The fundraising documents went to great lengths to sell the convertible structure to investors. It said the company had sold convertibles in mid-2020 to raise $10 million, and build a bridge to a Series B raise one year later.
Tech wipe out
The raise comes at a time when interest rate changes force investors to shut their checkbooks, shunting IPO candidates to unlisted markets and unlisted equity hopefuls to debt/convertibles.
In Spaceship’s case, its tech-heavy investment portfolios have dusted off big losses for the financial year, thinning out its revenue-generating funds under management. It’s also faced the challenge of turning customers acquired via paid marketing into revenue generators.
Its superannuation product, GrowthX did -19.5 per cent in the 12 months to June 30, while its investment product Voyager lost 47 per cent.
The poor performance sent Spaceship’s funds under management 14 per cent lower in the June quarter alone. It’s also sent some clients packing, but it had $48 million net inflows for the quarter.
Spaceship expected to make $9 million revenue (on an annualized basis) on its $1.01 billion funds under management, its pitch to potential investors said. The company said Spaceship’s regulatory skirmishes hadn’t turned off clients, and inflows were holding up despite it dialing back on paid client acquisition.
It had 219,000 active client accounts and 133,000 chargeable members, and grew paying superannuation customers from about 10,000 to 18,000 at June end. It recently added a fixed monthly fee for Voyager customers over $100 in their accounts, a much lower threshold than the previous $5000.
“Nonetheless, Spaceship has still not achieved the scale required to be cashflow positive, so the funds we raise now are needed to continue supporting the Company on the pathway to that milestone,” the raising documents said.