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Todd Taylor

Safety First Arms

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Company Overview –

Secure user-authorized firearms for personal defense.
*Souce: DreamFunded

Company Investment
Name: Safety First Arms Minimum Raise: $500K
CEO: Robert Allan Maximum Raise: $1M
Company Founded: 2012 Structure of Raise: SAFE
Location: San Diego, CA Valuation: $15M Valuation Cap
Crowdfunding Portal: DreamFunded Minimum Investment: $100
Crowdfunding Link: https://dreamfunded.com/companies/safety-first-arms  
Website: http://safetyfirstarms.com/  

Review Overview

Positives Risks and Reservations
Firearm safety is a high priority for consumers. $15 million valuation seems very high for a company with no revenue.  If all $1,000,000 is raised, investors only own 6.25% of the Company.
The company has a number of patents to protect its designs. The firearms industry is very competitive and many other companies have attempted but failed to market firearms with built in locks.
There are few competitors offering “smart” firearms Firearms are highly regulated by both federal and state authorities and regulations vary state by state and can change unexpectedly.
Relationships with large California firearms stores Company management team is small with little firearms industry experience and there are no independent board members.

The company has few, if any, resources to defend its intellectual property position or defend itself against claims of infringement.

Problem

Every year 200,000 guns are stolen and almost 1,000 teens commit suicide with a parent’s gun. Accessibility vs. safety is an issue gun owners with children face.

Solution

Current:
Safety First Arms created a gun has a PIN-code operated locking mechanism that prevents unauthorized firing and a programmable motion-sensitive alarm that protects against tampering and deters theft.

Long Term:
Develop guns beyond the Smart2 and Smart AR, such as a Smart Revolver and Smart Shotgun.

Business Model

Safety First Arms will sell their guns direct to consumer, direct to institution/large retailer, and through distributors. Direct to consumer has a $1,395 MSRP, revenue through direct to institution channel is $1,086 and revenue through a distributor is $1,036. The total COGS for each revenue channel is $550.75.

Traction

  • Over $1M in pre-orders already received
  • The Glock Store of San Diego, CA has an initial PO of $518,000, 500 units of Smart 2
  • Gunther Gun Shop of Carlsbad, CA has a future commitment of approximately 500 units of Smart 2 for first year or $543,000 estimated sales projection
  • Poway Weapons and Gear in Poway, Ca has a commitment to carry Smart 2 and Smart AR when ready
    *Source: Company provided in attached documents

Senior Management Team

  Robert Allan Brian Weinberg
Position: CEO COO
Ownership Percent: 75% 20%
Linkedin: N/A https://www.linkedin.com/in/enclavetechnologies/ 

Advisors:

  • Marshall Waters II – Alton Consulting Group, Advisor: Startup Plan
  • Lenny Magill – CEO of GlockStore, Advisor: Retail, Distribution, Product

Summary:
While management does have significant business experience, they have little direct experience in the firearms industry, including manufacturing at scale, supply chain management or marketing and sales.  There are no independent board members.

Market Analysis

Industry: Firearms

TAM (Total Addressable Market):

  • 35M current gun owners would consider purchasing a smart or childproof gun
  • 105M non-gun owners would consider purchasing a smart or childproof gun
    *Souce: Portal Page in Provided Documents

Industry Opinion:
The firearms industry is large and has experienced significant growth over the last few years, including sales of firearms to people who may otherwise be unused to firearms and thus prone to accidents.  Public awareness of and concern about firearm accidents has lead to many companies trying to build a “safe” firearm, however, most efforts have failed for a variety of reasons.  There is also considerable resistance within the firearms industry to “safe” firearms over concerns about reliability and public perception that guns are not otherwise “safe.”  A company that can produce and sell a firearm that can overcome these issues may be able to succeed.

Competition

Differentiator:
The company’s product seems to be unique because it combines the elements of an external safe with a keypad lock within the actual firearm.  Most other competitors are external devices such as trigger locks or gun safes.  Other companies that have tried to incorporate safety features such as fingerprint or RFID into the gun itself have failed to date.

Main Competitor

  Armatix Trigger Smart Identilock
Price $1,798 N/A $239

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised: $0

Use of Funds

  • Complete development
  • Produce beta guns for testing and marketing
  • Prepare business entity for sales transactions
  • Develop and launch website
  • Soft-launch with a web based pre-sale campaign

Exit Opportunities

Due to the highly competitive nature of the firearms industry, large companies often seek to acquire successful technologies that provide differentiation.  If the company is able to prove the reliability of its products, it may be an acquisition candidate.

Expert Opinion Summary

The firearms industry is highly competitive, heavily regulated and risk adverse about new technology adoption.  While a reliable “safe” firearm would likely be well received by the public, previous attempts have failed and no major firearms manufacturer is pursuing such technology currently.  In addition, the company’s valuation is extremely high considering they have no revenue and state they have no expectation of revenue for a considerable period of time.  While management seems to have a great deal of experience in business in general, they have little or no direct experience with firearms manufacturing, sales or marketing.

 AngelList: https://angel.co/safety-first-arms
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.  

Skillmil

By | Due Diligence | No Comments

Company Overview –

SkillMil helps veterans get hired by providing personalized knowledge and skill matching to fill the business position demand.
*Souce: Republic

Company Investment
Name: SkillMil Minimum Raise: $50K
CEO: Noel Gonzalez Maximum Raise: $500K
Company Founded: January 2017 Structure of Raise: Crowd Safe, 20% Discount
Location: Jupiter, FL Valuation: $4M Valuation Cap
Crowdfunding Portal: Republic Minimum Investment: $50
Crowdfunding Link: https://republic.co/skillmil  
Website: http://www.skillmil.com/  

Review Overview

Positives Risks and Reservations
Very experienced management team with deep knowledge of the problems facing veterans There is strong competition from employment services and online sites in general, in addition to well-funded veteran-focused employment sites.
Early customer adoption validates model Management doesn’t have direct experience running a related business or technology startup.
Excellent technology partners and advisory board Company is reliant on 3rd party technology
Growing market Valuation is high compared to Monster acquisition valuation

Problem

Veterans struggle to find jobs and companies struggle to find candidates. Job searching is a new concept to veterans and current major job search websites do not do well with matching a person’s training and background to the job. Hiring managers discount experience obtained in the military due to the jargon used to describe it.

