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Todd Mortenson

Alchema

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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.
*Souce: Crunchbase

Company Investment
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  
Website: https://www.alchema.com/  

Review Overview

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.

Problem

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.

Solution

Current:
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.

Long Term:
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.

Business Model

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.

Traction

  • 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
Position: CEO COO CTO
Ownership Percent: N/A N/A N/A
Linkedin: https://www.linkedin.com/in/oscar-chang-06784286/ https://www.linkedin.com/in/angel-huang-711a2b32/ https://www.linkedin.com/in/young-yang-24916030/

Summary:
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.

Market Analysis

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.

Industry Opinion:
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.

Competition

Differentiator:
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.)

Main Competitor

 

Brewbot iGulu MiniBrew

PicoBrew Pico

Funds Raised $1,639,940 $1M+ $283.99K $13.9M
Website http://www.brewbot.io/ http://www.igulu.com/ https://www.minibrew.io/ https://www.picobrew.com/

Company Financials

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
  • Advertising

Exit Opportunities

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.

AngelList: https://angel.co/alchema
Crunchbase: https://www.crunchbase.com/organization/alchema#/entity

Disclaimer

Crowdfund Research is a publisher and does not offer investment advice to any specific individual.  Crowdfund Research and its authors do not receive any compensation for the due diligence reports. 
 Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.  

GAPro

By | Due Diligence | No Comments

Company Overview –

GApro instantly and securely shares insurance information anytime, anywhere, to anyone who needs it through easy to use self-service access.
*Souce: Netcapital

Company Investment
Name: GAPro Minimum Raise: $20K
CEO: Herbert (Herb) Gibosn, Jr. Maximum Raise: $100K
Company Founded: 2012 Structure of Raise: Common Stock
Location: Detroit, MI Valuation: $4.845M pre-money valuation
Crowdfunding Portal: Netcapital Minimum Investment: $100
Crowdfunding Link: https://netcapital.com/companies/gapro  
Website: http://gaprosystem.com/  

Review Overview

Positives Risks and Reservations
Team is highly experienced in the industry as well as in their respective roles. Company is very early stage – pre-revenue. There is little ability to evaluate traction, pricing and the market’s acceptance at this early stage.
They have signed their first customer to a pilot project with 17,000 policies. This effort should provide additional useful information. Company will likely require additional rounds of funding and the investor will face dilution.
If there is product/market fit, then growing through additional strategic partnerships may allow the company to scale quickly.
The recurring revenue model is great for revenue continuity and maximizing corporate value.

Problem

Every time a policy or business relationship changes, evidence of insurance and compliance verification is required. Today’s expensive certificate of insurance is a vortex of agent/broker manual effort, paper, email, faxes and procedures where data is both late and locked in certificate forms.

Solution

Current:
GAPro delivers data-driven Verification-as-a-Service, significantly reducing both costs and errors associated with legacy certificate form-based approaches. GAPro provides all insurance stakeholders with secure self-service access to their insurance information, providing real-time and ongoing insurance confirmation and compliance verification globally. Additionally, GAPro can provide new customers and sources of revenue for carriers and agent/brokers

Business Model

User payment for access to the software will be through a combination of usage fees based upon subscriptions and on a per transaction basis. Carrier subscriptions average $5K per year. Agency revenue is usage-based leading to subscriptions and averages $180 per year.

Traction

  • In partnership with Mercato Solutions
  • NAPA/Gallagher, 4th largest broker globally
  • 17,000 pilot agents
  • 100,000+ potential agents
  • Recognized as one of the top InsurTech companies to watch in 2017
  • Partnered with Insurance Thought Leadership
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Herbert Gibson, Jr. Chester Gladkowski Naga Gautham Peddibhotla
Position: CEO & Founder Co-Founder, CMO, CIO CoFounder, CSO, CDO
Ownership Percent: 61.2% N/A N/A
Linkedin: https://www.linkedin.com/in/herbgibson/ https://www.linkedin.com/in/chetgladkowski/ https://www.linkedin.com/in/gauthamrao/

Advisors:

Insurance Company Operations:

  • Stew Nelson, Senior Risk Advisor – Kapnick Insurance
  • Bob Dowdell, Former Chairman and Chief Executive Officer of Marshall & Swift / Boeckh and advisor to Genstar Capital in the area of financial and business services.

