Company Overview –
Alchema is a smart home cider making machine that allows anyone to easily craft delicious hard cider, mead and even wine from fresh fruit right on their kitchen countertops in just two weeks.
|Name: Alchema||Minimum Raise: $50K|
|CEO: Oscar Chang||Maximum Raise: $500K|
|Company Founded: 2014||Structure of Raise: SAFE|
|Location: San Francisco, CA||Valuation: $3M Valuation Cap, 20% Discount|
|Crowdfunding Portal: Microventures||Minimum Investment: $100|
|Crowdfunding Link: https://app.microventures.com/crowdfunding/alchema|
|Positives||Risks and Reservations|
|Team of creative scientists who appear to have found a novel product that captured early attention on Kickstarter.||Team has little to no startup experience.|
|Fair valuation cap and discount offered for SAFE investment agreement.||Team could be fortified by adding experts in distribution (retail, web, TV, etc.) of kitchen type appliances.|
|Burn rate seems high considering the stage of the venture.|
|Even though the product is on the lower side of the planned competitive products, it is still “expensive” for the average consumer and makes the equivalent of 2-3 bottles of wine over a two week or so period.|
|Leadership appears to be heavily consolidated via the CEO/Founder.|
Traditional at-home fermentation tools do not tell the brewer when the fermentation is finished. The user must either rely on his or her experience or retrieve a sample to measure the alcoholic content using a hydrometer, which risks contaminating the brew.
The Alchema device has an air-tight seal, self-sanitizes to prevent contamination, and has a built in UVC-LED light that kills bacteria. The device also has built-in sensors that monitor important parameters during the brewing process, taking the guess work out for beginners. The coordinating App will let users know when the desired alcohol content and sweetness has been reached.
In addition to the Alchema device, the company plans to roll out additional accessories in 2018. They are also considering a kombucha maker and a homebrew system for vinegar and enzyme brewed beverages.
Alchema plans to make money through three different revenue streams which include the sale of devices and ingredients, the sale of accessories, and the sale of company branded beverages. Currently, the Alchema device is available for pre-order for $429 through their website, InDemand platform, and through BackerKit. Accessories purchases and company branded beverages aren’t available until early 2018 & 2019 respectively.
- 738 pre-orders through Kickstarter
- 34 pre-orders through InDemand
- 28 pre-orders through BackerKit
*Source: Company provided on crowdfunding campaign website
Senior Management Team
|Oscar Chang||Angel Huang||Young Yang|
The team is made up of scientists who have created a novel product. The team lacks experience in business in general, with startups in particular, and also with the disciplines of sales, marketing & distribution. The team should choose to craft their strategic disposition in the pillar of product innovation to leverage their inherent capabilities, but they need to bring on some additional executives and/or board members who can provide value in the realm of business leadership.
Industry: Homebrew Industry
TAM (Total Addressable Market):
- $500M cider market (U.S.)
- $12.9B global cider market in 2020
*Souce: Portal Page
Driving Trends: 13.9% compound annual growth rate in U.S.
The home brew industry caters to a lot of hobbiests who have been ok with the complexities of equipment and procedures to brew their own beers and wines. This product provides an opportunity to attract a new realm of consumer who seek a simpler process. Its hard to know at this point what sort of efficiencies may be found when manufacturing at scale – I would expect the market to open up signficantly if the price point for the product would get sub $100.
There are several differentiators: 1- the product is focused on ciders rather than beers or wines, 2- their product makes the process simple and easy, and 3- they are pricing at the low end of the competitive offerings (a strategic positioning of “innovation” would suggest not competing on price.)
Revenue to date: $0
Revenue Last Fiscal Year: $0
Previous Funds Raised: $344,231 from Kickstarter in 2016
Use of Funds
- Final pilot testing for the Alchema device
- Shipping & manufacturing costs
There are definite exit opportunities from a wide range of potential strategic acquirers including competitors and industry incumbents. Additionally, this type of product (as evidence by their kickstarter campaign) can get broad interest and attraction, which may also lend itself to additional crowd fundings and public offerings.
Recent Acquisitions in the Field
|Date||Company Acquired||Acquired By||Amount|
|Oct. 15, 2016||Northern Brewer||Anheuser-Busch InBev||Undisclosed|
Expert Opinion Summary
This deal presents an interesting opportunity at a very early stage, with a fair valuation cap and discount, led by a team of scientists who have created an interesting product that has demonstrated early traction through Kickstarter.
The team enhances itself by curbing their burn rate and building out their board of directors & executive team with people experienced in startups and sales-marketing-distribution.
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