Solution

Current:
Skillmil helps veterans find jobs by understanding and translating “military speak” and creating clean resumes. They also match candidates to jobs using a SkillScore and they list specific skills/experience a candidate is missing to achieve a 100% fit. Skillmil helps businesses by training them on how to fully use veteran benefits.

Long Term:
They want to expand Skillmil through partnerships with military education schools. They also plan to license their platform on a white label basis to other job search engines. Skillmil’s third phase (2019+) will grant other military training programs access to the Skillmil set matching feature so they can appropriately adjust skill levels and certifications in the commercial sector.

Business Model

Skillmil has a subscription based fee for companies but their services are free to veterans. Each company working will Skilmill will pay a licensing fee based on their size; the fee ranges from $1,500-5,000/month. The fee will include X amount of hires per year; for each additional hire, the company pays 5-15% of the employee’s yearly salary.

Traction

  • Early customers include American airlines and amazon
  • Raised $500,000 to date
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Noel Gonzalez Ken Roman Steve Garza Leonard Chapman
Position: CEO & Founder COO & Co-Founder CTO & Co-Founder CSO & Co-Founder
Ownership Percent: 45% N/A N/A N/A
Linkedin: https://www.linkedin.com/in/noeljgonzalez N/A N/A N/A

*The other founders, Ken Roman, Steve Garza and Leonard Chapman, together own approximately 28%
*The remainder is owned by the company’s independent contractors and by SRI International

Summary:
This team has excellent leadership skills from their Navy experience and the advisory team has relevant and deep domain experience.  However, management has never run a job placement company or a technology startup and may face unexpected problems as a result.

Market Analysis

Industry: Job Placement

TAM (Total Addressable Market): $124B
*Souce: Portal Page

Driving Trends: 1.5M veterans will be coming on the market in the next 5 years.

Industry Opinion:
Successfully integrating returning veterans into the civilian workforce is a critical need and there are many companies trying to address this problem.  Many companies seek options to add the right veteran worker and are partnering with companies like SkillMil due to the problem of translating military job descriptions into civilian jobs.  The industry is growing and while technology will be a differentiator, in-depth understanding of the veteran-civilian divide will likely provide the most opportunities.

Competition

Differentiator:
SkillMil offers significantly deeper understanding and matching of military job classifications than competitors.  However, other competitors have significantly greater experience and funding.

Main Competitors

  Military.com Monster.com Indeed.com Recruit Military
Funds Raiseed $23.5M N/A $5M N/A
Website http://www.military.com/ https://www.monster.com/ https://www.indeed.com/ https://recruitmilitary.com/

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised: $500K

Use of Funds

The majority of their funds will be used software development, working capital, future wages, and marketing.

Exit Opportunities

The most likely exit is through an acquisition by a larger competitor.  Monster was acquired by Randstad in 2016 at an EBITDA multiple of 4.9x.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Oct. 18,2016 RecruitMilitary Bradley-Morris Unknown
August 8, 2016 Monster.com Randstad $429M
October 1, 2012 Indeed.com Recruit Co., LTD Unknown

Expert Opinion Summary

Most investors value a strong team as the number one factor in an investment decision.  SkillMil has a strong team in general, though they don’t have experience in this industry.  Early customers and strong technology partners seem to indicate that they have traction.  However, valuation is high and they are competing against a number of larger, better financing companies that may be able to match or exceed SkillMil’s produce offerings.

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.  

ITFT (Innovative Technology for Transportation)

By | Due Diligence | No Comments

Company Overview –

ITFT, The Safe Driving System is a patented system designed to prevent drivers from speeding and driving recklessly.
*Souce: Start Engine

Company Investment
Name: ITFT Minimum Raise: $50K
CEO: Matthew Godley Maximum Raise: $1M
Company Founded: 2013 Structure of Raise: Common Stock
Location: North Carolina Valuation: $8.635 pre-money valuation
Crowdfunding Portal: Start Engine Minimum Investment: $200
Crowdfunding Link: https://www.startengine.com/startup/itft  
Website: http://itftsolutions.com/  

Review Overview

Positives Risks and Reservations
Use of data connected devices in cars is becoming more commonplace and parents, insurance companies and fleet services are seeking ways to improve safety, reduce injuries and deaths and lower costs. ITFT has no customers or sales and will require a great deal more money to finish its product development and sales and marketing efforts.  It may not have enough money to be able to become profitable.
The patented technology appears to offer some advantages and features that its competitors lack. There are many competitors, most of who are far larger than ITFT, have far greater financial and technological resources, as well as customers and revenue.
The advisory team has significant experience in startups, technology, and financial matters. ITFT needs to continue its technology development, as well as protecting its intellectual property.  If a competitor violated ITFT’s intellectual property or claimed that ITFT violated their intellectual property, ITFT likely would not have the resources to protect itself.
ITFT could be subject to significant regulatory or legal risks from people using their device, especially if the device provides incorrect information and leads to recalls or lawsuits.
Management has no experience with startups and little business experience in general.  The CEO is also the only voting shareholder and board member.
Valuation is very high.  If they raise $1,000,000, the crowdfunding investors will only own 10.8% of the Company, meaning that management is valuing the company at almost $10,000,000 post offering, which is extremely high for a company with no customers and no sales.