Technology & Application Security:

  • John Wurler, President – One Beacon Technology Insurance Company
  • James McGovern, Chief Architect – Hewlett-Packard

Industry Research:

  • Art Judson, VP/Program Manager – Goss, LLC

Fraud Deterrence

  • Barry Zalma – Zalma Insurance Consultants, World Risk and Insurance News

Standardization Strategies

  • Jack Gibson, President & CEO – International Risk Management Institutes, IRMI

Insurance Agencies

  • Bill Wilson, SVP – Independent Insurance Agents/Brokers Association (IIABA)
  • David Walker, Board of President, 2013-2014, IIABA; President – Hartland Insurance
  • Tim Dodge, Director of Research – IIABNY

Insurance Carriers

  • David Wroe, – Former Senior Vice President and Chief Technology Officer of Chicagobased CNA and Chairman and CEO of Agency Management Systems, Inc. Currently Director of Insurity, Inc. and advisor to Genstar Capital in the areas of financial services and software.

Summary:
Team has significant experience and depth. I would expect that they also have extensive relationships with potential strategic partners,  as well as potential acquirers. The team does not appear to have experience in a software startup and that could present some unique challenges for them. However, they have completed their MVP and now the major issue is to begin getting traction with clientele – and I would expect that if they have product/market fit, that they will be successful in business development.

Market Analysis

Industry: Insurance Industry

TAM (Total Addressable Market): $29.3B
*Souce: Business Plan

Industry Opinion:
This solution is the first verification-as-a-service offering. While this can allow for quick growth and market share accumulation it also comes with the challenges of educating the market, which can be expensive and time-consuming.  Early first mover advantage may benefit the company significantly through network effects and thereby becoming the standard.

Competition

Differentiator:
The only competition is the handling of paper files which can be relatively expensive and time-consuming. This solution is the first to market.

Main Competitors

  EBIX Data Trac Certrax
Funds Raised $25M N/A N/A
Website http://www.ebix.com/ http://www.datatrac.com/ https://certrax.com/

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised:

  • $125,000 seed funding from Start Garden
  • $50,000 seed funding from Invest Detroit
  • $40,000 from PowerMoves
  • $35,000 Owners Cap

Use of Funds

  • Add capabilities and extend existing Pilot from 17,000 to 120,000 policyholders
  • License and deploy GAPro in the Asian insurance marketplace

Exit Opportunities

The company would likely become an attractive acquisition target by a variety of both strategic and financial buyers.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Nov. 28, 2016 MarketStance Verisk Analytics Unknown
Nov. 26, 2013 Applied Systems Hellman & Friedman $1.8B
March 23, 2012 MediConnect Global Verisk Analytics $348.6M

Expert Opinion Summary

The most impressing aspect of the venture is the quality of the team and their advisors. This is a very early stage company that is pre-revenue.  It’s so early that it is not yet clear if there is product/market fit.  As soon as they demonstrate that there is product/market fit and begin showing traction, this venture could grow in value very quickly.

AngelList: https://angel.co/gapro-system-1
Crunchbase: N/A

Disclaimer

Crowdfund Research is a publisher and does not offer investment advice to any specific individual.  Crowdfund Research and its authors do not receive any compensation for the due diligence reports. 
 Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.  

Pearachute

By | Due Diligence | No Comments

Company Overview –

Pearachute helps children discover and explore activities that best fit their family’s schedule.
*Souce: Crunchbase

Company Investment
Name: Pearachute Minimum Raise: $50K
CEO: Desiree Vargas Wrigley Maximum Raise: $100K
Company Founded: November 2015 Structure of Raise: Crowd Saft, 10% Discount
Location: Chicago, IL Valuation: $7M Valuation Cap
Crowdfunding Portal: Republic Minimum Investment: $25
Crowdfunding Link: https://republic.co/pearachute  
Website: https://pearachutekids.com/  

