Investor Prospectus 2021

Executive Summary

React & Share is a Finnish SaaS company operating in Finland and the UK. We help communications teams shape their online content to better serve customer needs.

During the last 12 months we

• doubled our MRR to 59K€
• validated the UK market (deals with customers like the Royal Meteorological Society and The Association of the British Pharmaceutical Industry).

We're now planning to ramp up our UK operations and open another new market to reach a total ARR of 2.1M€ by the end of 2022.

To do that, we are now raising 200-300K€ equity paired with a 100K€ short term loan.

Problem

Organizations are losing money with content that doesn't serve their customers.

Based on our data, 52% of readers leave content pages unhappy as they didn't find what they were looking for. This means that

• half of the website content development resources are wasted on creating content people aren't happy with
• inflated costs: unhappy readers will need to call customer service
• lost opportunities and leads with content marketing
• even social problems arise: when people can't find relevant information about health issues like covid-19 or allergies the lack of knowledge may even lead to death.

Communications managers know they have this problem and want to fix it, but

• analytics tools are difficult and
• knowing what the customers actually want is impossible.

Without direct feedback from their readers, communications teams spend a lot of time and effort flying blind — they have no idea whether the content they publish is useful or not.

To fix this, communications managers want more feedback and quicker from their readers

Solution

We help communications teams

1. get feedback quickly, anonymously and directly from their readers in volume
2. prioritize their content development work
3. satisfy their readers' needs

with human-centric intuitive tools.

Our customers report a 2–10X increase in feedback with our tools compared to their old solutions. 100% of them report that the quality and actionability of the feedback is better than before.

Our software consists of reader activation widgets that are embedded to our customers' websites. The data is then collected and processed and the relevant information is communicated to our customers through intuitive dashboard and reports.

Timo Virtanen CEO

Try the feedback widget at the bottom of this article or see a demo here (desktop only).

See what our customer says about us:

Timo Virtanen CEO

Even a slight improvement in content customer satisfaction reduces the need to call customer service. With an average cost of 20€ per call, the savings mount up!

Positioning

The top three things our customers value in our product are:

1. High response rate with feedback
2. Insightful reports
3. Ease of use

From a competition standpoint our customers compare us to feedback tools and user experience analytics tools.

The biggest fear when considering our service is that they won't get any feedback or that it's not actionable. Our customers keep being surprised by the volume, speed and quality of the feedback they receive as soon as they install our feedback tool on their website.

Actionability of feedback →

Pace of receiving feedback →

Actionable & slow	React & Share Quick & Actionable
Non-actionable & slow	Quick & non-actionable

Customers

We focus on organizations publishing informational content online and whose main goal is to serve customers.

We are trusted by over 140+ organizations in Finland and the UK.

Business and KPIs

Our business is a conventional software-as-a-service where customers purchase an automatically recurring software license for a set of features.

In Finland the subscription periods are usually 12 months. In the UK we typically start with a 3-6 month paid pilot. In both cases the customers pay the license fee upfront.

KPIs as of February 2021

MRR

Market opportunity

Total addressable market $11B

The global content analytics market is forecasted to grow at 22% CAGR to reach $10.75B in 2025. The leading regions are the US and EU markets.

The content analytics market pie can be sliced into quantitative and qualitative sections, where the quantitative share is dominating. The qualitative slice is growing at a much more rapid pace. The text analytics market, for example, is forecasted to grow at 27.4% CAGR and over 30% in China to over $20B by 2025–it is expected to be a larger market than content analytics overall.

Teemu Varpanen Investor, board member

As the market grows 22% annually (CAGR) and R&S grows 5 times as fast, we are quickly taking market on selected segments, creating a defensible and a lucrative market position.

Serviceable Available Market 1.5B€ - Informational content

We currently focus on organizations publishing informational content online where the main goal is to serve customers.

This pool of organizations can be broken down to

• government organizations (local and national)
• membership organizations
• businesses with informational content and
• non-profits.

There are about 2.5M non-profits in the EU & US combined plus 500,000 businesses that exceed $5M in annual revenue or 10 employees.

We estimate that a third of these organizations spend money on creating content online and for a 1/4th content fills a strategic role. Based on our current annual revenue per account our market potential with 100% market penetration in this segment is 1.5B€.

Timo Virtanen CEO

Marketing tech is competitive, but communications teams are extremely underserved currently.

Commercial content — potential for future growth

The global content marketing software market size is expected to grow from USD 4.12 billion in 2018 to USD 9.59 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 18.4%. There are 60M organizations in the US and EU who report content marketing has a strategic role in their operations.

In addition content marketing, we have identified other potential commercial segments like companies' product pages, media publishers and for-profit blog media.

Future growth comes from geographical and product expansion

Teemu Varpanen Investor, board member

By accelerating new market entries and complementing existing customer segments with new products on an annual basis, we aim to keep the y-o-y growth at > 100%, reaching 50M – 60M€ ARR range in 5 years. This opens many interesting exit opportunities.

Why now?

