Whamoosh! founders seek equity investor

THE owners of online greetings card company Whamoosh! are looking for an equity investment of up to £500,000, as they plan its acquisition by a traditional card retailer.

The Daresbury-based company, which launched in October, uses face recognition technology in one of its ranges, allowing customers to upload a picture, extract the face and put it into a card.

Whamoosh! co-founder John Bickley said: “People can change the text on a card or upload any image but our Face-it range is what’s using the face recognition technology. We’ve deliberately gone for humorous cards, and the fact that people can add faces to those cards is our unique selling point.”

Mr Bickley and co-founder Alan Oliver have self-funded the venture to date, and invested around £150,000. They see the online personalisation and sales of greetings card as a huge growth area for a £1.5bn industry that has remained largely static.

“It’s a traditional, mature market. Up until MoonPig.com the internet had by-passed the industry, but that created a market for personalisation.

“Online is only about 1.5% of the total market at the moment so there are lots of opportunities for personalisation to take a much bigger share,” said Mr Bickley.

He expects that the large traditional players will have to develop an online, personalised offer very soon, and that is how he sees Whamoosh! reaching its full potential, once the model has been proved.

He said: “We think Moonpig, which produced a £20m turnover and £6.7m profit last year, will sell at some point in the next two years to the likes of Clintons, Hallmark, or even a social networking and photo sharing site like Flicker, which still needs to monetise its offer.

“At that point those of us in the market will also be in play for acquisition. I’d expect the company could well be acquired in three to five years time.”

The company is looking for private equity investment of between £250,000 and £500,000 to help grow the company quickly, by investing in marketing such as pay per click advertising, banners and PR.

“Investment would accelerate the marketing proposition to drive growth,” said Mr Bickley.

 “That could be the first stage and then two years down the line we could do a significant fund raising event that’s part of the exit strategy to take the business to the next level and operate in foreign territory.

 “We’ve already been approached by a couple of venture capital companies, one with a North West office and the other is London based. But we will approach others as well.”

Mr Bickley admits that a TV advertising campaign would really push brand awareness and sales.

“We’d like to do that this time next year, through a combination of the money raised and sales. It’s a very cash positive business – we don’t make anything until the consumer has already paid for it,” he said.

Gross profit margins are around 55%, according to Mr Bickley, who added that if printing was brought in-house that figure would rise to more than 60%.

Year one turnover is cautiously predicted to be around £500,000, but in the longer term the company is aiming for an annual turnover of £20m by 2014, with staff of 25 to 30 people to generate that level of business. Both partners want to keep a controlling stake.

“We’ve got a clear vision and we want to achieve that successfully. But we’d rather have 10% of a very large number than 50% of a small number. We’ll do what we need to in order to create an exit opportunity in the next three years,” said Mr Bickley.

The company, registered as Spotlight Cards, licenses the face recognition technology from FaceTec, a company formed by Mr Bickley to commercialise facial recognition algorithms and software that was spun-out of The University of Manchester.