◎ Company overview
Biocrem is a pure-play direct cremation provider that leverages its focus on unattended cremations to provide Cremation-as-a-Service (”CaaS”).
Key value drivers:
- CaaS decouples demand from geographical location, in effect bypassing catchment areas and increasing total addressable market
- Requires both less Capex to build and less Opex to run than a traditional crematorium operation, thereby maximising ROCE (Return on Capital Employed)
- Maximises energy recovery by operating continuously in long shifts, thereby reducing the environmental footprint of an equivalent traditional facility
Traditional market: The UK’s existing 301 crematoria are configured to serve the traditional ‘attended’ cremation, but these same sites also serve the recent and fast growing direct ‘unattended’ cremation market. This lack of specialisation (”square peg in a round hole”) results in an infrastructure that is costly to build and operate, ultimately resulting in higher prices for its clients, i.e. funeral directors.
Polluting industry: Cremations are an energy-intensive process that releases 200 - 245 kg of carbon, which for the UK is equivalent to ~ 115k tonne each year. Burial is becoming more expensive and harder to access due to lack of space in urban environments. It disrupts the fragile ecosystems in the soil and can pollute groundwater with embalming chemicals and decomposition.
Biocrem is launching the UK’s first purpose-built crematorium focused solely on unattended cremations. Advantages:
- Decoupling demand from geographical location thereby expanding market reach
- Lowering required CAPEX and OPEX over a traditional facility
- Reduce CO2 and NOx emissions by 60-80% over traditional processes
Biocrem offers a new cremation solution for the UK that is affordable, eco-friendly and accessible to all. Its facilities carry out unattended cremations and focus on maximising efficiency of the core process.
- Strong and experienced team: core team has previous PE (investment in funeral care), crematoria management experience (successfully launched operated and exited crematoria), and funeral care services (offering Direct-2-Consumers at-need and pre-need direct cremation products under the Neocremations (£280k in revenue in 2 years, UK’s first B-Corp certified funeral director) brand.
- Superior ROCE: with capital requirement to build a facility an order of magnitude lower than a traditional crematorium, as well as lower Opex due to operational efficiencies that are specific to the ‘unattended’ cremation process, Biocrem will showcase superior unit economics.
- Strong growth of affordable direct cremation: there are today ~ 600k funerals p.a. in the UK, 80% of which are cremations, of which ~ 20% are direct cremations. By comparison, the share of direct cremations was as low as 2% in 2018.
- Pioneers of CaaS: unlike traditional crematoria, Biocrem will not only provide cremation services to funeral director clients, but will also white label (cremation-as-a-service) its offering to other funeral industry practitioners (e.g. funeral plan providers, hospices, retirement homes) thereby increasing its addressable market and pioneering the concept of eco-friendly affordable cremations.
- Attractive acquisition target: by building a park of direct cremation-focused crematoria across the UK and demonstrating its ESG credentials, Biocrem will become an attractive acquisition target for large UK and/or European crematoria operators. Year 5: £1.7m EBITDA (40% margin), £600k FCF
- ◎ Company overview
- 🚀 Track record
- 🏬 Biocrem Product Offering
- ⚱️Business Model
- 💸 Investment opportunity
- 📊 Financial overview
- 🏇🏻 Competition
- 🌍 Market size
- 🧲 Team
🚀 Track record
For 2 years since Jan 2020 the team was focussed on growing the demand side (B2C) of the funeral business with a Direct-2-Consumer at-need and pre-need direct cremation product called Neocremations (www.neocremations.co.uk). Neocremations was a new breed of digital-native funeral director. Based on the successes (industry-leading customer satisfaction ratings) and lessons learnt, the company is shifting focus to building a logistics layer on the supply side (B2B) before layering the demand side on it.
B2C - demand side (www.neocremations.co.uk)
- Turnover of £61,745 - 49 cremations (priced at £1,295) and 3 funeral plans
- Secured strategic partnership with Safe Hands Ltd - selling direct cremation funeral plans white labelled by Safe Hands for £1,595
- Demonstrated their ability to create product customers rated highly
- Turnover of £175,644, 132 cremations and 53 funeral plans
- Demonstrated the ability to scale via digital distribution as well as roll out new products
- Explored B2B product feasibility, e.g. Biocrem
- Safe Hands suddenly and unexpectedly collapsed into administration leaving Neocremations with no product to sell
- Turnover dropped to £44,803, 30 cremations and 12 funeral plans
- Initiated pivot towards Biocrem. Milestones include obtaining vendor financing from Europe’s largest OEM and pre-approval processes with LA’s for site for first facility
B2B - supply side
The team’s established track record positions them well for expansion in the B2B market. By leveraging their proven sales ability and industry expertise, the team has pivoted to capitalise on B2B opportunities.