Problem

In 2015, approximately 38,300 people lost their lives in car accidents while an additional 4.4 million people were injured and needed medical assistance. The Department of Transportation calculated that 94% of all accidents are a result of human error such as speeding, reckless driving, and distracted driving.

Solution

Current:
ITFT created a technology that limits access to distracting mobile apps, can program and allow remote control of selected vehicle functions, and communicates events and activity to the app user.

Long Term:
They plan to add more features to their product that are part of the patent. These features include a panic button that can alert police/emergency personnel and can begin recording video and audio of an incident. They also want to include a breathalyzer module.

Business Model

ITFT will charge users a fee of $25/month.

Traction

  • S. full utility patent granted
  • Completed PRD and SRS specifications needed to start product development
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Matthew Godley Walt Maclay Cindy Godley
Position: CEO & Founder Interim CTO Secretary
Ownership Percent: 100% N/A N/A
Linkedin: https://www.linkedin.com/in/matthew-godley-99820183 https://www.linkedin.com/in/waltmaclay N/A

Advisors:

  • Amel Hill – Contract Patent Engineer with 25 years of experience in automotive technology applications
  • Tom Steding – Served as CEO for 9 startups
  • John Hondros – Senior VP managing director at SunTrust Private Wealth Management

Summary:
While the CEO, Matthew Godley does not have any previous experience in the industry or in startups, the CTO and advisors do have relevant experience.  The company will have to quickly hire experienced employees to realize their commercialization plans.

Market Analysis

Industry: Mobile App

TAM (Total Addressable Market): Their initial target market is focused on parents of teenagers. In 2014 there were approximately 37.5M families in the U.S. with at least one child under 18. There are approximately 15M teenage drivers in the U.S.
*Souce: Portal Page

Driving Trends: 24% growth from 2015 to 2016

Industry Opinion:
The total size of the market in dollars is unclear, as this market is still developing.  However, there are a number of potential market segments, including teenagers, fleets, and car services like Uber and Lyft that are experiencing significant growth.  The auto industry is increasing adding technology, including safety and data, to cars and this trend is likely to continue.

Competition

Differentiator:
ITFT has a patented technology that allows it to monitor and control certain aspects of a car’s performance and driver’s mobile device as it relates to safety.  Many of the unique product features are covered by the patent and could prove to be real competitive advantages.

Main Competitors

 

Automatic Zubie Hum by Verizon

Audiovox Car Connection 2.0

Funds Raised $24M 25.87M N/A N/A
Website https://www.automatic.com/ http://zubie.com/ https://www.hum.com http://www.carconnection20.com/

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised: $0

Use of Funds

If minimum amount is raised:

  • Development of prototype

If maximum amount is raised:

  • Development of prototype
  • Development of mobile app
  • Government consulting
  • Marketing
  • Pay salaries
  • Repayment of indebtedness
  • Travel & meetings
  • Working capital

Exit Opportunities

Many of competitors are significantly larger than IFTF and may want to acquire IFTF to buy its patent and product features.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
March 28, 2016 Interactive Driving Systems eDriving LLC Unknown
March 10, 2016 OpenCar INRIX Unknown

Expert Opinion Summary

While the CEO is young and inexperienced, the technology he has developed seems to offer promise in an expanding market.  He has surrounded himself with an experienced advisory group but will need to hire employees and add to his board and management team to take the company to the next level to commercialize and/or sell it.

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. 

Dollar Shots Club

By | Due Diligence | No Comments

Company Overview –

Dollar Shots Club is a subscription service for energy shots. The energy shots don’t cause headaches, sugar crashes, or stained teeth.
*Souce: Wefunder

Company

Investment

Name: Dollar Shots Club

Minimum Raise: $25K

CEO: Kevin Martino

Maximum Raise: $1M

Company Founded: 2014

Structure of Raise: Common Stock

Location: Las Vegas, NV

Valuation: $3.55M Valuation

Crowdfunding Portal: Wefunder

Minimum Investment: $100

Crowdfunding Link: https://wefunder.com/dollar.shots.club

 

Website: https://www.dollarshotsclub.com/

 

Review Overview

Positives

Risks and Reservations

The potential market for energy shots is large, estimated at $3.8 billion.

Two of three directors and the COO are owners or employed by Glendale Securities, a FINRA regulated brokerage firm, which has two final disciplinary actions against it.  The two directors at Glendale also are under investigation by FINRA at this time.

The company is offering energy shots on a subscription model at a lower price than competitors.  The subscription model has been successful in other industries dominated by larger competitors.

No member of management or the board has any experience in consumer products, the energy drink industry, retail or online sales or management of a startup company.

As of November 2016, the Company only had $5,000 cash on hand with a burn rate of $1,300 per month.  The company didn’t describe any plans to fund its operations pending completion of this offering.

The minimum offering amount of $25,000 is unlikely to be sufficient to fund the company’s operations so that it has a reasonable chance of success.  It is unclear at what offering amount the company would have a reasonable chance of success.

The valuation of $3.55 million is high given the company has no significant revenue and few assets

The Company is selling common stock with no protection from dilution for future rounds or from conversion of outstanding preferred stock.  Upon conversion just from outstanding preferred stock, held by the current officers and directors of the company, the investors in this offering will own 0.014% of the company’s equity.

Competition in this industry is dominated by 5 Hour Energy, holding between 85%-90% of the market.

The company has no proprietary intellectual property advantage over its competitors, meaning that any competitor could copy their formulations, flavors, and pricing.

Problem

Every time a customer wants an energy shot, they have to go in-store and purchase one for $3 a bottle or more.

Solution

Current:
Dollar Shots Club has created a subscription service that ships energy shots straight to the customer’s door. The energy shots cost $1 each instead of the $3+ customers pay in the store.

