Gather Online
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Gather Online Leading social-media platform to gather and share what's on your mind with people on your wavelength
  • Internet Business
  • Leisure and Tourism
  • NZ$908,829

    invested

  • 213.3% funded

  • 0

    time left

  • 4.8% - 13.1%

    min - max equity offered

  • NZ$426,000.00 - NZ$1,278,000.00

    min - max investment sought

  • NZ$681.60

    min investment parcel

OFFER IS CLOSED
Note!

Gather Online is running a parallel crowdfunding campaign on Seedrs, a United Kingdom based crowdfunding platform, to enable them to access European investors. Once the Seedrs campaign goes live, Equitise will reflect the funds raised on Seedrs in the Equitise campaign so that investors are aware of the full size of the round. This will be reflected under the label "Seedrs Placement". The terms of the Seedrs round are substantively the same as the Equitise round.

The total amount raised via the Seedrs Offer: https://www.seedrs.com/gatheronline was NZ$61,371.69

More detailed information about this offer is contained in this Information Memorandum

Information Memorandum
Offer overview

The Company is offering 625,000 to 1,875,000 ordinary shares under the following terms:

Note: Existing Gather shareholders have been entitled to a discounted share price, in line with Information Memorandum attached to the Documents section of this offer.

Executive summary

We live in a world of interesting people, who share our interests and passions, however social networks have failed to connect us to these people in a meaningful way; to really connect with them we need to have meaningful conversations (research shows we never communicate with 89% of our social network connections at all). This requires two way communication – a real ‘back and forth’ – rather than passive consumption of content. Gather Online will perfect a platform that facilitates real conversations, about things that matter to us, with like-minded people across the globe. Gather Online is focused on the 2.1 billion social media account market, with its differentiated core offering being its time-limited Gatherings on any topic. Gather is unique in that it is optimized to work as a social discovery platform i.e. it helps people meet new people, as well as communicate with existing contacts.

 

 

The Product

Gather Online (“Gather” or “the Company”) is a social discovery and messaging platform for desktop and mobile. Users engage in topical conversations and develop new like-minded connections for purposes of shared interests and hobbies, business networking and dating.

The main problem with most social networking sites is that group interactions quickly become stale and inactive. Comments are made over extended periods of time and are often lost in the timeline of other events and issues. Participants join the groups at very different points in time, so many other participants have already become inactive, and the group interaction tends to become irrelevant. This is where Gather differs. Unlike other social media sites each group conversation, called a Gathering, is open for a period of a few days (the variable time limit is set by the host, with a default setting of 7 days), after which the group disappears. Before the end of the set time period, participants in the Gathering can decide to create a private conversation or exchange information to develop the relationship further before the opportunity is lost.

A time-limited Gathering encourages timely and immediate interaction, and keeps conversations fresh. Unlike other social networking sites, Gather brings together people with common interests. Since there is high velocity, active interaction amongst like-minded people, true relationships and friendships can develop. Gatherings can be public or private, and host permission can be required to join some groups. Through Gather, you have “conversations that connect”.

 

 

Company summary

The problem with most social networks is it is difficult to meet people with shared interests, and have real conversations with them. With the exception of close personal friends and family, most connections remain passive and usually do not result in any direct social interaction. Most “follows” and “likes” are meaningless, and lie passively in your contact list. Without a common interest and real ongoing direct back and forth interaction, these contacts offer no true value.  Studies show that almost 89 percent of ‘connections’ on social media aren’t ever used.

 

 

Gather solves this problem by providing an ecosystem that brings people together based on their common interests. This ecosystem encourages interaction and promotes urgency so users can form meaningful relationships outside their current networks. With Gather, users can find or create a real conversation on any topic they enjoy in order to meet like-minded people. Gatherings are “group conversations with a purpose”. Whether for romance, friendship, business or just to gain knowledge, Gatherings bring people together and get them to interact quickly.

Examples of use:

  • Find people that share your hobbies and interests;
  • Schedule online lectures, study groups and religious studies;
  • Voice your opinion openly and have peace of mind that the conversation won’t leave a permanent trail;
  • Set up group projects and meet deadlines in a timely manner;
  • Promote your brand through interactive marketing campaigns;
  • Enhance content and networking at a conference;
  • Bloggers and high profile personalities can interact with their audience;
  • Want to discover other moms in your area? Looking for future business partners? Or do you want to date someone that shares your taste in music? Start a Gathering!
Key statistics

Since inception, Gather has invested around A$1.5m in the business.