Review Overview

Positives Risks and Reservations
Experienced and connected leadership. Burn rate is $60,000/month and the company planned to raise, $50k-$100k (which is 1-2 months of cash.)  However, they are getting great exposure and proving an ability to beat expectations. I would expect to see an angel/VC round as a quick next step and seek insight from the team.
Solid pricing with great early traction with a real need and massive market potential. Investors don’t have votes or any ‘say’ in company matters – they share in the upside but do not become actual shareholders with voting rights. (I could argue that this is a good thing with a large number of small investors, and mention it merely to create awareness.)
Should be fairly scalable, depending on the qualities of each market and their respective business development teams. I would like to know more details surrounding company’s differentiation and competitive/comparative advantage. It may be purposely withheld in a public forum because it is thin or easily copied, and that could be a wise decision. Yet at the end of the day, this would be one of the most critical success factors, and I would like to get some assurances from the team regarding how they will approach this and/or create a “blue ocean” strategy.
Oversold their maximum raise with a lot of time left.

Problem

For parents and caregivers, children’s activities are hard to find and even harder to book. Activity centers are poorly marketed and lock parents into expensive 10-12 week sessions for children too young to know what they like.

Kids’ activity space owners see high turnover rates season to season, lose revenue for unfilled spots, and are forced to cancel classes because of low enrollment

Solution

Current:
Pearachute created a monthly membership club that makes it easy for parents and caregivers to find activities for children age 0-12. Users can choose to sign up for three, six, or unlimited classes each month. They are able to search thousands of family friendly activities in their city and book instantly with no forms or hassle.

Long Term:
Pearachute’s future plans include adding the ability to book birthday parties, launching the Pearachute native app, adding the ability to book seasonal camps, and upgrading their Partner Portal.

Business Model

Pearachute makes money through a subscription model. They have three different levels of subscriptions; $39/month (3 classes), $79/month (6 classes), $129/month (unlimited classes). Their supply partners on the courses they offer provide them with a discounted rate. Pearachute has average margins of 29% across the three subscription levels. In a 10 month period, they saw a 340% growth in active subscriptions.

Traction

  • 28% MoM user growth
  • 4x revenue growth since August
  • Over 30K activities booked
  • Backed by Techstars Ventures, Chicago Ventures, the founders of OKCupid, HotelTonight, SitterCity,
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Desiree Vargas Wrigley Brittany Graunke Erica Alhorn
Position: CEO & Founder VP Operations & Finance VP of Membership
Ownership Percent: 40% N/A N/A
Linkedin: https://www.linkedin.com/in/desireevargas/ https://www.linkedin.com/in/brittanygraunke https://www.linkedin.com/in/erica-alhorn-8a94048

*Builders VC, LLC owns 30% of the company

Advisors:

  • Sam Yagan – Chairman, Co-Founder of OkCupid
  • Paul Lee – Board Member, CEO & Co-Founder of Builders Studios, general partner at Builders VC

Summary:
The team has great experience and education. They have shown an early ability to tap into valuable investor and other networks. Their early successes show that they are making great decisions for the company, right out of the gate.

Market Analysis

Industry: Kids Activites

TAM (Total Addressable Market): $32B
*Souce: Portal Page

Driving Trends:
As 75M millennials start having kids the market is expected to grow. 78% of millennials prefer to spend money on experiences over things.

Industry Opinion:
The company is leveraging technology to provide a solution that may not have been possible without it.  The fact that there are others on this space provides additional validation for the industry.  There is a real need and desire for this type of service, and the solution is a win-win for all.

Competition

Differentiator:
I’m not able to find a strong differentiator.  This firm has been able to grow more quickly than their competitors and they appear to have great investor connections.  It seems the ability to finance & execute expansion faster than others could be an ability for the company to open new cities and become the dominant player.

