UK digital ‘end-of-life’ services startup Farewill acquired for $16.8M

Farewill, a U.K.-based end-of-life services provider that offers online tools for writing wills, organizing probate, and arranging cremation, has been acquired by funeral service provider Dignity in an all-shares deal valuing the startup at £12.9 million ($16.8 million).

The deal is a classic case of an established legacy incumbent chasing growth by buying a younger digital upstart, and is designed to help Dignity gain a larger portion of a death care services market that’s expected to reach $190 billion by the end of the decade.

Founded in 2015, Farewill is one of several startups to emerge in a category dubbed “death tech.” This includes apps to memorialize loved ones and social platforms to support the grieving process. Some have raised significant amounts of venture capital funding, too, such as Empathy, which emerged from stealth back in 2021 with $13 million for its digital assistant for bereaved families — going on to raise a further $47 million just a few months ago.

Farewill, for its part, has raised around $39 million since its inception, from backers including Augmentum Fintech, Highland Europe, Keen Venture Partners, Kindred Capital, and Wise co-founder Taavet Hinrikus. This means that Farewill’s $16.8 million valuation is well below the capital that had been injected — a fire sale by just about any estimation.

Financials

It’s not clear what the exact circumstances were that led to this sale — reports emerged back in February that one its investors, the VC arm for Daily Mail and General Trust (DMGT), had cut its stake’s estimated value by two-thirds, suggesting that Farewill’s valuation had dropped from £86 million to £30 million. Today’s news is worse than that.

Farewill’s most recent accounts showed an increase in gross sales (+31.4%), revenue (+36%), and gross profit (+88.9%) for financial year 2023. However, its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) figure showed that the company still wasn’t operationally profitable, with losses of £4.2 million — though those losses had fallen by half on the previous year.

Add to all that, the transaction is being financed through a share-for-share exchange. Farewill’s shareholders will now own stock in Castelnau Group — an investment firm and Dignity’s majority shareholder, after a joint venture with serial entrepreneur Sir Peter Woods’ SPWOne took Dignity private in a $349 million deal last year.

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“The addition of Farewill to Dignity’s offering embodies Castelnau’s strategic ambitions for Dignity, helping Dignity to drive its digital transformation and serve its customers even better,” Castelnau CEO Richard Brown said in a statement.

Dignity’s origins can be traced back more than 200 years, though its current incarnation is the result of various mergers and acquisitions. However, with a digital-native rival under its wing it will be hoping to be able to combine collective strengths. Dignity operates more than 40 crematoria in the U.K. and has a strong on-the-ground presence, while Farewill’s online-focused services looks like a complement to that — “combining the strength of Dignity’s heritage, with Farewill’s expertise in online journeys and data,” as they put it in a press release.

The Farewill brand will continue as is, and will operate independently.

“At Farewill, our mission has always been to make the end-of-life experience as straightforward and stress-free as possible,” Farewill co-founder and CEO Dan Garrett (pictured above with Dignity CEO Zillah Byng-Thorne) said in a statement. “Joining forces with Dignity allows us to stay true to that mission while benefiting from the experience and resources of a company that has been a trusted name for generations.”

The acquisition is still subject to regulatory approval, and isn’t expected to close before January 1, 2025.