  • Gather has achieved remarkable traction to date:
  • 6,500 active users at end of week 6 of *Beta 1
  • Within five weeks Gather achieved a threshold of users that 99% of Australian apps never do
  • 30,000 new users were acquired in 6 months of *Beta 2, with a significant amount of Gatherings achieving over 200 participants
  • Increased pace of acquisition in Beta 2, reaching over 6,000 new users per month
  • Size of largest Gatherings climbing month on month by over 100%

*Beta 1 and 2 refers to the first and second product versions tested with the public. These testing phases help in deciding what is required for the full commercial version.

Business model

There are three primary revenue sources for Gather Online viz. Business to consumer (“B2C”) premium subscriptions, Business to business (“B2B”) specific premium subscriptions and advertising.  Initially, like other social networking platforms, the plan is to introduce Gather as a free, direct to consumer offering, until which time scale is achieved. The Company plans to establish a base minimum of 230-250,000 active users per month before monetization. The threshold for monetization by way of advertising will be approximately 1.25 million users.

Gather’s B2C monetization strategy will be through a freemium revenue model as well as allowing content creators to create Gatherings which require a fee for entry. Freemium - a combination of “free” and “premium”- is the most common revenue model used by social media platforms. With the freemium model, all users receive basic features for free. A paid subscription is required for an enhanced, feature-rich user experience. Statistics show that freemium companies are able to convert between 1 and 10 percent of its users into paying customers with the average being between 2 and 5 percent. Gather’s conversion rate should be greatly enhanced through its strong B2B business strategy. Gatherings which require an entry fee will garner a 10% fee generating revenue for the Company.

A similar Freemium model will be rolled out to the B2B market as well. Sponsored seminars and/or discussion groups and real-time conferences will be marketed to various groups. Premium services would enhance an organization’s ability to use Gather by allowing for (by way of example) a greater number of Gatherings, corporate branding, analytics etc.

Advertising can be targeted based on the topics of the Gatherings. Advertising potential will become more significant when the overall user base becomes larger. Gather also has its own proprietary advertising technology called Gather Connect, which utilizes an artificial intelligence algorithm to search other social media platforms for particular conversation topics. Gather Connect then draws those people to a Gathering on the Gather platform, which allows Gather to source potential customers for its existing clients as a paid service.

Milestones & history

The concept development of Gather began in late 2012 and was led by company founder, David Price, with the support of top concept and product advisors: Nolan Wolff (former head of Trust and Safety at Ebay, Europe), Ian Jordan (Former head of Innovation at Ebay), and Mike Iampietro, Chief Product Director for the Amazon Kindle.

Having completed a very successful beta test last year, Gather recently released the first commercial version of the website in January 2017 and the first commercial versions of the mobile apps in March 2017.

The following timeline shows some highlights of the Company’s progress to date:

*Alpha 1, 2 and 3 refers to the earliest product versions tested in private prior to beta testing.

Strategy & vision

In preparation for Gather’s commercial rollout which started in January 2017, the Company has been working to identify numerous conference, tradeshows, educational institutions and corporate partners that will introduce Gather to their event attendees, students, and employees. Gather has already established early partnerships with the following leading educational institutions; Symmetra, CFA Society South Africa, and six of Australia’s most prestigious tertiary education institutions, including the University of Sydney.

The B2B strategy discussed above will be complemented with  through the line (“TTL”) and above the line (“ATL”) marketing strategies. TTL will utilise online advertising and social media campaigns while ATL will focus on mass audience broadcast marketing, PR and influencer and celebrity endorsements, to create significant brand awareness and buzz around the app launch.

Gather is currently involved in seed 2 discussions, and has already raised some money towards this funding round. A new version of the Gather app is being launched in March 2017.

The South African launch of the platform took place in October 2016, while US, UK and Asia launches will take place from April-September 2017. Discussion for series A will begin in the fourth quarter of calendar 2017, once a minimum of 100k monthly active users is achieved.