- Secured vendor financing from Europe’s largest OEM allowing Biocrem to launch operations with zero cash upfront to build its first crematorium
- First site identified in an converted farmland in South England allowing Biocrem to target the ageing Southern area of the UK
- Completion of pre-permitting applications process with Local Authority to guarantee successful full application
- Indications of interest from funeral directors to contract Biocrem once the facility is up and running
Why pivot from B2C to B2B?
🏳️ Funeral director side of the funeral market is highly fragmented and economics of the D2C model are unclear given high digital distribution costs
🤝 Today there is no pure-play direct cremation-focused facility in the UK despite the recent increase in the share of direct cremations
🦕 The economics (unit economics, ROCE, ROI) of the Biocrem business are category leading
🔃 Focus on B2B growth and then open a new B2B2C markets by offering plan providers, hospices, retire homes and doulas the platform to white label direct cremation services to their customer base.
Site 1: Converted dairy farm near Winchester - Lease Agreed Subject to Biocrem’s Financing
- Dairy farm converted to light industrial warehouses
- 7,000 square feet facility with offices and parking
- Easy access to A3 and A31
- Pre-application process with Winchester Local Authority completed
- Rental costs 50% lower than equivalent surface area in industrial estate on outskirt of town
- Landlord also operating an anaerobic digester together with other local farmers provides option to use locally sourced biogas (TBD)
🏬 Biocrem Product Offering
Funeral directors sell traditional ‘attended’ cremations as well as direct ‘unattended’ cremations. Direct cremations are a low-cost alternative that have gained traction with the UK public in the past decade.
Biocrem offers funeral director a purpose-built direct cremation-focused facility with collection and delivery services.
💻 Product offering
- Direct cremation - the funeral director delivers the deceased to Biocrem who performs the cremation. The ashes are kept at Biocrem’s facilities and are collected by the funeral director.
- Direct cremation with transportation - Biocrem collects the deceased from the funeral director, performs the cremation and delivers the ashes back to the funeral director.
- CaaS - offering funeral industry practitioners a white label eco-friendly direct cremation product that burnishes their ESG credentials
- Biocrem is also considering the potential roll-out of water resomation and terramation processes should market demand warrant it (this has not been factored in the business plan).
✅ Biocrem USP
- 21st century digital experience for funeral directors with Biocrem phone app providing electronic booking, billing, facility access, after sale service.
- Eco-friendly credentials that can be showcased to the families of the deceased guaranteeing a sustainable send-off.
- First mover advantage in the CaaS market accessing a large potential of untapped distribution channels
- Direct cremation - £250
- Direct cremation + transport - £350
- CaaS - £800
Average UK price of a cremation paid by funeral directors: £832 for attended cremation, £400 for direct cremation
Challenges funeral directors face
🔺Lack of choice of service provider: Funeral directors are limited in their choice of crematorium by facilities that are within a ~ 50 mi. radius with often only one facility to chose from, rarely two and almost never three.
📉 Pressure on margins: The UK funeral market is under pressure due to the increasing popularity of direct cremations, which are a low-cost alternative to traditional cremations. This trend is resulting in cannibalisation of high margin traditional cremations, which is putting pressure on the margins of funeral directors and crematoria operator. Funeral directors are seeking cost-effective solutions.
♻️ Environmental Concerns: There is growing awareness and concern about the environmental impact of traditional burial and cremation practices. Funeral directors and crematoria are under pressure to offer eco-friendly alternatives, such as green burials, natural coffins, or carbon-neutral cremation options.
Unsophisticated mom & pop operations: 70% of UK’s funeral directors are operating a single shop front. These operators are generally family-owned, are passed from generation to generation and are not sophisticated in their day-to-day operations
Biocrem is a location-agnostic service provider; because it focuses solely on unattended cremations, it allows funeral directors to select Biocrem as a service provider even if the distance is large.
Biocrem offers a competitive price point made possible by its focus on direct cremations. Biocrem’s unique model of low capital requirement coupled with low operating costs are making it uniquely suited to help funeral directors. It operates a new type of hybrid cremator which can use gas, biogas or electricity, minimising fuel usage by operating almost continuously.
BioCrem becomes the first and only brand in the UK to provide CO2 and NOx emissions-minimized cremations. It achieves this by operating by operating almost continuously which maximises energy recovery.
Biocrem provides a phone app that provides intuitive booking, scheduling, billing and customer-support services facilitating logistics for the funeral directors which leaves them more time to support their customers.
