When city navigation app Citymapper launched a crowdfunding campaign earlier this month, it was a resounding success. The initial £1 million target was smashed within hours and the campaign had to close after just one day when close to 9,000 investors scrambled to get their hands on its shares. In one of the fastest fundraisers in crowdfunding platform Crowdcube’s history, Citymapper ended up taking £6.7m of new cash in just 24 hours, with the largest single investment coming in at £100,000.
Not everyone was taken with the campaign, though. In the Crowdcube discussion board potential investors bemoaned the lack of financial or strategic information from the loss-making company. In a post entitled “I’m out”, an initial supporter commenting under the pseudonym PSYANIDE said that as there were “no financials, plans or strategy in the pitch” he was cancelling his investment. “The company has no revenue to speak of and is burning through cash,” he added. Another person under the pseudonym OliW1, who said they had been “holding out for a prospectus”, followed suit, noting they could not make “an informed decision without details”. Mikkel58, meanwhile, wished Citymapper luck but said “I won’t be sharing in your future, because you won’t share your present with us”.
For Citymapper CEO Azmat Yusuf it is “unfortunate” that some people were put off the crowdfunder by the lack of detailed financial information, but he says he has mixed feelings about this feedback.
“I don’t want this to come out wrong, but when you’re doing a crowdfunder you’re looking for support,” he says. “I wanted to share more but in a pandemic you don’t want to share projections because you don’t know how it will turn out – if you share it you are legally liable to it. On the other hand, our historical financials are available on Companies House. You need to find a balance and it’s not an IPO. I do feel mixed about it, but I hope that the people who are comfortable invested and the people who aren’t didn’t.”
It is unsurprising that Yusuf should feel cautious in the wake of the pandemic. The free app, which plots journeys for users in 80 cities around the world, generates an income from its travel card, Citymapper Pass. It has also introduced a subscription service — Club — that gives users enhanced features including a rain warning and the ability to personalise their app. Via its affiliate channel, Citymapper is also paid a small fee every time a user hails a taxi or books a scooter via its platform.
Though it is not clear just how much income those streams were generating prior to the pandemic, data released by Citymapper in March 2020 showed that they all but dried up overnight as soon as Covid-19 hit. The Citymapper Mobility Index indicated that the number of journeys taking place in London dropped by 90 per cent from one day to the next while in cities including Milan, New York and Paris the decline was closer to 95 per cent. More than a year later, the situation is far from being rectified.
“The past year has been hard because a lot of our users have been missing,” Yusuf says. “In January 2020 I was feeling good because we had Pass working and Club, our subscription service, was going to launch in March. I told the team that I had a plan to profitability but then everything got smashed. Profitability has been hard to pursue throughout the pandemic.”
The current plan for growth is to bring the app, which is already used by 50 million people, to a much wider audience. In its Crowdcube pitch, Citymapper said its aim is to “cover all major metro cities in the world”. Yusuf says six Italian cities and eight in Spain will be added in the next few weeks, followed by others in Eastern Europe and Asia in June and July. In terms of making money that is likely to be a slow burn though, not least because Club, which costs £2.99 a month (£19.99 a year), will be a hard sell when the best of the app’s functionality is available without it. At the same time, as one source close to the business says, “people will subscribe for Netflix, but they’re just not used to doing it for travel”. Pass, meanwhile, is currently only available in London.
Yusuf says the third strand of income Citymapper is targeting is enterprise based, where it sells aspects of its functionality to other companies. Amsterdam-based e-scooter business Dott, which recently won one of three tenders for a pilot scheme in London, is one client. Snap-owned French app Zenly, which allows family and friends to keep track of each other, is another. Yusuf notes that each contract provides “six-figures-plus of recurring revenue”, adding that further enterprise clients will be unveiled later this year. But as a company which at the end of 2019 had accumulated £31m of losses, Citymapper is going to have to sign a huge number of these deals if it is relying on enterprise clients for its future success.