 

Use of funds

Funds raised will be used for scaling the business through building Gather’s team in various areas, a large scale marketing rollout, continued investment in improving the technology and server maintenance, and some lesser spend on legal, accounting and funding working capital.

 

Milestones & history

The concept development of Gather began in late 2012 and was led by company founder, David Price, with the support of top concept and product advisors: Nolan Wolff (former head of Trust and Safety at Ebay, Europe), Ian Jordan (Former head of Innovation at Ebay), and Mike Iampietro, Chief Product Director for the Amazon Kindle.

Having completed a very successful beta test last year, Gather recently released the first commercial version of the website in January 2017 and the first commercial versions of the mobile apps in March 2017.

The following timeline shows some highlights of the Company’s progress to date:

*Alpha 1, 2 and 3 refers to the earliest product versions tested in private prior to beta testing.

Strategy & vision

In preparation for Gather’s commercial rollout which started in January 2017, the Company has been working to identify numerous conference, tradeshows, educational institutions and corporate partners that will introduce Gather to their event attendees, students, and employees. Gather has already established early partnerships with the following leading educational institutions; Symmetra, CFA Society South Africa, and six of Australia’s most prestigious tertiary education institutions, including the University of Sydney.

The B2B strategy discussed above will be complemented with  through the line (“TTL”) and above the line (“ATL”) marketing strategies. TTL will utilise online advertising and social media campaigns while ATL will focus on mass audience broadcast marketing, PR and influencer and celebrity endorsements, to create significant brand awareness and buzz around the app launch.

Gather is currently involved in seed 2 discussions, and has already raised some money towards this funding round. A new version of the Gather app is being launched in March 2017.

The South African launch of the platform took place in October 2016, while US, UK and Asia launches will take place from April-September 2017. Discussion for series A will begin in the fourth quarter of calendar 2017, once a minimum of 100k monthly active users is achieved.

 

Financial summary

Profit and Loss

 

Balance sheet

* Gather Online has a loan for A$57,748 which accumulates interests at 1.4% p/m to an individual third party. The company has an income source against which this debt has priority, which will be used to pay off the debt in full. The income source is a 3 year government innovation grant, whereby the company receives a rebate from the government for R&D expenditure; A rebate of A$70,580 was received in 2016 and a further larger amount will be received in August 2017, as eligible R&D expenditure for 2017 has been higher. Thus none of the proceeds of investment are intended to be used to repay this debt.

For more information regarding this grant, please visit https://www.business.gov.au/assistance/research-and-development-tax-incentive

**This includes $304,000 funds already contributed as part of the current funding round

Executive summary
Market overview

According to the Pew Internet Project’s research (January 2014), 74% of online adults use social networking sites. Facebook is the clear leader with 71% of online adults as users. 23% use Twitter, 26% Instagram and Pinterest and Linkedin have 28% of online adults as users. It is estimated that 2.1 billion people have a social media account, and 2.5 billion use social messaging services. This is a staggering number when you consider that there are 7.3 billion people on planet Earth.

 

 

Related Data Points:

  • 2.5 billion people have a social messaging account
  • There are 2.1 billion social media users; and
  • 1.65 billion active mobile social accounts
  • 14% users (294 million) connecting around shared interest (Pew Research)
  • 9% (189 million) use social media to meet new friends (Pew Research)
  • 400 million users on Linkedin in 200 countries and territories
  • Dating market - 200 million active users; $5.5B revenue
  • 31,000 global exhibitions, tradeshows 2012 (UFI March 2014)
  • 260 million exhibition/tradeshow attendees 2012
Potential returns

Potential scenarios if projections are achieved:

  • If the business meets its aggregation targets by Q1 2018, Series A will be conducted at a valuation 50%-60% higher than at seed stage 2. However there will not be an exit opportunity at this stage.
  • The business is projected to be highly profitable once sufficient aggregation is achieved, with high profit levels being achieved from ~2020. After 2019 the business could function as a standalone not requiring further investment, and dividends could (theoretically) be declared if most shareholders were supportive of this strategy. More likely that cash flows will be invested in future growth.
  • There is also a potential exit through being acquired (Facebook, Linkedin, Google, Meetup, Snap) that could occur in the 3-7 year range. Based on projections, the return on capital could exceed *50x if acquired after five years.
  • There is also the potential opportunity to list the company within the 4-7 year range, again providing a return on capital of *25-75x, depending on timing of listing, and market conditions in the future.
  • Gather is open to discussing other exit opportunities.