Biocrem charges a fixed fee per cremation, as per the standard crematoria model. Unlike the traditional crematoria model however, Biocrem offers collection and delivery services to maximise its opportunity to enlarge its addressable market beyond the usual catchment area.
In order to provide this collection and delivery service, the Biocrem business plan includes a fleet plus associated ancillary equipment of ‘private ambulances’ equipped for transportation of deceased.
Because Biocrem focuses solely on unattended cremations, it is able to build a facility at a fraction of the cost of a traditional crematorium. This is possible because Biocrem can do away with chapels, reception areas, maintained grounds, gardens of remembrance, and parking spaces. Moreover, Biocrem is able to build its facilities in industrial park, converting a light industrial use into a crematorium facility.
Biocrem has negotiated a vendor financing agreement with Facultatieve (FT), Europe’s leading manufacturer of crematoria equipment. The cremator FT will install in the first facility will be a hybrid cremator that can use gas, biogas and electricity as energy sources.
Source: Facultatieve Analysis, 2022
Traditionally, cremations have primarily used natural gas or propane as fuel sources (99% of UK crematoria). When these fossil fuels are burned, they release CO2 into the atmosphere. For every gas cremation, approximately 200-245 kg of CO2 is released (the equivalent of driving your car for 470 miles), which is around 115,150 tonnes of carbon released each year solely from cremation in the UK.
Biocrem has estimated in conjunction with OEM manufacturer that operating its machinery on continuous shifts (something made possible solely due to the direct-cremation nature of Biocrem’s model) would reduce energy consumption and therefore CO2 emissions by a factor of 10.
💸 Investment opportunity
Use of funds for this seed round is to establish Biocrem’s first facility and fund operations leading to commercial launch. Thereafter facility #1 will become self-sustaining and profitable. Financing of the second facility (North England) is likely to be done using bank debt as by that time Biocrem will be a cash generating business with a large PP&E installed based (attractive to banks and impact lenders).
- Setup site 1 (9 months)
- Secure contracts with funeral directors part of the Association of Green Funeral Directors
- Use vendor financing to reduce upfront CAPEX and have £99 contribution to COGS.
- Reach 1250 cremations in site 1 (80/20 split extra/standard) to generate £442k in revenue
- Focus sales on funeral directors
- Prepare platform for CaaS model sales targeting plan providers.
- Open site 3 (3rd vehicle and driver), 2000+ cremations per site
- Scale CaaS revenue to £2m
- Generate £380k profit
Next fundraising window: Q4 of Year 3 - likely to be bank debt financing
- Pure Cremations (2015) was acquired by Epiris for undisclosed amount (2022 valuation £400m), Pure Cremations received a loan from Santander Bank for £18m to buy out Puma Investments and other shareholders. Pure Cremation, a leading provider of direct cremations in the UK, has received £7.35 million from Puma Funds between 2017 and 2018
- Foundation Partners Group is a company that has been investing in funeral service businesses with a high cremation mix to become one of the nation's leading providers of cremation services and the second-largest provider of funeral services by case volume.
- Farewill is an online will writing and probate service that recently received backing from venture capital firm Augmentum Fintech, who led a £7.5m fundraising round for the company. Farewill launched a direct cremation service
- Abbey Funeral Services, venture capital companies have invested significant funds into local, online, and remote funeral companies
📊 Financial overview
- Standard cremation - £250
- Standard cremation + transport - £350
- CaaS - £800
Currently, average unattended cremation fees across the country range between £250 and £500, with average of £400.
The historical evolution of crematoria fees over the past 10 years shows that fees have increased well in excess of CPI, in nominal terms at a CAGR of 6% between 2008 and 2018, equivalent to an inflation-adjusted increase of 48% across the Period.
TAM (Total Addressable Market)
The TAM represents the total potential market demand for Biocrem's services, considering all cremations in the UK.
There were 523,303 cremations in the UK in 2021 across 310 crematoria. Assuming this trend continues, and using the historical CAGR in the cremation rate of 0.33% per year, the cremation rate is projected to reach 82.3% of all deaths by 2037. Considering the projected 777,000 deaths in 2037, the estimated number of cremations would be approximately:
Projected cremations in 2037 = 777,000 * 0.823 = 639,771
Therefore, the TAM for Biocrem would be the potential market demand for cremations in the UK, which is estimated to reach around 639,771 cremations in 2037. TAM: £223m
(UK Funeral market value: £2.5bn)
SAM (Serviceable Addressable Market)
The SAM represents the portion of the TAM that BioCrem can realistically target and serve.
