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HeronTrack 6A
The return on the Participating Notes is directly linked to the revenues that Spreds Finance will receive from HeronTrack. Consequently, all risks described below at HeronTrack level are borne by the investors. HeronTrack emphasises that it is no longer in a pre-commercial start-up phase: the company has an established product, paying customers and an installed base of approximately 30,000 tracked assets. Nevertheless, the company remains a technology company in a growth phase and is therefore exposed to the commercial, technological, financial and operational risks associated with the international development of a business based on recurring revenues. Management considers the main risks to relate to commercial execution, the working capital requirements associated with the Tracking-as-a-Service model and the successful development of international markets.
Type 1 – Project risk
1. Market adoption and growth risk
- Risk: HeronTrack operates in the growing market for digital asset management and IoT tracking.
- Consequence: There is a risk that market adoption, particularly among SMEs in the construction sector, develops more slowly than expected or that the addressable market has been overestimated.
- Observation: This risk is mitigated by an existing base of paying customers, approximately 30,000 tracked assets and a commercial offering starting at €100/month.
2. Commercial execution and international expansion risk
- Risk: The business plan relies on continued customer acquisition and further expansion, particularly in France and Germany.
- Consequence: Growth could be slower or more costly than expected.
- Observation: HeronTrack mitigates this risk through a combination of direct sales, inbound/SEO acquisition, partnerships and AI-assisted lead generation and lead nurturing.
3. Working capital requirement risk
- Risk: Under the Tracking-as-a-Service model, HeronTrack finances the hardware at the start of the customer contract and recovers this investment through monthly subscription revenues over a 36-month period.
- Consequence: Rapid growth in the number of customers may therefore increase working capital requirements before the corresponding recurring cash flows are received.
- Observation: The present financing is partly intended to support this requirement.
4. Financing and debt servicing risk
- Risk: HeronTrack has existing bank, institutional and subordinated financing and will incur additional debt as part of the crowdfunding transaction.
- Consequence: If revenues or cash flow generation are lower than forecast, this could affect the company’s ability to meet its repayment obligations.
- Observation: The company mitigates this risk through a growing recurring revenue base, 36-month customer contracts and the planned refinancing of the higher-cost KBC debt.
5. Customer concentration / contractual risk
- Risk: Certain large customers may represent a significant share of recurring revenues.
- Consequence: The loss of a major customer or a reduction in its subscription could therefore impact revenues.
- Observation: HeronTrack’s strategy is to continue diversifying its customer base, with a particular focus on SMEs and numerous relatively modest subscriptions.
6. Key personnel and human resources risk
- Risk: The company’s know-how and commercial and technical leadership remain concentrated within a relatively small management team.
- Consequence: The departure or prolonged unavailability of key individuals could impact operations.
- Observation: This risk is reduced through documented and integrated processes, AI-assisted development and commercial activities, as well as the use of Zoho One throughout the organisation.
Type 2 – Sector risk
1. Competition risk
- Risk: HeronTrack competes with providers of telematics solutions, companies specialising in asset tracking and equipment manufacturers developing their own connected solutions.
- Consequence: Increased competition could put pressure on prices or increase customer acquisition costs.
- Observation: HeronTrack differentiates itself through its hardware-independent platform, the combination of BLE/LTE/GPS technologies, its accessible entry-level offering and its fully integrated Tracking-as-a-Service model.
2. Technology and cybersecurity risk
- Risk: The platform relies on cloud infrastructure, mobile applications, telecommunications networks and IoT devices.
- Consequence: Technical failures, cybersecurity incidents or disruptions to connectivity provided by third parties could temporarily impact the service.
- Observation: The company mitigates this risk through a cloud-based architecture, multiple location and connectivity technologies, and continuous software development and monitoring.
3. Hardware and supply chain risk
- Risk: Although HeronTrack no longer sells hardware separately, its 36-month subscriptions include tracking devices.
- Consequence: Supply shortages, increases in component prices or dependence on certain suppliers could therefore affect deployment costs and margins.
- Observation: This risk is mitigated through the use of multiple technologies and suppliers, as well as by integrating hardware costs into long-term recurring contracts.
4. Regulatory and data protection risk
- Risk: Tracking technologies may involve location and usage data.
- Consequence: Changes in regulations relating to privacy, telecommunications, cybersecurity, or employee monitoring could result in additional compliance requirements.
- Observation: HeronTrack tracks equipment and assets rather than positioning itself as an employee-tracking solution, and must continue to comply with the GDPR and other applicable regulatory requirements.
5. Risk related to reliance on AI and its implementation
- Risk: AI is increasingly integrated into HeronTrack’s software development, code review, and lead generation and lead nurturing processes.
- Consequence: AI improves productivity but also creates reliance on external technology providers and introduces risks relating to output quality, availability, data protection and changing costs.
- Observation: Human oversight remains integrated into critical development processes and commercial activities.
Type 3 – Default Risk
- Risk: The risk of default means that HeronTrack does not have sufficient funds to meet its payment obligations (insolvency).
- Consequence: If the company is unable to secure alternative financing (credit crunch), it may become insolvent. In that case—as with this instrument—the holders of subordinated claims will only be paid by the insolvency administrator after the other creditors and immediately before the shareholders. In most cases, subordinated creditors are not paid in the event of bankruptcy.
