Net4

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Net4 provides AI solutions that are integrated into the 5G network. We focus on building utilisation as well as health & safety applications, using video analysis for valuable business insight.

  • 03/04/2022
    Closing date
  • £10,000.00
    Min. investment
  • Technology
    Sector
  • EIS
    Investment type

Overview

Camera's are one of the most deployed sensors in the world and the video streams they produce are one of the most powerful data sources available to any type of organisation, whether it is a Government department, a global enterprise or even a small localised business. Video analytics is the process of using artificial intelligence (AI) to turn video streams into data that can be used to identify key events, send alerts or record data for further analysis.

The Problem

Video analysis technology is developing well and it provides the opportunity for many businesses to make substantial business improvements from a revenue and operational perspective. However the complexities and costs of traditional deployment methods limit the ability for solutions to scale beyond trials, particularly when considering larger and wide geographic deployments where organisations have more complex infrastructure environments.

As the solution expands the potential for limitations grows. Currently there is no way to use video analytics from multiple vendors on the same infrastructure, with the AI running independently and providing separate, unsynchronised data outputs.

Net4's solution

We have developed a video analytics solution enables the intelligent placement of the AI within the network. This provides an advantage over existing solutions that either use limited capability devices on clients site or transmitting prohibitively large volumes of data to a data centre. Net4 uses the increased bandwidth of 5G to ingest the data but by processing it within the network this data does not need to be transferred to the internet.

Our solution enables customers to use the video analytics they need, knowing the infrastructure is in place and data insights are standardised and secure.

Highlights

  • $3m future investment already secured.
  • Opportunity to invest in a pivotal Internet of Things platform
  • Valuable key partnerships in place with Arm, Pepperl & Fuchs, IBM and Verizon
  • Proven ability to deliver solutions to blue chip customers
  • Customers include SCC (scc.com), Tesco and Network Rail
  • Strong, well developed sales channel
  • Active sales channels in Europe, Africa and Latin America
  • Common capability across any 5G network
  • Not tied to selling our own data science models; in fact our roadmap includes enabling a 'market place' of AI models for customers to choose from. Like an App Store but for video analytics.
  • Single unified data stream for customers. This is regardless of number of cameras, locations, countries and AI models used.
  • We provide security against rogue AI providers the models only work within our ecosystem and data cannot be leaked unknowingly.
  • We are revenue generating (£300k in 2020 and forecasted £400k in 2021)
  • Part of Telefonica's Wayra 5G Smart Cities innovation program (July - Dec 2021)
  • Commercial launch of our solution on Amazon agreed for December 2021
  • Launch of our solution on Verizon's 5G platform, est launch early 2022; includes key lead customer

Market analysis

As we have designed our solution to be easily deployed the market open to us is very large. Key statistics on the market are;

  1. Video camera solutions will drive 5G growth until 2023 (Gartner 2020)
  2. Video analytics market is growing at 27% CAGR (Research & Markets 2021)
  3. Private 5G is forecasted to generate £5.2Bn GDP in UK factories in 2025 (Analyst Mason 2020)
  4. 5G yr on yr CAGR between 2021 and 2028 is forecasted at 46% (Gartner 2020)
  5. Total value of 5G market in 2028 will be $665Bn (Gartner 2020)

Our strategy is to enable our solution on the platforms of key vendors in the 5G ecosystem, this is shown by our existing relationships with Amazon (AWS) and Verizon. We are in discussions with large systems integrators, mobile operators & resellers as well as competitors to Amazon. We see huge opportunity in both the public and private 5G sectors.

We are able to serve non-5G markets and will continue to win business on networks other than 5G networks, however we feel this targeting approach, especially in the coming 3-4 years will be fruitful as the networks and their vendors seek innovative solutions that add value the networks they are seeking to provide to clients.

Business model

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Use of funds

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Financial projections

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Investment strategy

Net4 is raising £1m at a pre-money valuation of £6m to enhance the development of its solutions, speed up time to market and capture a larger share of a growing tech sector. We have received Advanced Assurance from HMRC already.

We have already secured 25% of the fund raise and we will close the raise during December 2021 in line with the commercial launch of our solution with Amazon.

Key team

Alex Taylor - CEO

Alex is a passionate technologist with over 25 years experience in telecoms and IT. Starting out managing a retail store, he quickly advanced into product development with Recall Group, developing cutting edge vehicle tracking solutions. This was followed by consulting and advisory roles including projects for core technology solutions for companies such as Dell and Barclays Bank.

Alex then became the head of technology for a leading international MVNO which had in excess of 300k users spanning over 100 countries. He then worked for floLIVE, leading the sales of NVF solutions focused on IoT and machine based applications. His career experience provides the broad knowledge to lead Net4 in its technology focused market with powerful channel relationships.

Alex recently appeared on the Next Big Thing Podcast discussing Net4 and his vision for Visual Analytics. 

Simon Tobelem - Director

A globally-experienced investment and business development professional and entrepreneur, Simon has more than 25 years’ experience in banking, venture capital, corporate finance, M&A and general management. Prior to founding ARIE Capital, Simon forged a strong reputation as a strategic advisor to senior management and boards using strong analytical and financial engineering skills with a ‘big picture’ vision.

Previous positions include spells at Rothschild Bank, as the Economic Adviser to the Israeli Minister of Finance, and as General Manager of Corporate Finance at the Israel Discount Bank.

Simon currently sits on the UK-Israel EdTech Task Force, and is fluent in five languages, including English, French and Hebrew

Pete Norton - Head of Sales

Pete is head of sales for Net4. Pete joined Net4 as part of the IBM C4G program to assist IBM partners in their development and growth. Pete brings extensive experience to Net4, having spent 19 years at IBM in a variety of roles around business development, partner onboarding, Enterprise License Agreements and other high‐profile roles.

He is driven and highly organised. Pete has an extensive network of contacts and experience of developing channels for high tech services.

Exit strategy

The management team foresee an exit from a trade sale. This is likely to come from a larger business looking to accelerate their position in the market or from a competitor. Both Boulder AI and Ipsotek have been acquired recently, with larger tech players looking to enhance their AI capability and speed up their time to market. It is likely that an exit to a trade partner will be within four years.

In October 2021 Cavell Group stated that they were seeing acquisitions at 12 - 15 times annual revenue in the technology space. As an example the forecasted £30m revenue at the end of 2025 at 12 times revenue provides investors with a 60 times (60X) return on investment (ROI)

Fee summary

Investor fees

0% - initial fee

20% - performance fee at a hurdle of £1.35

This means 100% of any investment qualifies for EIS relief.

Note: The sponsor (ARIE Capital) charges the investee company (NET4) an initial 5% from which they pay third party fees as well as an ongoing management charge of 1.5% p.a.

Documents

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The content above has been provided by Arie Capital Limited, an Investment Adviser to Sapphire Capital Partners LLP who are authorised and regulated by the Financial Conduct Authority under firm registration number 565716.