In this case, the SAM can be defined as the number of cremations that Biocrem can potentially handle in its purpose-built crematoria.
Based on the assumption that Biocrem will charge £250/350 per cremation UK funeral data in 2021:
- 667,479 registered deaths
- The cremation rate in the UK is 78.4%, resulting in 523,303 cremations
- 17% of all cremations were direct: 88,600
Assuming a similar proportion of direct cremations in the future, the SAM can be estimated as follows:
SAM = Direct cremations in 2021 * £350 per cremation: 88,600 * £350 = £31m
SAM: approximately £31m
SOM (Serviceable Obtainable Market)
The SOM represents the portion of the SAM that Biocrem can realistically capture based on its business strategy and competition.
In summary, the TAM for BioCrem is estimated to reach approximately 639,771 cremations in 2037. The SAM, representing the potential revenue from direct cremations that Biocrem can target and serve, is estimated at around £31m.
Using the capacity of each site: At full capacity and operating with maintenance shut-down requirements, Biocrem can process 3,000 cremations per site per year, based on that and the 2 sites planned for the first 4 years, Biocrem can process maximum of 6,000 cremations. SOM: £2.1m
Companies using own crematoria
The UK direct cremation market is fragmented with the top 5 providers estimated to perform 21,500 direct cremations in 2022. Pure Cremation is the largest player. Most competitors have between 1-5 crematoria sites, clustered around London and Southern England. This limits their geographic reach.
Companies using 3rd party crematoria
The analysis shows these additional players are relatively small, likely generating under £10 million in combined revenue. They rely mainly on 3rd party crematoria. Farewill is likely the largest based on its broader funeral services.
|Logo||Company||# Cremation 2022||Avg monthly cremations||# of sites||Price point||2022 Revenue||Additional services||tag|
£995 - £1,695
collection, storage, delivery of ashes
use own crematoria
£1,050 - £1,295
collection, ashes caskets
use own crematoria
£995 - £1,295
customized ashes, memorial packages
use own crematoria
home collection, ashes jewelry
use own crematoria
keepsake packages, bereavement counseling
use own crematoria
- First mover CaaS advantage - no one in the UK is currently offering CaaS.
- Superior unit economics with lower CAPEX and OPEX costs purpose-built for unattended cremations - enables lower pricing.
- Leverages logistics network and technology to extend geographic reach across UK - not restricted by crematoria locations.
- Eco-friendly positioning and digitally-enabled platform appeals to evolving consumer preferences.
- New entrant targeting fragmented market poised for growth in direct cremations. First mover advantage.
In summary, Biocrem enters the market unencumbered by legacy infrastructure, with a lower cost base, national footprint, and modern eco-conscious brand. This provides an advantage versus fragmented incumbents concentrated regionally.
🌍 Market size
UK Funeral market
The UK funeral market experiences significant demand for cremations. Over the past 10 years, crematoria fees have steadily increased at a compound annual growth rate of 6%, resulting in a 48% inflation-adjusted increase. Funeral directors operate in a market where cremation fees generate healthy operating margins, with EBITDA margins projected to be no less than 44% at maturity. Moreover, the majority of investment appraisals forecast operating profit margins exceeding 50%.
The market is concentrated on the crematoria side but fragmented for funeral directors. Direct cremations are growing rapidly off a small base and present an opportunity for new eco-friendly cremation facilities.
- In 2020, there were 520k cremations across 300 crematoria in the UK, with a cremation rate of 78%.
- On average there were 2,131 cremations every day in 2021 (we based this on weekdays only across the country)
- In 2022, the average cost of a cremation to the end consumers is £3,600 (£1,500 for direct cremations)
- Using ONS projections of 777,000 deaths in 2037, and assuming the historical CAGR in the cremation rate of 0.33% continues for the next 20 years, the cremation rate is forecast to reach 82.3% of all deaths by 2037
- In the UK, there are approximately 303 crematoria. The market is concentrated, with the top 3 providers (Dignity, Westerleigh, Memoria) owning over 40% of crematoria
- 50% of crematoria have no local competitors within 30 minutes drive time. New crematoria openings have mainly come from the large private providers
- Crematorium fees in the UK have risen consistently over the past decade. Direct cremations range between £250 and £500, with average of £400
- According to the CMA (Competition and Markets Authority), new crematoria projects are projected to achieve EBITDA margins of no less than 44% at maturity
- The busiest crematorium in 2021 was Andover with 9,632. The most expensive crematorium in 2021 was Friockheim (£1,100) and cheapest crematorium in 2021 was Belfast (£392)
- Direct cremations accounted for a significant portion, 18% of all cremations were direct with 88,600, recorded in 2021.
