Krzana Ltd

Gold Due Diligence for GrowthInvest – EIS Report

10 Nov 2016 / Tax enhanced research

Krzana has designed and built a real-time search engine that uses natural language processing and machine learning to apply filters to news and social media feeds, including Twitter, to supply users with focussed real time results.

Why Invest?

Positives

Strategy: Has developed a powerful, but easy to use, product to supply a spectrum of sectors with focussed results from a large range of feeds.

Issues

Marketing: The main issue for the company is to grow its sales. To date sales have only been of the single user product.

 

The Management

Positives

Team: An experienced management team has been brought in to progress the company further.

Issues

Company size: Team is small, particularly in sales. Fundraise will allow further recruitment, though the quality of those will be important.

 

Nuts & Bolts

  • Share Issue: Open offer issue for 1,375 shares (12.5% of enlarged equity) at £288 per share i.e. up to £0.5m.
  • Offer: Offer is currently ongoing.
  • Exit Strategy: Management are planning for a trade sale and have already had offers.

 

Specific Issues

  • Sale period: Management are looking for a sale in the next 18-24 months. They are aware this is less than EIS limit, and will only sell if worthwhile for investors.
  • Partners: Has signed up with some high-quality partners. Though this implicitly validates the technology, so far they have not been used in practice.

 

Risks

  • Sales: Focussing on the financial services industry, sales are currently at a very low level. The pipeline is good and trials are in progress with some major
    companies are in progress, but next step is to get some high value project sales.
  • Finance: The fund raising is intended to see the company through to being selffinancing. There is some space in the managements’ projections and they have committed to not increasing spending until funding is in place.