*these are not forecasts, but hypothetical valuations given current market comparables and based on profit projections.

The DCF valuation for the Company, assuming a high level scenario is below:

The assumptions are as follows:

  • Australian risk free rate is 2.3% and market premium is 4.59% giving an implied aggregate market risk rate of 6.89%
  • An extra company risk factor of 30% is used – the company has achieved various milestones (app development, > 40,000 users) and models future user numbers and revenue conservatively, but the investment is nonetheless pre-revenue and needs a risk buffer
  • Terminal value calculated as the average of two methods. Perpetuity and Exit Ebitda multiple. The terminal rate used is a standard 2%, reflective of inflation and or long term annualized GDP growth in developed economies. Exit Ebitda Multiple is set at 3 for maximum conservatism, on the basis of a standard range for tech startup of 3-20

Valuation and Exit Comparables

 

Competitive landscape

Gather is stronger than the competition in creating direct back and forth interactions around common and shared interests.

 

By offering a complete platform that allows for the creation of direct, immediate interaction within a limited timeframe and around an endless variety of user-created topics and conversations, Gather currently has no direct competition. However, since Gather’s users can create specific Gatherings in areas such as personal interests, hobbies, relationships and business, many social networking sites may see Gather as competition to them.

Popular sites such as Facebook, Instagram, Twitter and Pinterest allow for personal interaction, to an extent. Posting something on one’s timeline or pinning a picture allows one to interact with followers. However these interactions are usually passive - there is very limited, back and forth communication.

For business-related Gatherings, Linkedin could be considered a competitor in the business networking segment. However, Linkedin is primarily used by professionals and recruitment agencies. Gather is a perfect way for small business owners, new entrepreneurs or even simply someone with an idea to meet the right people. If users want to broaden their network in their industry, for example, they can create a Gathering in that area.

Whilst Reddit helps people find content that interests them, it is really a bulletin board service, which allows the posting of items some people consider newsworthy. Reddit is not geared to meeting people. With Reddit, people use pseudonyms, and they cannot post pictures and profiles.

Meetup provides a way for people of shared interests located within a geographical area to meet by joining groups and attending real-life meetings. It can be very inconvenient and inefficient to continually attend real life meetings before knowing whether you want to spend a lot of time with those particular people. Gather allows you to filter online prior to committing your time to a group or one on one real life get-togethers.

Online dating is popular, with sites such as Match.com and eHarmony being  two of the industry giants. It is estimated there are now over 8,000 online dating sites with 200 million active users globally, and generating over $5.5 billion a year in revenue. However, among singles surveyed by IBIS World, 50% won’t use dating sites because of the stigma. A large 80% of those that try it, stop due to dissatisfaction. Session M’s survey found that only 22% are interested in having a relationship. Many are just looking to for casual sexual relationships (or “hookups”). By way of contrast, a Gathering allows people to establish relationships and new friendships around real areas of interest through real interactions. This is the foundation for true relationships.

Another dating-related platform that has grown in popularity is Tinder. Nicknamed the “hookup app”, Tinder allows people to establish connections based solely on physical appearance and location - Swipe left for no and Swipe right for yes. Research by GlobalWebIndex showed that 83% of Tinder users were between the ages of 16 and 34. The bad news for Tinder users looking for a lasting and meaningful relationship is that GlobalWebIndex found that 42% of Tinder users were already married or in a relationship.

Gather’s uniqueness in the social networking market is grounded in its ability for users to start limited-time Gatherings on any issue, item or topic. Gather’s ability to host countless Gatherings makes it special in the world of social networking. While there are many other social networking sites, Gather is the one place where you can quickly meet and interact with people who will actually interest you.

Target market

The market for Gather is large when both the Company’s B2C and the B2B marketing strategies are taken into account.

2.1 billion people have a social media account of which 1.7 billion are considered active users, and 2.5 billion people are active social messaging account users. Around 33% of the world’s population use social media and messaging. The number of people using mobile devices is also growing, and there are already 1.65 billion active mobile social accounts.

