05 Aug Client Case Study – Loveshark
Loveshark is an innovative UK based social augmented reality (an interactive experience of a real-world environment) games company, who describe themselves as “making camera games for Generation Z.”
The company, founded by Tara Reddy and Sam Weekes in 2018, have been working with Barnes & Scott for over a year. The engagement comprises a number of different services including accounts production, tax compliance, managing SEIS/EIS investment rounds, and most recently undertaking a Video Games Tax Relief (VGTR) claim.
Tara’s moment of inspiration to start Loveshark struck when she was working with her co-founder at Blippar, an established augmented reality company.
The pair realised that there was a gap in the market to create games for a young female audience so both quit their jobs to start their own company.
Tara’s motivations were partly borne out of her own frustration of being a gamer herself growing up and finding that the selection of titles on offer were focussed on a young male audience.
“When I was growing up I was a gamer and the selection of games which appealed to me were minimal. Most games are made with teenage boys in mind. At Loveshark we aim to make games which take girls seriously and are not just about putting on makeup, going on dates and trying on outfits. We make games which are creative and social, which resonate well with a young teen audience.”
An ambition to be the digital version of X-Factor
Since incorporating the company has already produced and launched laserDRAW (a game which is focussed on drawing 3D doodle in the air) on Apple’s iOS store. To date, laserDRAW has been featured in the top 100 downloads in over 17 countries and has been listed as a featured app by Apple’s USA, China, and Europe iOS stores.
Additionally, a new game has recently been soft-launched for the Asian market.
Tara’s longer-term aim for the company is to build a large scale platform which facilitates interactions between a mass audience, allowing them to create and share content with their friends, as well as play the games themselves.
“In the further away future we have the ambition to be the new digital version of X-Factor. We see this as being super entertaining and exciting but with a competitive element and the winning is not just about playing the game but may also be about who is the most entertaining.”
It is hoped that the creative elements of games will encourage more young girls and women to participate and see the games industry as a viable career route, without the need to be an engineer or very technical.
Barnes & Scott’s startup specialism
Tara was first attracted to working with Barnes & Scott due to their specialism of working with startups. In particular, she cites their experience of investment rounds and SEIS/EIS applications.
“A lot of accountants are more generalist and not used to working with startups. What first really attracted me to wanting to work with Barnes & Scott was their pragmatism and that they specialise in tech startups.”
A sticky SEIS dilemma seamlessly solved
A stressful situation which Loveshark encountered during their last fundraiser was getting their advanced assurance form for SEIS turned down by HMRC.
In most instances, the form is relatively easy to fill in, with Barnes & Scott generally recommending for clients to complete this themselves at no cost by accessing their own step by step guide, accessible for free on their website.
When there is an issue related to risks or complications they step in to help resolve the situation for clients.
Loveshark was unlucky due to initially getting their form rejected due to the “risk to capital” condition, introduced in 2018. This predominantly focuses on ensuring that companies only qualify for advanced assurance status if their investors are likely to result in capital being lost over any net return.
Barnes & Scott were able to remedy the issue by successfully disputing HMRC’s claim that the game and industry did not carry sufficient risk to qualify for the SEIS scheme.
The initial rejection was particularly pertinent for Loveshark due to them having already taken funds from a number of investors who had agreed to participate, on the basis of the company being eligible for SEIS.
Tara was assured by the firm’s experience of having been through similar situations, alongside their cool and calm approach.
“When I first emailed them about the situation they called me within around an hour and put a plan together to make an appeal. This was a really stressful time for the company and they resolved the issue quickly.”
An early year close to facilitate a speedy VGTR claim
Loveshark are midway through their first VGTR application (read Barnes & Scott’s guide here) and have so far found the process relatively light touch.
Tara’s main input into the project has been to provide supporting documentation to support qualifying expenditure for the claim.
Due to being a small company Tara has been doing most of this work herself, with the aid of an “easy to use template” created by Barnes & Scott.
Whilst the support work has taken up a fair amount of her time she cites the template approach as being more efficient than creating her own processes from scratch.
Her recommendation for first-time applicants of the VGTR scheme is to record real-time weekly logs and timesheets of staff activity in order to lessen the workload associated with retrospective claims.
In order to speed up the transaction, Barnes & Scott shortened Loveshark’s accounting period so that they can file the claim sooner. This will allow the company to receive the associated payment sooner to further ease cash flow.
It is expected that the final claim amount will be around £20,000, payable as a cash rebate due to Loveshark not yet being profitable.
Tara views VGTR as being a win-win situation for both Loveshark and Barnes & Scott and sees it as being one of many proactive ideas which the firm has suggested to help the company.