Business Model

Currently, Dollar Shots Club offers a subscription service with boxes starting at $10/month for 6 bottles, $15/month for 15 bottles, and $30/month for 30 bottles. Each customer’s subscription is automatically renewed each month unless they cancel or suspend their membership. Currently, customer cannot buy just one shot, in order to receive club pricing they must buy a minimum of 5 shots.
*source: company website

Traction

  • First energy shot subscription model
  • Currently only one other major player in the energy shot industry
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Kevin Martino

Christopher Rowe

Position:

CEO

COO

Ownership Percent:

N/A

N/A

Linkedin:

https://www.linkedin.com/in/kevinjmartino

https://www.linkedin.com/in/cmrowe

*GCEF Opportunity Fund, LLC has a 65.95% ownership.  GCEF Opportunity Fund, LLC is owned by two board members of the company.

Summary:
While the management team may have experience in the financial industry as brokers or as an executive recruiter, no member of management has relevant domain experience or experience in running a startup consumer products company.  Three of four members of management have other jobs in the brokerage industry.  There is no list of advisors with domain or technology experiences mentioned.  Management is not a strong point for this company.

Market Analysis

Industry: Energy Drinks

TAM (Total Addressable Market): $3.87B (energy drink shots)
*Souce: Portal Page

Industry Opinion:
This industry is large but is dominated by 5 Hour Energy, holding 85-90% of the market.  Their dominance gives them huge leverage with retailers and other resellers, as well as significant marketing and advertising money.  The industry does not rely on patents or “secret formulas” to succeed, they rely on marketing and distribution power.

Competition

Differentiator:
The company claims it has an advantage in the subscription-based model with their energy shots selling for $1.00 each versus $3.00 per shot for their main competitor.

Main Competitors:

 

5 Hour Energy

RhinoRush

Revenue

$725M (2015) N/A
Estimated Market Share 85-90%

N/A

Funds Raised

N/A N/A
Website http://5hourenergy.com/

 http://rhinorush.com/

Company Financials

Revenue Last Fiscal Year: $2,897 (2015)

Previous Funds Raised:
$165,000, priced round, September 2016.  As of November 2016, the company is reporting is has $5,000 cash on hand and a burn rate of $1,300 per month.

Use of Funds

  • Market outreach
  • Build inventory
  • Add new flavors

Exit Opportunities

The most realistic exit is for one of their competitors to buy them, similar to Unilever buying Dollar Shave Club.

Recent Acquisitions in the Field

Date

Company Acquired Acquired By

Amount

July 19, 2016

Dollar Shave Club Unilever

$1B

July 18, 2014

Citrus Lane Care.com

$48.6M

April 8, 2014

Tonx Blue Bottle Coffee

Unknown

Jan. 1, 2012

GlossyBox Lust Have It

Unknown

Expert Opinion Summary

Huge competitor, management team lacking experience in the field, high valuation, significant dilution, no clear competitive advantage, lack of funds…it is hard to find a path to success for this company.  While the market may be large and the subscription model a proven success for some companies, it is not a guaranteed success and many companies using the subscription model have not succeeded.  They company may wish to consider a traditional crowdfunding in order to prove consumer interest prior to offering common stock.

AngelList: https://angel.co/dollar-shots-club
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.

FUN-GI

By | Due Diligence | No Comments

Company Overview –

FUN-GI designs and publishes games that enable emerging brands to engage with fans beyond traditional media. Their first partners are the stars of HGTV’s most-watched show ever: Chip and Joanna of ‘Fixer Upper.’
*Souce: Wefunder

Company

Investment

Name: FUN-GI

Minimum Raise: $100K

CEO: Alfred Fung

Maximum Raise: $1M

Company Founded: 2014

Structure of Raise: Future Equity (SAFE)

Location: Los Angeles, CA

Valuation: $10M Valuation Cap

Crowdfunding Portal: Wefunder

Minimum Investment: $100

Crowdfunding Link: https://wefunder.com/fungi

 

Website: http://www.fun-gi.com/

 

Review Overview

Positives

Risks and Reservations

The licensing deal with HGTV stars Joanna and Chip Gaines provides significant traction and market access.

Competition in the mobile game market is extensive and competitors are well-funded.

The founder has previous startup experience in the domain and advisors are experts in most aspects of mobile game design and sales.

Success is dependent on ongoing popularity of the Gaines, which is not guaranteed and out of control of Fun-gi.

The mobile game market is growing quickly, and upscale female target audience is a growing demographic within the mobile game market.

Company success is currently tied to one game and genre, the failure of that game or loss of interest by the target audience in the genre could kill the company.

Strong product and marketing partners.

Competition for mobile game developers is intense and if the company cannot retain its existing developers or hire new ones when needed, the company may not be able to grow at the pace it requires.

Very strong Australian and New Zealand soft launch bodes well for US launch.

$10M valuation cap may be high for a pre-revenue company.

Problem

Growing brands need a new way to capture the attention of fans to remain relevant and grow.

Solution

Current:

Fun-gi has created a game development platform for brands who want to give fans ways to engage in brand-specific experiences and open up new revenue streams in mobile.

Long Term:

Launch additional games. They currently have two additional game designs beyond house flip that are ready to be produced, pending funding.

Business Model

FUN-Gi has three primary revenue channels; in-app purchases (70%), in-game advertising (15-20%), and in-game product placement sponsorships (15-20%). In-app purchases are estimated to be 6.6% CAGR by 2019, in-game advertising to be 73% CAGR by 2018, and in-game product placement sponsorships to be 26.5% CAGR by 2020.