Main Competitors

  Kidpass LittleLane Sawyer
Funds Raised $1.2M $20K $1.5M
Website https://kidpass.com/ https://www.littlelane.com/ https://www.hisawyer.com/

Company Financials

Revenue to date: $140,580

Revenue Last Fiscal Year: $140,580 (2016)

Previous Funds Raised: $1.2M, seed, February 11, 2016
*Source: Crunchbase

Use of Funds

  • Native App
  • User Growth
  • Market Growth
  • In-House Development Team
  • Improve the Partner Portal

Exit Opportunities

It appears to me that they will likely offer a series of VC rounds and through their investor network connections will position for an acquisition and/or public offering down the road.  With the dynamics of today’s new ventures, I would bet on the company keeping itself private unless it was determined that a public offering would benefit them moreso due to the increased public exposure of an IPO.

Expert Opinion Summary

A quick encapsulation of the opportunity.

  • real product/service need with early traction
  • good business & revenue model
  • great team
  • great investor connections
  • unclear differentiation and competitive/comparative advantage

AngelList: N/A
Crunchbase: http://go.microsoft.com/fwlink/?LinkId=121315

Disclaimer

Crowdfund Research is a publisher and does not offer investment advice to any specific individual.  Crowdfund Research and its authors do not receive any compensation for the due diligence reports. 
 Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.   

Fizzics

By | Due Diligence | No Comments

Company Overview –

Fizzics is a universal beer dispenser that delivers a fresh-from-the-tap experience from any can, bottle, or growler.
*Souce: Microventures

Company Investment
Name: Fizzics Minimum Raise: $100K
CEO: Philip Petracca Maximum Raise: $1M
Company Founded: 2014 Structure of Raise: Series Seed Preferred Stock
Location: Wall, NJ Valuation: $18M pre-money valuation
Crowdfunding Portal: Microventures Minimum Investment: $200
Crowdfunding Link: https://app.microventures.com/crowdfunding/fizzics  
Website: http://www.fizzics.com/  

Review Overview

Positives Risks and Reservations
Great early traction with retailers and consumers, as well as with crowdfunding sites. Cashflow management is paramount. Manufacturing requires significant upfront investment followed by long payment terms of retailers. The more successful the company is the greater and greater upfront cash required.
Shark Tank investors all highly impressed with the taste difference. Though the company is not able to comment on the results of the Shark Tank program, based on the QVC results, it would appear that they are moving forward with Cuban and Greiner There is only one board member – the founder and CEO.  It would be beneficial for the “shareholders” (a.k.a founders) of the company to have elected multiple board members.  In its current state, the CEO and sole board member is free to operate the company at his sole discretion. It is often preferred that big issues are discussed, debated, and wrestled with, even if with a close tight-knit group.
Significant market and product line expansion opportunities. The amount of cash available for operations ranges from roughly 1 month at the low end of a successful raise to 1 year at the top level. In any event, the company will continue to require additional funding as it grows and the investors will face additional dilution
The company has not planned nor identified any potential paths for an exit event, which may defer a return on investment indefinitely.  This issue is compounded by the absence of a board directors beyond the founder, CEO.

Problem

90% of beer is consumed from cans or bottles and the experience, flavor, and taste is not as good as it is fresh from the tap.

Solution

Current:
Fizzics created a beer system that delivers a fresh from the tap experience. Fizzics controls pressure flow and utilizes sound to create a rich, creamy foam (head) that enhances the appearance, aroma, flavor, and a smooth bodied mouth-feel. The system is compatible with standard-size cans and bottles and is powered by AA batteries.

Long Term:
Fizzics plans to release two new products in 2017, the Waytap Savor+ and the Waytap Host.

Business Model

Fizzics generates most of their revenue by selling its products wholesale to retail partners. The Original Beer System has margins of 69% and the Waytap has margins of 61%. They also make money by selling their product direct to consumers through their website. The Waytap retails for $149.99 with gross margins of 75% and the Original Beer System retails for $200 with gross margins of 78%.