On the B2C side, Gather’s primary target market is social network users in the 18 – 35 year old age demographics. Before Gather it has been difficult to make meaningful connections, with the right people, online. Social networks, whether it be for personal or business, do not function well as a way to meet new people and establish meaningful connections with them. Gather fundamentally changes the dynamic of how people connect. Gather brings people together that have common interests. Relationships, whether for romance, business or friendship are built through interactive, time-sensitive Gatherings, around shared interests.

While most current social media sites do not cater to connecting people around shared interests, according to Pew’s research, 14% of users state that connecting around a shared hobby or interest is a major reason for their using social media. This 14% number alone is equal to 294 million potential users. Every social media and messaging user could find a reason to use Gather, and is a potential user. Here are some examples:

  • A student sets up a Gathering to discuss a school assignment with his/her peers.
  • Considering buying a Honda Accord? Set up a Gathering of existing Honda Accord owners, and get their opinions of the car.
  • Looking to find other vegans in your area to socialize with? - use a Gathering.

In addition to those seeking others with a common hobby or interest, Pew found that another 9% of all social media users utilize social networks as their main way to meet new friends. This 9% figure adds another 189 million potential Gather users. With a Gathering, users can find new friends, who share a real common interest. Whether it be for personal or business, a connection has no value unless there is continued interaction. On existing social media platforms, how many “follows” or “likes” become true friends?

Pew also found that 3% of users use social networks with hopes of finding a romantic partner. It is believed that at present, the majority of people use dating apps to find a “hookup”. Unfortunately, one survey showed that only 22% of dating app users were interested in finding a true ongoing relationship. This “hookup” stigma has stopped a lot of people from using a dating site or app. Because Gather brings together people with the same interests and passions, it eliminates this stigma associated with dating sites. For some users of Gather, romance will follow as a “natural consequence” of meeting interesting new people.

The B2B market for Gather is very significant and potentially larger than the B2C market. Gather will acquire B2B users by partnering with four key groups: conferences/tradeshows, schools/universities, associations/non-for profits and businesses.

Conference attendees can Gather prior, during and after an event or tradeshow. Materials can be exchanged on the platform, schedules can be announced and key-note speakers introduced. Schools and universities can establish Gatherings for reunions, graduations, alumni events, fundraising, open days and socially integrating their communities. Associations and not-for-profits can use Gather to interact with their members and supporters. Gatherings can be used for progress updates, to solicit volunteers and to launch, or conduct fund raising drives. Businesses can use Gatherings in many ways, like brainstorming among management teams. For large corporations, business units worldwide can Gather to plan, strategize and implement new products or initiatives. Gather can also be used to promote employee involvement, team building and other human resource activities. Consultants and training companies can provide additional value-add with a Gathering after a workshop.

David Price

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Danielle Olivier

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Vincent Dravert

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Mark Bryson

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Gather Online IM

Gather Online Information Memorandum

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Certificate of Incorporation - Ethics Consulting

Certificate of Incorporation - Ethics Consulting

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Gather Online - Share register

Gather Online - Share register

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The investors below have committed capital to the business in this funding round.

William John Lamb

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Angel Investor

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Bruce Gilbert

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Abhijit Zantye

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Joshua Cristall

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Rupert Oakley

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Thabani Sibanda

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Blair Pedersen

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Kelvin Guerin

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Golda Paderanga

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Rene Fu

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Pre Money Valuation

Who was responsible for the pre money valuation? What valuation method was used?

Rupert Smoker posted on 16.05.2017

Hi Rupert, sorry i didn't see this before the deal closed. As our dual raise is still running through Seedrs we can still take investments (and Equitise will get there percenage due to the introduction) and you can contact me on my email in the Pitch deck.

The valuation was done by https://www.linkedin.com/in/alexis-de-vries-6649945a/ using both market comparables and DCF both confirming the premoney valuation range. Market comparables for US companies at the same stage of traction are actually markedly higher, so our pre-money valuation is not particularly aggressive, and that is why we have had sophisticated Angels invest up tover $250k.

David Price posted on 17.05.2017

Replied to Rupert Smoker

 


 


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