Facewatch Fundraise for UK Anti-Crime PlatformBy John Honovich, Published May 25, 2015, 12:00am EDT
A foolish dream or the future of crime fighting?
A UK businessman has spent millions of his own money and now has raised nearly a million more from investors to fund a UK anti-crime platform that promises to drive down crime through sharing criminal information and real-time criminal face recognition alerts.
In this note, we examine the financial details, and the challenges the company will have to overcome.
Facewatch [link no longer available] was founded in 2010 by one of the owners of Gordon's Wine Bar, well-reviewed establishment on Yelp. The founder has put his money where his mouth is, investing over $2 million USD and taking a loan secured by his house.
For the past 12 months (~4 years since starting), Facewatch generated just £37,422 (~$58,000 USD) against a £1.35 million loss, reporting 9,000 premises using their service / application.
The company is forecasting hockey stick growth, as shown below, up to £11 million (~$17 million USD) by 2019:
The company expects to make revenue in 3 ways, roughly divided into thirds of total revenue:
- A monthly fee per premise of > $5 to be part of the network
- Add-on applications that businesses can purchase
- Facial recognition / surveillance service that they can participate in so they can generate real time alerts and stop thieves
Here is the company's pitch about how it is going to do it:
Facewatch has spent a lot of money and time seeding the market, giving away its software / offering to the police to encourage them to participate.
If Facewatch can get to a critical mass, it could generate increasing 'network effects' where it could become extremely valuable for all businesses to join (e.g., the equivalent to having a phone or all of your friends being on Facebook or Snapchat, etc.).
The UK itself is densely enough populated, a relatively small enough area and literally an island(s), that knowing or getting alerts on other criminals across the country could be extremely valuable to many retailers / business.
Finally, the founder is clearly willing to bet big on his own personal money to make this work.
Most obviously, the company needs to prove that it can sustain itself. Not only does the company make less most individual company security professionals, it has been and projects to continue to burn through a relative significant amount of money. By contrast, even with their optimistic financial forecast (30x growth in 5 years), they still would be doing less than $20 million annual revenue, plus a third of that is assumed to be coming from a never before done nation-wide facial surveillance sharing network.
If they can succeed, it would certainly be positive for security professionals, as such a network of crime sharing has potential benefits but, as Facewatch has already shown, a very hard task to build up. The good news is the new funding will give them some run-way to try to scale the network.
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