysts would argue that it is too early in the company’s evolution to be able to come up with a reliable figure for this.  It certainly is early in the company’s evolution, but it is not too early.  Noice state that their current Customer Lifetime Value is £15 and that they expect that to increase significantly in the coming years.  But, nowhere do they state what this is likely to increase to!    

If you’re going to give me a CAC and a current Customer Lifetime Value, you have to give me a projected Customer Lifetime Value figure to enable me to form an opinion about the financial prospects of this business.  Just give me your best estimate and state the underlying assumptions on which the estimate is based – that’s all I need.  Sadly, the campaign material sheds no light on projected CLV metrics, and this is another missed opportunity by the promoters. 

In fact, nowhere in the campaign material are investors given any financial projections for the business.  At the very least, a simple Revenue, Costs and Net Profit figures table for the next 3 years should have been provided.  Have they never seen Dragons’ Den?!  This makes it practically impossible for an analyst to say whether the £1.76m company valuation is appropriate or not, let alone how it was arrived at.  The only clue we are given as to profitability is that (as noted above) the company is looking “to get towards profitability by 2024 …”.  Really, “getting towards profitability” could mean anything and doesn’t help me make an investment decision. 

Although the limited information provided makes it impossible to give an opinion of valuation, it is worth noting, however, investors in Noice Care (who are UK taxpayers) can recover 30% of the value of their investment in the form of a tax rebate, as Noice is an EIS Qualifying company.  The imputed pre-money valuation therefore drops by 30% from £1.76m to £1.232m.  The importance of this should not be underestimated, especially for investors who are sitting on the fence and are looking for something to convince them to invest.  Remarkably, the campaign material fails to highlight this critical investment consideration.  The promoters should be shouting it from the rooftops. 

Business Case

No-one will argue against the business case for a product that “cleans up the oral care industry, the

zero-waste way.”  Noice Care has demonstrated it can provide such a product and generate revenues from doing so.  The “world’s first all-natural zero-waste toothpaste” is tapping into the circular economy zeitgeist and the Noice mission to make toothcare planet-fair is laudable.  Having successfully developed the product and achieved impressive sales in the last 12 months, now would appear to be the right time to put some petrol in the engine and accelerate growth rates.     

Market Size – very attractive

When your product is toothpaste, the ‘universe’ is your target market and TAMs and SAMs are almost irrelevant.  However, Noice is operating in a small, but growing, subset of this market, and with the right promotion and education could greatly increase the size of this market.  According to the Noice campaign on Crowdcube, the UK Natural product market is worth £221M in 2020 and is estimated to grow to £339M by 2025 and the Herbal toothpaste category has a predicted 5.1% CAGR 2020-2024.

What is the USP?

Being first to market with an all-natural zero-waste toothpaste is definitely something to shout about, but it is hard to argue that this is a strong unique selling point.  Colgate could presumably produce and launch something equivalent in a few months and all for less than what they spend on advertising in a day.  We have to therefore look elsewhere for a USP, and to me, this shifts to the database of Subscribers.  That is certainly unique and building this is where the company should focus its efforts.  It is what will appeal most to a potential acquirer of the business as it almost guarantees recurring revenues.  From an investor’s perspective, the start-up experience of the Founders and their knowledge and previous work experience in this market is the closest thing to a USP that this business has.  Very often, that is all that is required, but it requires excellence in strategy execution by the Founders.    

Other Considerations

Crowdfunding Campaign Content

I’ve said all that needs to be said (above) about how the campaign content really doesn’t paint the company in as good a light as it should.  As the old adage goes ‘People buy people first’, and the least the promoters should have done is present their investment case in a short video.  From the little bit of external research I have done on the promoters they appear to have strong backgrounds and are highly motivated to succeed.       

Social Media Presence

Noice has a strong presence on Instagram and engages regularly with its 5,200 followers.  It is equally active on Facebook with its 1700 Followers.  Surprisingly it has chosen not to have a presence on Twitter and is probably missing out on some useful interactions there.     

Trustpilot Reviews

Surprsingly, the company has received mixed reviews on Trustpilot  The negative reviews are more about customer service than the product itself, which is the lesser sin, but it is a concern nonetheless and will become far more critical if the company goes on to do a Series A fundraising in the future.  For a customer-facing company that has so many (presumably!) tech-savvy subscribers Noice should be asking all of these satisfied clients to leave reviews.   

Previous Successful Exits?

Two of the Founders claim to have had several successful exits in the past in the form of trade sales, but no detail is provided.  If you’ve had a successful exit in the past and you are raising funds now, the bare minimum a promoter should disclose is the % return achieved for investors from those exits.  Even better, tell us the sale price.  That’s a huge selling point for investors.  Where no detail is provided, scepticism abounds.  Against this, the lessons learned in the previous ventures, whether successful or not, are the best education the founders could get, and I would view the previous entrepreneur experiences as highly positive. 

Appropriate Company Valuation

It is very difficult to form a view on the company valuation, based on the limited information that has been provided.  But, given the sales that have been generated to date, the calibre of the team that has been assembled and the size of the market opportunity, I don’t believe the £1.7m pre-money valuation is excessive.  But unfortunately, I have to caveat this due to lack of detail provided.  For a risk tolerant investor, who may also be able to add strategic guidance, you could easily see high multiple returns from this valuation if the promoters can successfully execute the strategy.  I’d certainly like to see the company succeed.