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UKHotViews©

 

Wednesday 14 August 2019

‘Zero revenue’ startup Yoti worth £82m? Excuse me?

logoI don’t like to be seen as a nay-sayer as I truly am a keen supporter of UK tech startups and scaleups. I hope we have amply demonstrated that through TechMarketView’s well-received programmes such as Little British Battlers, Great British Scaleups and the TechMarketView Innovation Partner Programme, as well as by our extensive startup coverage in UKHotViews.

But I do believe it is necessary to peer beneath the hype and have a little prod around to form a more measured view as to whether a company is all that it appears to be.  

Such an example is London-based ‘digital identity’ platform, Yoti, which we wrote about when it first announced funding in January 2018 (see Identity platform Yoti valued at £65m). At the time we didn’t question the valuation. Frankly, we should have.

Yoti has just announced that it has raised a further £8m with a new valuation of £82m.

So, let’s prod.

According to its most recent accounts, Yoti, which was founded in 2014, reported zero revenues in the year to 31st March 2018, with pre-tax (refund) losses of £17.0m, compared to losses of £11.4m the prior year. The startup also burned through £15.9m in operating cash, almost double the rate of the year before.

And what about the funding? Well it apparently came from private investors, employees and Yoti’s Co-Founder and CEO, Robin Tombs. Sounds like a ‘family and friends’ affair to me.

As for the valuation – well I have no idea where that comes from.

Yoti’s website claims that over 4m people have downloaded the app – but of course that’s free. The financial model is meant to derive from the few pence per transaction that Yoti aims to charge businesses to use its verification platform: 15p for age verification up to 30p for (claimed) biometric-based building access functionality. Yoti gives NCR as one of its partners that has ‘integrated Yoti technology into its self-checkouts’, though it’s not clear whether this is in use in any of NCR’s retailers.

Maybe Yoti really is bang on track to achieve its aim of becoming a ‘global identity platform’. Maybe it is truly worth £82m. But my ‘prodding’ might suggest a somewhat different narrative.

Posted by Anthony Miller at '08:47' - Tagged: funding   startup  

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