Traction

  • Exclusive partnership with Chip & Joanna Gaines, stars of Fixer Upper, which brought in 25M viewers last season
  • Worldwide launch in expected January 2017
  • Landmark partners include Baylor University, USS Midway Museum, Arizona State University and more
  • Scripps Networks (which owns HGTV and the Fixer Upper show), is a media partner
  • Two additional game designs are in pre-production, also for growing brands
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Alfred Fund

Jimmy XU

Position:

CEO

Product Manager

Ownership Percent: 88%

N/A

Linkedin:

https://www.linkedin.com/in/alfredfung

https://www.linkedin.com/in/adventjex

 Advisors:

Calvin Lim – Co-CEO & CCO at SELECTIV

Summary:

Alfred Fung has significant startup and established mobile app development experience and other team members are likewise experienced.  The management team mainly consists of Alfred at this point, however, so while he may be experienced, he is just one person.  Overall, the team appears to be well qualified.

Market Analysis

Industry: Mobile app industry, specifically mobile games

TAM (Total Addressable Market): $36.9B
*Source: Wefunder

Driving Trends: 7.7% growth rate per year

Industry Opinion:

The mobile game market has been growing rapidly and shows no signs of slowing down.  In addition, the female mobile game player demographic is large and growing and seems to be willing to pay for freemium game content.  However, the mobile game market, including games that compete directly against Fun-gi’s game, is highly competitive with both existing games and new entries.  Successful mobile freemium games can generate significant income, but many lack longevity in the face of new games, changing interests or boredom.

Competition

Differentiator:

Undoubtedly, Fun-gi’s differentiator is their relationship with Chip and Joanna Gaines and HGTV.  This relationship will give Fun-gi significant brand recognition to help them attract and retain players. Most other mobile games lack this branding benefit so Fun-gi should be able to differentiate itself from most of its competitors, at least initially.

Main Competitor:

Company Name: Glu Mobile

Funds Raised: $7.5M

Company Website: http://www.glu.com/

Competitive Summary:

Competition in the mobile gaming field is intense, and the female target market is among the most competitive.  Fun-gi is following a proven success strategy of associating with a popular brand (the Gaines) and developing a mobile game around them.  This worked for the Kardashian’s mobile game and could work for Fun-gi.  Competitors realize the same thing however and there are many competing games who will likewise work with celebrities.  However, I believe Fun-gi should be able to compete effectively with their first game as long as the Gaines remain popular.

Company Financials

Revenue to date: $0

Revenue Last Fiscal Year: $0

Previous Funds Raised:

  • 12/2015 priced round for $125K
  • 10/2016 priced round for $200K

Use of Funds

  • If $100K is raised: Pay production to bring game to global launch
  • If $250K is raised: Boost global launch with marketing on social, search, and influencer channels
  • If $500K is raised: Hire another senior engineer to add new feature to the game in addition to production costs
  • If $750K is raised: Hire additional game designer/technical producer, and accelerate game feature and asset production.
  • If $1M is raised: Ramp up marketing spend to maximize user acquisition and hire a marketing specialist

Exit Opportunities

Successful mobile game companies tend to be acquired by more mature successful mobile game companies and that is the likely exit for Fun-gi.

Recent Acquisitions in the Field

Date

Company Acquired Acquired By Amount
Nov. 3, 2016 Crowdstar Glu Mobile

Unknown

May 31, 2016 Funtactix Playtech

Unknown

Expert Opinion Summary

While Fun-gi seems to have good traction for its first game, long term success will require sustained marketing and development of new games based on other successful brands.  Management has experience in the industry and there is a good advisory team.  To succeed, Fun-gi needs to raise as much money through this crowdfunding as possible in order to maximize marketing efforts and game development.  While competition is intense, the star power of the Gaines should be able to provide Fun-gi with enough recognition to break out in a crowded field.  How long they can maintain this is another matter.

AngelList: https://angel.co/fun-gi
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.

Traveling Spoon

By | Due Diligence | No Comments

Company Overview –

Traveling Spoon connects travelers with local, vetted hosts to share the joy of a homemade meal in their home and learn about their cultural and culinary traditions passed down through generations. They offer everything from meals to cooking classes to market tours.
*Souce: Seedinvest

Company

Investment

Name: Traveling Spoon

Minimum Raise: $150K

Co-CEOs: Steph Lawrence & Aashi Vel

Maximum Raise: $300K

Company Founded: 2013

Structure of Raise: Convertible Note, 20% Discount

Location: San Francisco, CA

Valuation: $6M Valuation Cap

Crowdfunding Portal: SeedInvest

Minimum Investment: $500
Crowdfunding Link: https://www.seedinvest.com/traveling.spoon/seed

 

Website: https://www.travelingspoon.com/

 

Review Overview

Positives

Risks and Reservations

Fair Valuation and discount upon conversion

There are few barriers to entry for current or new competitors with differentiation based on experiences and marketing rather than any technology or market advantages.

There is a strong management and advisory team with relevant domain, marketing, and technical experience.

Food travel is still an evolving industry and success is dependent on the experiences of the customers and hosts so that they are willing to continue participating.

Competition is small and fragmented with no clear industry leader

The travel and experience dining market is sensitive to economic downturns.

Partnerships with Expedia and Viator expand reach of offerings

Managing the marketing, host management, and event logistics has proven challenging for other companies in this space, including ones with significant financing.

Problem

People find it hard to connect with the local food and culture while traveling. Most people end up in the tourist spots instead of having an authentic experience.

Solution

Current:

Traveling Spoon created an online platform that connects travelers with locals, enabling them to share authentic experiences.

Long Term:

Over the next five years, Traveling Spoon wants to be in 2,000 cities, have 100,00 hosts and serve 10M travelers.

Business Model

Traveling Spoon has three revenue channels; 60% of revenue comes from their website, 25% through online travel partners (expected to grow to 40% over the next two years), and 15% through tour operators. They take a commission on every experience booked. The average price point for a meal and cooking class across all destinations is $66/person with a 28% average accrual margin over a full year.

