Overfunding: Bookkeeping and Tax Automation Fintech Coconut Secures £918K+ via Crowdcube

Coconut, a Fintech firm that automates bookkeeping and tax for sole traders, a market of 3.5 million in the UK, has raised £918,370 from 1202 investors (at the time of writing while having a £700,000 target) through a campaign on Crowdcube.

Coconut reports a pre-money valuation of £18,000,000, 4.85% equity, and a £0.02 share price. Currently, there are 18 days left in the company’s campaign.

As noted by the Coconut team:

“Starting a self-employed business is easier than ever, but the finance tools available haven’t improved for decades. Coconut automates bookkeeping & tax for sole traders, a market of 3.5m in the UK. With 8k paying customers and 174% revenue growth in 2020, Coconut is on a mission to transform sole trader finances.”

Some of the key company stats shared by Coconut’s management are as follows:

  • 174% revenue growth between 2019 and 2020
  • 8,000 paying customers, a 6x increase since December with new subscription model
  • 2,800 accountants registered on the Coconut Accountant Portal
  • Fully authorized by the FCA for Open Banking aggregation as an AISP

During the past 2 years, around 3.5 million sole traders will have to turn in 4 tax submissions every year instead of only 1, because of the HMRC’s Making Tax Digital (MTD). As noted by Coconut, they will also be required to use a digital product such as Coconut to complete this.

Company founders Sam and Adam became self-employed after they sold their first Fintech firm. Even though they’re PwC-trained accountants, they found it challenging and burdensome to manage their tax obligations.

As stated in the update, Coconut aims to become the leading sole trader finance and MTD product being offered the UK. They’re raising a Pre-Series A to strengthen their presence in this market.

As noted by Coconut:

“The pandemic focussed the team on meaningful core metrics. Total revenue grew by 174% in 2020 (YE 2020 revenue: £679k, EBITDA: -£2,335k). Having launched a new pricing model at the end of 2020, they converted 75% of active customers to paying by March 2021, growth of 6x since December. With 2,800 accountants signed up, Coconut is a favourite with accountants too.”

A pioneer in Open Banking, Coconut links up with more than 25 banking institutions, which allows these services providers to access automatic tax insights via banking data. With invoicing, receipt storage, tax and performance dashboard built-in, Coconut “equips customers to easily manage their business and tax in one place.”

The announcement also mentioned that Coconut has a 100m+ self-employed businesses in Europe and North America. This should help the firm with targeting an “exciting global opportunity.”

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