Traction

  • Appeared on Season 8 of Shark Tank
  • Available at Best Buy, Brookstone, Target, Amazon, QVC, Total Wine & More, Best Buy Canada
  • One of Brookstone’s best-selling holiday items in 2015
  • Received 86,000 purchase orders in 2016 compared to 16,450 in 2015
  • Had 14,000 purchase orders in January 2017
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Philip Petracca David MacDonald Tom Steckbeck
Position: CEO & Co-Founder CTO & Co-Founder CCO
Ownership Percent:d 28.5% 28.5% N/A
Linkedin: https://www.linkedin.com/in/philpetracca https://www.linkedin.com/in/david-mcdonald-3699847 https://www.linkedin.com/in/tom-steckbeck-5906293

Summary:
The team has solid experience in launching and marketing products as evidenced by their early traction in crowdfunding sites, in retailers, and on Shark Tank. The company should build out its board of directors to provide additional comfort for investors/shareholders.

Market Analysis

Industry: Alcoholic Beverage

TAM (Total Addressable Market): $22.3 (craft beer market in 2015)
*Source: Portal Page

Driving Trends: Craft beer sales rose 13% in 2015

Industry Opinion:
The consumer appliance industry is highly competitive and with several competitors in this space, the company can anticipate margin erosion over time. If they are able to innovate and create a product suitable for commercial operations (bars, restaurants, etc.) that delivers the same excellence in product enhancement, they may find a market with fewer competitors and sustainable profitability.

Competition

Differentiator:
The size and quality of the bubbles in the head of the beer provides a taste and experience that has rave reviews.

Main Competitor

  Synek Sonic Foamer BeerTender EdgeStar SPT
Funds Raised $3.145M $160 on Indiegogo N/A N/A N/A
Retail Price $399 $29.99 $391 (Amazon) $149.99 $160 (Amazon)
Website https://synek.beer/ https://sonicfoamer.com/ http://beertender.usa.heineken.com/ https://www.edgestar.com/edgestar-deluxe-mini-kegerator-tbc50s-beer-cooler/TBC50S.html http://www.sunpentown.com/bdmikedi.html

Company Financials

Revenue to date: ~$7.3M

Revenue Last Fiscal Year: $5.6M+ (2016)

Previous Funds Raised:

  • $260,000+, Indiegogo, May 2015
  • $1M+, Kickstarter, September 2016

Use of Funds

The majority of the funds raised will be used for development of new products and marketing. They will also use the funds for general working capital, repayment of obligations, equipment purchases, and repayment of debt.

Exit Opportunities

Investors ultimately want to know this. If they invest, how much will they get back and when.  The company has stated that it has not considered any plans for an eventual exit and that shows a disconnect from the needs/wants of its shareholders. Should there be a change of disposition, there would likely be a number of potential acquirers from the very deep pocketed beer industry.

Expert Opinion Summary

This company has gotten off to an excellent start. If the company were to build out its board of directors it would provide more comfort that the team could weather the inevitable challenges new ventures face, as well as communicate a wisdom in understanding corporately leadership. Further, the leadership should communicate how it plans to provide return for investors, through M&A, IPO and/or Dividends. Additionally, because of the nature of the consumer appliance business, cash flow will need to be actively and successfully managed.

AngelList: N/A
Crunchbase: N/A

Disclaimer

Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.  

Vera Roasting Company

By | Due Diligence | No Comments

Company Overview –

Vera Roasting Company has created a craft coffee, CoffVee, infused with resveratrol, the all natural antioxidant found in red wines.
*Souce: Wefunder

Company Investment
Name: Vera Roasting Company Minimum Raise: $25K
CEO: Mark Galvin Maximum Raise: $100K
Company Founded: 2015 Structure of Raise: SAFE
Location: Portsmouth, NH Valuation: $2M Valuation Cap, 15% Discount
Crowdfunding Portal: Wefunder Minimum Investment: $100
Crowdfunding Link: https://wefunder.com/veraroasting  
Website: https://www.veraroasting.com/  

Review Overview

Positives Risks and Reservations
Highly qualified founders in both the business and technology. The founders currently are not focusing their efforts full time on this venture.
This team has been able to generate significant traction early. The companies competitive/comparative advantage rests solely on their potential patent’s ability to protect from competitors and industry incumbents carrying producing and offering a similar product.
The solution addresses a massive and growing market, not only nationally but also worldwide. Management would benefit from acquiring advisors and additional leadership with experience in bringing food based products to market.
The product is well suited for building a recurring membership-based model and additionally, has inherent upside through JV partnering/OEM opportunities. These sorts of strategic partnership possibilities may also present M&A – liquidity potential.