Traction

  • Established presence in 29 countries
  • Developed a team with experience from Google, Groupon, Yahoo, and Alice Waters
  • Partnerships with Expedia and Viator
  • Launched website in September 2015 with a fully developed platform
  • Thousands of travelers served
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Stephanie Lawrence

Aashi Vel

Swati Raju

Position:

Co-Founder/Co-CEO Co-Founder/Co-CEO

CTO

Ownership Percent:

36.75% 38.25%

N/A

Linkedin:

https://www.linkedin.com/in/stepholawrence https://www.linkedin.com/in/aashi-vel-9240201

https://www.linkedin.com/in/swati-raju-5557422

Advisors:

  • Alice Waters – Founder of Chez Panisse and the Edible Schoolyard Project
  • Komal Kirtikar – Director of Marketing at Lyft
  • Ron Schneidermann – Co-Founder of Liftopia, CMO at AllTrails
  • Erik Blachford – Former CEO of Expedia, Former CEO of Butterfield & Robinson
  • Nick Grandy – First Engineer at Airbnb

Summary:

The management and advisory teams have excellent credentials in the areas that should help Traveling Spoon succeed.  However, the management team is small, and their skills generally do not overlap, so that in the event there is a problem with one or more founders, Traveling Spoon may not be able to compensate quickly to fill in any gaps. In addition, Traveling Spoon will need to hire new employees quickly as it ramps up and competition for talent in marketing, technology, and business development is intense.

Market Analysis

Industry: Culinary Tourism

TAM (Total Addressable Market): $246B
*Source: Seedinvest

Driving Trends:

According to the UN World Tourism Organization, culinary tourism is a fast growing market and is expected to continue its growth.

Industry Opinion:

The culinary tourism industry, as a segment of the food subsection of the travel industry, is large and as long as tourists are seeking food-related experiences and have disposable income for such experiences, the industry should continue to grow.  International tourism, in particular, has proven to be an attractive market, with numerous, but small, competitors involved.  The idea of in-home and personal culinary experiences is similar to Airbnb, which has proven widely successful.

Competition

Differentiator:

Traveling Spoon intends to rely on technical innovation, curation (creating a unique enjoyable experience) and brand ownership to differentiate from its competitors.  Technical innovation is based on expertise developing large online customer centered platforms and will be used to provide better-matched experiences.

Main Competitors:

  BookaLokal Vizeat WithLocals Feastly EatWith
Funds Raised $360K $5.55M $500K $1.25M $8M
Website http://www.bookalokal.com/ https://www.vizeat.com/ https://www.withlocals.com/  https://eatfeastly.com/   https://www.eatwith.com/

Competitive summary:

While there is no clear market leader, there are a number of other small companies with varying degrees of funding and market acceptance, all of whom are vying for similar customers, seeking partners and marketing exposure.  Larger travel-oriented companies, such as Airbnb, could also enter the market, through their own offerings or acquisition, and would pose a significant competitor if they did so.

Company Financials

Revenue to date: $44,923

Revenue Last Fiscal Year: $32,560 (2015)

Previous Funds Raised:

  • $870K raised from January 2014-July 2014 through the sale of its convertible promissory notes
  • ~$660K from the sale of SAFE notes

Use of Funds

If minimum amount is raised:

  • 23% engineering & development
  • 26% sales & marketing
  • 35% general & administrative
  • 11% offering fees & expenses
  • 4% regional management
  • 1% unspecified

If maximum amount is raised:

  • 36% general & administrative
  • 27% sales & marketing
  • 24% engineering & development
  • 8% offering fees & expenses
  • 5% regional management

Exit Opportunities

The most realistic exit is to be acquired by another culinary travel company or by a larger company in the travel industry.  Airbnb has already acquired similar companies and is likely to continue to opportunistically seek to acquire more companies.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Sept. 19, 2016 Trip4real Airbnb Unknown
April 5, 2016 onefinestay AccorHotels $170M

*Trip4real: Experience Europe like a local. Book tours and activities hosted by local insiders across Europe and experience a place like you live there.
*Onefinestay: Pioneers of handmade hospitality, for stays in the finest homes. They offer homeowners (our hosts) a way to earn additional income from guests while they’re away, handling everything from marketing to managing their home.

Expert Opinion Summary

Traveling Spoon has an excellent management team and advisory group, including strong investors.  They are also raising enough additional money from other investors to give them a long runway.  Despite this, the market is still new and developing and there are a lot of competitors.  Other culinary tourism companies have raised a lot of money and failed due to the challenges, but Traveling Spoon seems well positioned to have a chance of success.

AngelList: https://angel.co/traveling-spoon
Crunchbase: https://www.crunchbase.com/organization/traveling-spoon#/entity

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.

GoFish Cam

By | Due Diligence | No Comments

Company Overview –

GoFish Cam is a wireless underwater camera that sits on a fishing line and works with a mobile app via WiFi so users can capture underwater action. Anglers can easily review their footage to help justify their decisions, cut out guessing time, and be more effective while fishing.
*Souce: seedinvest

Company

Investment

Name: GoFish Cam

Minimum Raise: $100K

CEO: Brandon Austin

Maximum Raise: $400K

Company Founded: 2015

Structure of Raise: Crowd Note

Location: Houston

Valuation: $3M Valuation Cap, 20% Discount

Crowdfunding Portal: SeedInvest

Minimum Investment: $500

Crowdfunding Link: https://www.seedinvest.com/gofish.cam/seed

 

Website: http://gofishcam.com/

 

Review Overview

Positives

Risks and Reservations

Almost $200,000 in preorder (1,200 + orders from 65 countries) shows some market validation

Small Management team, with a young CEO and sole board member

$3 million valuation cap with 20% discount

Growing competition

Multi-channel marketing approach with an international potential

Relevance and protection of intellectual property

Previous investment from Telluride Venture Accelerator

Lack of confirmed distribution partners

Problem

With most of the fishing experience taking place underwater, there is a lack of visibility. Currently, there is limited ability and technology to capture data and the fishing experience underwater.

