Poundshop.com has launched a drive to raise £175k in crowdsourced investment to help it grow revenue to nearly £10m in just three years.
The online discount site, set up in early 2014 by Poundland founder Steve Smith, is selling 8% equity on Crowdcube, valuing the business at £2.2m.
It plans to use the funds to treble the size of its warehouse facilities - moving from its base in Exeter to a new 10,000 sq ft facility in the Midlands. It also wants to treble its range and invest further in developing its own customer software and systems.
Pitch documents show the business achieved £320k in sales in its first full financial year. It plans to grow this to £1.7m in the year to April 2016 and to £9.2m by the end of its 2018 financial year.
Smith said the company had decided to pursue crowdfunding after the success of a similar £1.4m fundraising drive for his online estate agents business EstatesDirect.com.
“Estates Direct was one of the fastest pitches to ever overfund on Crowdcube and it got us a lot of public attention. Poundland was all about word of mouth, I’d open the shop and people would tell their friends. With the internet it’s a bit different and this is a way of showing a lot of people the site is there.”
One potential investor has used the Crowdcube forum to question the £2m-plus valuation given paid-up capital is stated as £50k. But Smith pointed to the £5bn and growing fixed-price discount sector as evidence to support the bullish growth plans. “”The pound market is around £5bn at the moment - it doesn’t need to take much of a percentage to convert that into some big revenues,” he said.
“Over the past 18 months it has concentrated on getting things right in terms of distribution and getting suppliers on board,” he added. “They’ve gone through that and now they’re ready to start pushing the business.”
Poundshop.com has had a busy year and a half since its launch with the backing of Poundworld. It parted ways with Poundworld, which has since launched its own online offering, in August 2014 and took over rival site Hereforapound.com in October.
Smith said the dissolution of the Poundworld partnership had not inhibited growth as it had been primarily triggered by the likelihood of Poundworld being taken over - a process that concluded with TPG buying the chain last month.
The site has grown to 150,000 customers and Smith said it was now crucial to get the right products on the platform. “They had a big parcel of La Senza underwear the other day and sold £48k worth in a few hours - if you get the right products on there, it’s amazing the power the internet has got.”
MD Donna Baker said the site had generated sales of £500k since February 2014, and £417k of the turnover has been generated since the October merger with her Hereforapound.com. Sales in May 2015 were up 28% on the previously month, reaching £62.4k.
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