Behavioral trends

• People are searching for more information than ever before.
• With fake news, it's more difficult than ever to evaluate whether a piece of content is reliable.
• Communications teams are finally catching up with marketing departments in their interest in becoming data driven online.

Legal trends

• Privacy laws are being implemented not just in Europe with GDPR, but all over (the western world).
• Accessibility standards are being regulated and monitored more strictly than before (WCAG 2.1).

Timo Virtanen CEO

Many of our customers actually got started with us due to compliancy problems with their old providers - they wanted to get rid of social sharing and analytics tools who sell the data to 3rd parties. We don't!

Technological trends

• Cookie practices are getting stricter with different browsers blocking 3rd party cookies altogether. This means the old business logic of collecting people's personal data for advertising is getting harder to implement.

Plan 2021-2022

The key strategic goals for the next 18 months for us are

• UK ramp-up: build a sales organization that averages 10K€/MRR new business per month (linear growth)
• Find a scaleable product/market (expontential growth)

MRR for 2021-2022 with the current target segment

MRR Forecasts

Key financials by quarter

Timo Virtanen CEO

This doesn't yet include the investment for a new market opening at the end of 2022-2023.

Expenditure breakdown

Biggest investments will be in international expansion.

Market entry

Market entry KPIs

• Initial investment for market validation: 100K€
• Investment to ramp up: 220K€
• Break-even reached after 19 months
• IRR: 118% (3 year horizon).

Market selection

We initially select and evaluate a market based on these requirements:

• There's a large number of organizations publishing informational content online (see Customers)
• Evidence of budding customer centric thinking in governmental organizations (typically mentioned in their public strategies)
• Communications teams' technical maturity at the level where they are starting to test different analytics and customer experience measuring tools.

We typically find strongest traction initially in local governmental organizations.

We then hire one sales manager and three sales representatives ideally with the sales manager in the team already.

After a market has been selected, we split the entry stages into three: validation, ramp-up and profitable growth.

Market entry stages

Cumulative cashflow at new market entry

Validation

Based on our UK data, we can validate the product/market fit in about 4 months. The investment to get there is about a 100K€ and bookings are at about 2.5 – 4K€/MRR at that point.

Criteria for validating the markets:

• Customers have the same problem as in other markets
• We see customers experiencing the value of the product
• We can replicate our sales model succesfully
• Large enough pool of organizations publishing informational content online.

Ramp-up

During the ramp-up phase the main goal is to establish repeatable and predictable processes for sales and customer success. This means

• hiring and onboarding sales reps
• solidifying sales and customer success processes.

At the end of the ramp-up phase the team will consist of 10 sales reps, one country manager and one dedicated customer success manager.

Profitable growth

We're entering this stage in Finland. As the name implies, this means focusing on both growth and profitability metrics:

• Net retention rate > 100%
• CAC payback time < 12 mos.
• Gross margin > 70%.
• The business unit as a whole on the black.

With a razor sharp focus only on organizations publishing non-commercial informational content, we estimate the market size being about 7M€/ARR* in a UK sized country. Adding other informational content publishers the market size triples to 21M€/ARR. Additional product segments grow the Serviceable Available Market even more.

Augmenting this segment even with just informational but commercial content, we estimate the potential market size to at least triple.

Team

An ambitious team with a big ❤️

Management team

Timo Virtanen CEO

Antti Aalto Chief Commercial Officer

Lauri Hälinen CTO

Hayat Rachi CMO

Selja Tiilikainen Country Manager of Finland, Head of Customer Success

Board

Mikko Mäki-Rahkola Chairman

Teemu Varpanen Board Member

Timo Virtanen Board Member

Mikko Mäki-Rahkola Chairman, investor

As React & Share is growing according to this plan, we are continuously on the lookout for new additional members to strengthen the company board and to resolve future challenges.

Personnel

Beyond 2022

Our vision

At React & Share, we believe high-quality content will deliver the best results — whether it being cost savings from reduced customer service needs or increased sales through lead generation.

And to deliver high-quality content, content teams need to take a human-centered data approach to content creation and strategy.

We believe this approach will be the norm, not the exception, and content creators globally will measure and improve their readers’ content experience with React & Share’s tools.

Exit

We're currently 100% focused on creating a scalable lucrative business. Nevertheless, thus far we have identified four possible paths to exit:

1. Acquisition by a feedback company. SurveyMonkey, for example, has acquired at least two of our competitors recently (GetFeedback and Usabilla)
2. Communications agencies that help customers succeed with online content. (e.g., Dentsu, Hill+Knowlton, and WPP Group)
3. The big four consulting companies: KPMG, Ernst & Young, Deloitte, and PricewaterhouseCoopers. They sell a lot of services to businesses and government organizations. Actionable insights on how to allocate communications budgets better could be an exciting product for their customers.
4. IPO.

Funding proposition

We're targeting

• 70-80% annual growth for the next two years
• to make the company cash flow positive by the end of Q1/2022
• to complete the UK ramp-up.

The total funding will consist of:

• 200-300K€ private equity
• 100K€ short term loan

The company is valued at 4.2M€ pre-money.