Solution

Current:
GoFish Cam has created an underwater video camera that sits on the fishing line. With the ability to connect with the GoFish mobile app, you can capture, edit, and share data.

Long Term:
Their goal is to release accessory packs that will be compatible with all camera models. After the release of accessories, their plan is to launch GoFish Cam 2.0, a more enhanced and innovative fishing camera.

Business Model

GoFish Cam’s business model was initially built on the sale of the cameras. The camera sells for $184.95 with a gross margin of about 60%. They believe the gross margin will increase to over 70% at scale. Their long-term goal (after developing a significant user base) is to shift their business model from being built on camera sales to monetizing on data, content, and the mobile app.

Traction

  • $180,000+ from pre-orders
  • Pre-sold 1,200+ cameras through traditional crowdfunding
  • Over 20 distribution requests
  • Over 25K social media followers
  • Named one of the three most promising startups in Canada in 2015
    *Source: Company provided on crowdfunding campaign website in pitch deck

Senior Management Team

 

Brandon Austin

Kieran Howlett

Ryan Austin

Position:

CEO, Board Member & Co-Founder CTO

Co-Founder/Advisor

Ownership Percent:

32.75% 9.5%

32.75%

Linkedin:

https://www.linkedin.com/in/baustin1992 https://www.linkedin.com/in/kieran-howlett

https://www.linkedin.com/in/ryanaustin3

Summary:
Brandon Austin, the CEO, has minimal start-up company experience and is also the only board member.  Kieran Howlett, the CTO, has significant experience in relevant technology areas and Ryan Austin, co-founder, and advisor has significant start-up experience and education.  No team member has experience in the sport-fishing industry.  The co-founders founded the company based on their passion, often an important “x-factor” for success.

Market Analysis

Industry:
GoFish Cam targets anglers in the sport and recreational fishing industry. More specifically male anglers between 25-55 with a household income over $75K who fish at least once a week.

TAM (Total Addressable Market): $1.9B worldwide. They are targeting a near-term market of $91.9 million in the US and $154 globally.
*Source: Seedinvest

Industry Opinion:
The fishing industry and the technology sector within the fishing industry, in particular, has experienced strong growth in recent years.  Their target customers tend to have disposable income and per capita spend on their leisure activities such as fishing tends to be stable.  The target customer demographic also has a history of being comfortable using technology in the everyday lives.  While there are some regulatory pressures on fishing due to concerns about overfishing, sport-fishing has not been significantly impacted yet.

Competition:

Key Differentiator:
GoFish claims their key differentiator is their mobile app, which is expected to be able to provide customers data on fishing behavior, history and share videos and data with friends.  GoFish intends to monetize the data and videos in the future.

Main Competitors:

 

Water Wolf

Strike-Cam

Funds Raised Unknown Unknown
Company Website http://www.waterwolfhd.com/en/# http://www.strike-cam.com

Competitive Summary:
Competition in this market segment is increasing at a rapid rate.  Beyond the competitors listed above, competitors using both aerial and underwater drones, including PowerRay Submersible (launch at the 2017 CES), are emerging with similar technologies.  GoFish acknowledges that it does not rely on its intellectual property (Exhibit A to Form C, page 3), and as a result, GoFish must compete on the basis of its usability, price, and availability through distribution channels.

Company Financials

Revenue to Date: Pre-sale revenue of almost $200K

Revenue Last Fiscal Year: $0

Previous Funds Raised:

  • $30,000 from Telluride Venture Accelerator
  • $60,000 grand from Ontario Centres of Excellence SmartSeed Fund.
  • $101,041 pre-sale revenue from Kickstarter
  • $118,186 pre-sale revenue from Indiegogo

Use of Funds

  • General and administrative expenses and future marketing (41%)
  • Production of product (25%)
  • Product launch marketing (20%)
  • Offering fees and expenses (14%)

Exit Opportunities

Expert Opinion:
The most likely exit is an acquisition by a competitor in an effort to consolidate intellectual property, including user data and acquisition of GoFish’s customer base.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
July 2013 Hardy & Greys Limited Pure Fishing Unknown
May 2011 Backcountry.com TSG Consumer Partners Unknown

Expert Opinion Summary

GoFish has impressive traction on pre-sales through Kickstarter and Indegogo and solid backing from professional investors and advisors.  Their management team, most specifically their CEO, is short on expertise however and the lack of independent board members gives pause about their ability to address difficult challenges.  Their target market is large and growing, with a strong customer demographic that has demonstrated it is eager to adopt new technologies.  Competition is already strong and is growing, not just from direct competitors with similar products, but also from new product types, most specifically aerial and underwater drones.  GoFish will have to demonstrate strong customer growth through the rapid development of its sales channels, then use that large customer base to collect and monetize customer data in order to succeed.

AngelList: https://angel.co/gofish-cam
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.

Ellison Eyewear

By | Due Diligence | No Comments

Company Overview –

Ellison eyewear is building an eyewear brand that strives for the highest quality, does good and has an integrated social mission, and focuses on customers with a lifetime client service model. Each pair of glasses is handmade using the finest Italian materials. Through their Club Ellison, customers are able to replace lost, stolen or broken glasses for 50% off retail. With every pair of sunglasses or Club Ellison memberships sold, they will either provide spectacles for children, build vision centers for the poor, or train eye health personnel.
*Souce: Republic

Company Investment
Name: Ellison Eyewear Minimum Raise: $50K
CEO: Aristotle Loumis Maximum Raise: $750K
Company Founded: 2014 Structure of Raise: Crowd Safe
Location: Chicago, IL Valuation: $4M Valuation Cap, 20% Discount
Crowdfunding Portal: Republic Minimum Investment: $30
Crowdfunding Link: https://republic.co/ellison  
Website: http://wearellison.com/  

