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Has Melbourne startup Rewardle just opened up its Initial Public Offering?

Rewardle Holdings Ltd, the holding company that owns Melbourne-based startup Rewardle Pty Ltd, has recently opened up its Initial Public Offering (IPO), according to a prospectus Startup Daily discovered on the website which was lodged with ASIC on the 20th of August. However, Ruwan Weerasooriya, Founder and Managing Director of Rewardle, chose not to comment.

The company was founded by Weerasooriya in September 2011, who carries a track record of founding, funding, and selling internet and media-related businesses. It was not long after selling a majority stake in his earlier business CafeScreen to oOh! Media in 2012 that Weerasooriya embarked on a full-time mission to provide local merchants the digital engagement tools and business intelligence typically available to large retail chains. The first iteration of the Rewardle platform was introduced to the market in July 2012; and in April 2013, the first tablet was deployed within merchant premises.

The startup has since experienced healthy growth, with more than 1,500 merchants and 300,000 members who have checked into the platform over 3 million times. The company has been working rigorously, particularly in the last 12 months, to establish itself as a market leader. It has facilitated over 340,000 reward redemptions ranging from free coffees to beauty treatments; and over $300,000 of prepaid credit has been loaded onto the Rewardle platform.

Rewardle acts as a commerce-based social network, connecting consumers with their favourite merchants, based on transactions. The startup is a prime example of how social media, marketing and mobile payment technologies can converge.

To put it more simply, Rewardle has given the traditional “buy 9, get 1 free” paper punch card a digital makeover and extended its utility by adding pre-ordering functionality, mobile payments and social media integrations. Rewardle’s typical clients are include the local café, yoga studio, butcher, hairdresser, juice bar and other time-poor merchants who tend to have limited operational and marketing budgets.

Earlier this year, Rewardle announced its partnership with global Point-of-Sale leader Revel Systems. More recently, Weerasooriya revealed plans to integrate Rewardle into wearable technology – particularly, smartwatches.

The progress of the company has not gone unnoticed by investors, according to an article by Mathew Beeche that examined the emerging backdoor listing trend in Western Australia. Weerasooriya told Startup Daily in July that numerous groups had reached out to him over the past few months, seeking to backdoor list or IPO the business.

“I’ve had plenty of cups of coffee with VCs over the last 18 months discussing Rewardle and our growth plans, that’s pretty standard. But in the last few months the ASX has emerged as a potential growth funding source,” he told Startup Daily at the time.

Weerasooriya, who currently owns a total of 75 million shares in the company, refused to comment on the IPO. It is clear, however, that Rewardle’s IPO opened quite recently. According to the Prospectus, the company is seeking to raise AUD$4 million through the issue of 20 million shares at a price of $0.20 per share. The company has also established an Employee Share Option Plan to assist in attracting and retaining current and future employees by providing them with the opportunity to own shares in the company.

The $4 million will be used to fund the growth of the startup, according to the Chairman’s Letter in Section 1 of the prospectus. More specifically, the funds will allow the startup to “enhance the early mover advantage (benefits of early entry into a new market) that the Company has established with respect to product development, business process management and Merchant and Member Network development.” It will also allow easier access to equity markets to fund future growth on the Merchant and Member Network as well as acquisition opportunities.

Rewardle’s only revenue at the moment comes from merchants paying a subscription fee of $49 per month for digital customer engagement tools – which assist them in email, social and mobile marketing. Of the 1,500+ merchants using the Rewardle platform, only 64 have transitioned into paying subscribers. In the prospectus, it states that this has been deliberate on behalf of the company: “At present it has been determined that resources associated with converting trial Merchants to paying subscribers are more valuable when applied to the growth of the Merchant and Member Network which will enhance the Company’s early mover advantage and the Network Effects inherent in the Rewardle business model.”

In addition to marketing services, the startup will be generating revenue from brand partnerships and mobile payments. Brands will be charged a fee to engage with Rewardle’s Merchant and Member Network – similar to loyalty programmes like Qantas Frequent Flyer and Virgin Velocity that allow brands to purchase points for distribution to their customer base as incentives.

At the moment, the company is investigating a variety of approaches for collecting fees from the facilitation of payments between members and merchants, so the third arm of the company’s revenue model is still a work in progress.

More details will be revealed once the company agrees to comment.

Disclosure: Ruwan Weerasooriya is on Shoe String Media’s advisory board. 





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