- Awareness of direct cremations is growing, with 59% of funeral directors seeing an increase in client interest in direct cremations over the past year.
- Average cost of direct cremations in UK is £1500, 2% of all funerals in 2018 were direct cremations, 18% in 2022.
- The UK funeral directors market is estimated to be worth around £2 billion in revenue annually
- There are over 10,000 funeral homes in the UK. The market is highly fragmented
- Geographical constraints often limit funeral directors to a catchment area of approximately 50 miles, requiring them to work with local crematoria
- The market is dominated by a few large providers: Co-op Funeralcare has around 1,000 locations, Dignity around 800 locations. Other large consolidators are Funeral Partners,, C.P.J Field, Golden Leaves.
- According to the Funeral Guide, the average cost of cremation to funeral directors in the UK in 2023 is £832, which covers the cost of a standard weekday time slot.
- This deal could be replicated throughout the funeral plan industry to allow them to compete with Pure Cremations
🎯 Go-to-market plan
Part 1 - Creation of a B2B sales channel with local funeral directors who are selling direct cremations to their customers. The management team has experience with pre-marketing of a new facility and has done it successfully in previous instances with traditional crematoria (from 0 to 1,000 cremations in year 1 with limitations of catchment area).
Activating the sales channel:
- Targeting in the first instance funeral directors who are part of the Association of Green Funeral Directors (in excess of ~ 500 across the UK)
- Partnership with green burial grounds, similar to Green Acres in Manchester, for Biocrem to become the de-facto crematoria provider of woodlands plot providers (10,000 burials p.a. and growing)
- For all other FDs price services at a significant discount to what their local crematoria are charging for direct cremation fees (see success of Pure’s model)
- Data-driven dynamic pricing algorithm that maximises revenues based on instantaneous demand levels, similar to yield management for the airline industry.
- Between 1 and 10 facilities
- Forced to minimise COGS due to own competitive pressures
- Keen on offering a ‘green service’ to its own customers
- Willing to enter long-term partnership with cremation provider with minimum volume guarantees
Geographic expansion plan: Several facilities spread across the country to cover England and Wales
- Industrial unit 1 shall be located south: this will be upsized and most of the space wont be used but capacity will be 2500 - 3000 per year
- Industrial unit 2 between Liverpool and Manchester
- Biocrem will have a fleet of vehicles and drivers to cover nation-wide transportation
Part 2 - Launch of CaaS product. Many funeral industry practitioners in the UK be it funeral plan providers, hospices and retirement homes would like to vertically integrate and offer their clients an affordable direct cremation service at competitive prices. Biocrem’s CaaS is a unique service that would white-label the Biocrem operations to allow such offering
⛈ Funeral Plan Providers
- Pre-need funeral plan providers in the UK are not particularly interested in the direct cremation segment because it cannibalises their high margin traditional funeral business. They however need to offer the product because the market demands it
- The management team of Biocrem has a track record of negotiating off-take deals with funeral plan providers to solve their problem with a turn-key solution that facilitates their operation and increase their margins
Other funeral industry practitioners
- Retirement homes - CaaS would be a new offering that fits a narrative of sustainability and affordability
- Hospices - CaaS would be a new offering that fits a narrative of sustainability and affordability
- Online D2C direct cremation funeral directors (e.g. Farewill) - CaaS provides a simple affordable alternative to their current set up whilst showcasing eco-friendly and carbon neutral credentials
- Doulas/Humanists (as many as 5,000 in UK who provide ceremonies of life, i.e. non religious funeral services) - CaaS gives them an opportunity to work on their brand as a vertically integrated offering
- Eric, former private equity professional, brings a wealth of experience in disruptive ventures, while his deep understanding of the funeral care industry, gained through his ownership and board positions in major European funeral director chains, gives invaluable insights into the shortcomings of existing players.
- Steve's track record of successfully building, launching, operating and selling crematoria operations ensures the team has the know-how to replicate a formula of success into this new venture.
- Benjamin, an entrepreneur with a proven track record in building scalable digital businesses, and driven by a shared passion for combating climate change.
Together, the team’s diverse backgrounds, strategic insights, and track record in the funeral care industry positions it ideally to disrupt a staid and complacent industry with a much needed product that strangely is common on the European continent but not yet in the UK.
Disclaimer: This memo and all documents presented and attached here is confidential and intended for Fundie Ventures and its affiliates. It is strictly forbidden to share any part of this document with any third party, without a written consent.
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