- Observation: HeronTrack is a specific-purpose investment vehicle (SPV) established for specific projects. This type of structure is very commonly used in renewable energy financing, and its existence is intended, among other things, to limit insolvency risks.
- The company holds only projects. It has no personnel costs or structural overheads. Its sole role is to collect the revenues and pass them on to the investors, after deduction of any management fees.
Type 4 – Risk of lower, delayed or no returns
1. Risk associated with the lack of guarantees
- Risk: Neither the loan issued by HeronTrack nor the Participatory Notes of the HeronTrack 6A compartment of Spreds Finance provide guarantees of a return or repayment of the invested capital.
2. Risk associated with the lack of a fixed return
- Risk: Participatory Notes do not offer a fixed return.
- Consequence for both risks: The return on the Participatory Notes will depend solely on the performance of the Underlying Asset, i.e., the debt of HeronTrack. Similarly, the date of the cash repayment of the Participatory Notes to investors depends on the date Spreds Finance receives repayment from HeronTrack. If the project owner’s forecasts are not met (within the planned timeframe), there is a risk of a lower or non-existent returns and, in the worst case, partial or total loss of the invested capital.
- Observation for both risks: Investors in Participatory Notes bear the same economic risk as if they were acting directly as lenders to HeronTrack. It is important to note that the vast majority of this offering is intended to refinance existing installations that have been performing well and whose customers have consistently made their payments correctly and on time to date.
Type 5 – Risk of failure of the financing vehicle
- Risk: Although each Spreds Finance compartment is ‘bankruptcy remote’ (meaning that no other creditor can claim a right on or against this compartment) in relation to the others and in relation to the ‘general’ liabilities of Spreds Finance itself, as a result of (i) the terms and conditions of the Notes, (ii) the articles of association of Spreds Finance and (iii) article 4 of the Law of 18 December 2016 on crowdfunding; there is a subsidiary risk of insolvency of Spreds Finance.
- Consequence: Should such insolvency occur, Noteholders may be exposed to the risk of a significant delay in the recovery of their investment.
- Observation: The probability of this risk occurring is extremely low given the structure and organization of Spreds Finance, in particular the compartmentalization mechanism and the "bankruptcy-remoteness" described above. Each participation taken or loan granted to a project owner is recorded in a separate compartment and is appropriately accounted for in the accounts, taking into account the fact that the accounts are kept by compartment. As a result of (i) the conditions attached to the issue of Participatory Notes, (ii) the articles of association of Spreds Finance and (iii) article 10 of the law regulating the recognition and delimitation of crowdfunding and containing various provisions relating to finance and notwithstanding articles 7 and 8 of the Mortgage Law of 16 December 1851, the assets of a particular compartment serve exclusively to guarantee the rights of investors with respect to this compartment.
Type 6 – Risk of illiquidity of the investment
1. Risk associated with the liquidity of HeronTrack
- Risk: Liquidity risk means that HeronTrack has the theoretical means to meet its deadlines, but these resources cannot be mobilized immediately (illiquid). This can occur, for example, when the resources are invested long-term or are the subject of a loan to a third party.
- Consequence: The illiquidity of HeronTrack could lead to payment delays or, in more severe cases, to the bankruptcy of the company.
- Observation: The loan granted to HeronTrack has a term of five years. Investors will not be able to withdraw their funds before the maturity date. There is no organized secondary market for these securities. If an investor wishes to be repaid earlier, they will need to find a buyer for their participatory Notes themselves and arrange the transfer independently.
2. Risk associated with the absence of an organized exchange market for Participatory Notes
- Risk: Neither the project owner nor Spreds Finance organizes an exchange market for Participatory Notes. It is thus up to the investor himself to find a buyer for his Participating Notes. Given the absence of an exchange market for Participatory Notes, there is no way to adequately establish a comparative pricing methodology for Participatory Notes.
- Consequence: A holder of Participatory Notes may not be able to find a buyer for the Participatory Notes it wishes to sell (at the price at which it wishes to sell).
- Observation: The intention is not to sell the Participatory Notes. On the maturity date of the Underlying Asset, when the final interest payment and principal repayment occur, the Participatory Notes will be liquidated.
Type 7 – Other risks
- Risk: Spreds Finance has not conducted an analysis of the proposed project or of the financial situation of the Company.
- Consequence: Any investor considering subscribing to Participatory Notes should make its own analysis of HeronTrack's solvency, activity, financial situation and prospects.
- Observation: Any decision to invest in Participatory Notes should be based on a comprehensive analysis of the project and of this key investment information sheet. Spreds Finance's model does not provide for the presentation of analyzed projects to investors but allows investors to invest based on the information made available to them, after making their own analyses.
- To the best of the project owner's knowledge, there are no other material risks associated with its activities.
Raise summary
| Duration | 60 months |
| Interest rate | 9% |
| Reimbursement frequency | Monthly |
| Reimbursement type | Amortizing |
| Crowd investments | €78,000 |
| Committed by others | €0 |
| Amount raised | €78,000 |
| Minimum round | €125,000 |
| Maximum round | €400,000 |