Global bicycle retail platform, BikeExchange Limited (Proposed ASX: BEX), are set to debut on the exchange on February 9 at an offer price of $0.26 per share. The small cap is looking to raise $20M, which would give the company a prospective market cap of $76M. The offer formally closes on January 25. 

RPro Holdings Limited, which will be renamed BikeExchange Limited, was founded back in 2007 and has since become the largest cycling marketplace in the world with operations spanning across 8 countries. The online model ensures the company never holds any physical inventory, nor does it require significant ongoing investments to continue the platform’s operational activities. 

BikeExchange.com connects consumers and retailers through the online platform. The draw for consumers includes increased shopping convenience and the transparency of upfront pricing, with the platform facilitating the transactions between retailers and buyers. Search results can be filtered to help find the exact type of bike required via postcode distances, wheel size, bike type, and condition, with private sellers able to advertise their pre-owned bikes through the platform. 

BikeExchange receives recurring revenue in the form of subscriptions from their retailers and manufacturers, commissions through e-commerce transactions via the platform, and media sales revenue in the form of classified listings, feature upgrades, and ancillary services. 

During the first half of 2020, BikeExchange experienced an 187% increase in website traffic compared to the year previous. The company also reported a 492% increase in e-commerce sales revenue with transaction value also increasing by 292%. However, the increase in the e-commerce revenue stream was insufficient to outweigh the reduction in the main source of revenue, subscriptions (69.5% of total revenue in FY20), which experienced a CAGR loss of -6.6% from FY18 to FY20. 

The company is yet to be profitable, recording a net loss of $2.9M in FY20, $4.5M in FY19, and 2.9M in FY19. Of the $20M being raised under the offer, 30% ($6M) is proposed to be used for marketing for customer acquisition, 25% ($5M) toward working capital, and the remaining 60% to be equally divided across product development, costs of the offer, and investments into resources to scale the business.