Problem

It has been found that people who drink red wine regularly and responsibly lead healthier lives with less disease due to the beneficial ingredient resveratrol. To gain the full benefits of resveratrol one should consume it every day. Not everyone likes red wine or drinks it every day but many adults drink coffee multiple cups of coffee each day.

Solution

Current:
Vera Roasting Company has created an infused coffee that contains resveratrol to provide all the same health benefits as drinking a glass of wine

Long Term:
They plan to ramp up their subscription model and land more national accounts.

Business Model

Up until recently, Vera Roasting Company focused on direct-to-consumer sales through their website. Through the website, customers could place one time orders or set up a subscription service. Their coffee retails for $14.95 per bag or $12.95 per box of k-cups. As of Q3 2016, they have gross margins of 51%. Recently Vera Roasting Company has been aggressively pursuing traditional, brick-and-mortar retail channels.

Traction

  • Via earned media, the company quickly sells CoffVee to all 50 states within 2 days
  • CoffVee is available at local retail markets in NH, ME, & MA
  • Awarded U.S. patent for unique process and composition of matter
  • Partners with the Vitamin Shoppe, Baltimore Orioles and United States Coast Guard
  • Invited to participate in Whole Food’s regional showcase
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Mark Galvin Glen Miller
Position: CEO CTO & Founder
Ownership Percent: N/A 53.73%
Linkedin: https://www.linkedin.com/in/mbgalvin/ https://www.linkedin.com/in/glenmillerunh

*New England Innovation Center has 28.93%

Summary:
This venture founded by two gentlemen who appear to be experts in their respective disciplines. This has undoubtedly been the basis for their impressive and early traction. The company is entering a new phase which would benefit from the company leadership being solely focused on the company’s growth. The CEO’s shares are held via proxy through his NEIC.  While this equity is of significant value, the fact the CEO holds shares indirectly, combined with his lack of full-time focus on the venture presents an issue to explore further.

Market Analysis

Industry: Food & Beverage

TAM (Total Addressable Market): $48B (U.S.)
*Souce: Portal Page under details

Driving Trends: growing at 4% annually
*Souce: Portal Page under details

Industry Opinion:
The coffee industry in the United States is a fragmented and mature yet growing industry. There are significant opportunities to partner with large industry incumbents. Further, there are significant trends in the adoption and pursuit of healthy foods. The product is consumed daily and that presents significant opportunities in recurring and membership-based sales.

Competition

Differentiator:
This is the first company that has figured out how to infuse coffee with the health benefits of resveratrol and has filed patents to protect its technology.

Main Competitors

Vera Roasting Company doesn’t have any competitors that produce a coffee with resveratrol and its unique health twist. They do realize their biggest competition is other premium coffee brands that consumers enjoy drinking.
*Source: Portal Page

Company Financials

Revenue to date: $108,380

Revenue Last Fiscal Year: $76,233 (through November 2016)

Previous Funds Raised: $0

Use of Funds

  • Open a new pack and ship facility
  • Marketing, advertising, and customer retention
  • Create a buffer in their cash position to be able to invest in working capital

Exit Opportunities

The most likely exit for this company would be an acquisition by large industry incumbents.  The value of such a transaction would be predicated by the company traction and the nature of the protection ultimately granted by its patent(s).

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Dec 7. 2015 Keurig Green Mountain JAB Holding Company $13.9B
Oct 6, 2015 Stumptown Coffee Roasters Peet’s Coffee & Tea Unknown

Expert Opinion Summary

This company has proven with its early traction, that there is valuable interest from an array of customers and partners. When the leadership makes this venture its sole focus, the question will not be profitable/successful or not, it will be at what scale will this company be successful. The operations for this type of venture are not difficult.

In addition to ensuring competitive advantage through IP protections, the venture will be most successful by creating and managing a world-class brand. In the process of building this brand, the company should continue to develop strategic partnerships with more distributors and vendors in both the coffee and health foods industries.

AngelList: N/A
Crunchbase: N/A

Disclaimer

Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.