Review Overview

Positives Risks and Reservations
The target demographic is young, fashion sensitive and eager for alternatives in purchasing opportunities, style, and price to the near monopolistic power of the two dominant manufacturers. Crowd SAFE offers investors limited rights and leaves the time of conversion up to the Company.
Ellison has a strong management and advisory team with a variety of skills and backgrounds. Competition includes large, aggressive multi-nationals that have near monopoly power along with other small, internet-based companies relying on similar sales strategies as Ellison.
Large competitors have a history of acquiring successful startups, so the path to an exit is clear. The three critical materials for manufacturing, are single sourced from three providers.
Proceeds from this crowdfunding are not necessary to continue operations, assuming closing on other investments.  Proceeds would be used for growth of the business. CEO has no startup experience prior to this company.
If you are interested in social benefit, Ellison’s focus on doing good by donating to charitable organizations and participating in community outreach activities will appeal to you. If you are not a socially conscious investor, Ellison’s focus on socially conscious behavior may be seen as a distraction from growing the company in an extremely competitive environment.
Investors get “perks” based on the size of their investment, including the right to receive one or more pair of Ellison sunglasses.  This is an unusual benefit of this offering, more common in a traditional crowdfunding.  This also increases near-term sales and the odds of future sales through their Club Ellison program.

Problem

The eyewear industry is headed by a handful of giant corporations, who currently own the rights and licenses to today’s biggest fashion brands and distribution channels. This causes consumers to pay higher prices for lower quality products.

Solution

Current:
Ellison has built a brand that strives for the highest quality by producing hand-crafted goods using the finest Italian materials. They give back by providing eyesight to those in need and they focus on customers using a lifetime service model.

Long Term:
Ellison wants to expand online sales to become the dominate sales channel due to higher margins.  Ellison also wants to develop a prescription eyewear line.

Business Model

Ellison makes a profit with a four-point sales strategy that is built around a direct to consumer approach. The four sales channels include wholesale, pop-up and direct (70% of sales), corporate and online. Wholesale has a $24.77 cost/unit with a 2.9X margin. Pop-up and direct has a $23.57 cost/unit with a 4.5X margin. Corporate has a $23.57 cost/unit with a 3.6X margin. Online has a $35.10 cost/unit with a 5X margin.  Unit costs are expected to decrease as volumes increase, however, unit costs are subject to considerable variability due to foreign currency exchange issues and costs of materials.

Traction

  • Operational for 2 years with 125% average yearly growth rate
  • Expanded into 60 brick-and-mortar stores globally in 2016
  • Club Ellison, the lifetime membership model, priced at $10.00, was launched in June 2016 and has acquired over 1,200 new members.
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Aristotle Loumis Ravi Patel John Roa
Position: CEO/Founder Co-Founder/Growth Strategist Partner/Technologist
Ownership Percent: N/A N/A N/A
Linkedin: https://www.linkedin.com/in/aristotle-loumis-21562050 https://www.linkedin.com/in/ravi-patel-7ba85923 https://www.linkedin.com/in/johnroa

Advisors:

  • Scott Kitum – CEO, Technori
  • Tim Huizenga – President Huizenga Consulting
  • Chad Bronstien – SVP, Amobee

Summary:
Aristotle Loumis, the CEO and board member, is a young entrepreneur with a big vision, but this is his first startup.  Ravi Patel, the other board member and John Roa both have significant startup and emerging company experience.  In addition, the company has a number of highly qualified and diverse advisors.  If the management team, especially the CEO, is willing to listen to the advisors, management should not be an issue.

Market Analysis

Industry: Eyewear Industry

TAM (Total Addressable Market): $112B
*Source: Company provided on portal page

Driving Trends: Expected to reach $184.03B by 2024

Industry Opinion:
This industry is a classic example of both significant opportunity and risk in a near monopolistic market.  On the risk side, the market is dominated by two very large, multi-billion dollar companies that control both vertical and horizontal supply chains. These competitors have demonstrated a willingness to use their market power to either destroy or acquire smaller competitors.  On the opportunity side, Ellison may be able to exploit increased customer awareness of new buying options (pop up and online being most prevalent), the high cost of major competitors products, and a focus on social good that is attractive to Ellison’s target demographic.  Ellison also faces competition from other startup glasses companies seeking to exploit these same trends.

Competition

Key Differentiator:
If you like socially responsible companies, Ellison’s focus on doing good will appeal to you and is a big differentiator from its larger competitors.  In any case, Ellison’s focus on young, fashion-conscious purchasers and its hoped-for ability to predict and create fashion trends may differentiate it from large corporate brands that lack direct customer connections.

Main Competitors:

 

Luxottica

Safilo Warby Parker

Hawkers

Revenue

$9.8B (2015) $1.33B (2014) N/A

N/A

Estimated Market Share

80% 10.8% N/A

N/A

Funds Raised

N/A N/A $215M

$56M

Website

http://www.luxottica.com/en  http://www.safilogroup.com/en/ https://www.warbyparker.com/     

https://www.hawkersco.com/

Competitive Summary:
This industry is extremely competitive.  One competitor owns approximately 80% of the market, the second largest owns approximately 10.8%, leaving only 9.2% for other competitors without a change.  This massive market power gives these two competitors huge advantages in marketing, sales, manufacturing costs, access to materials and perhaps most importantly, well-known brand names that drive buying decisions.  Newer competitors relying on similar marketing and manufacturing strategies to Ellison are emerging and are raising significant funds to compete.  Finally, there are numerous other startups seeking to enter this market.

Company Financials

Revenue to Date: $243,000

Revenue Last Fiscal Year: $109,947

Previous Funds Raised: Ellison has raised at least $380,000 through issuance of convertible promissory notes

Use of Funds

  • Develop prescription eyewear
  • Help cut overall costs related to product development
  • Geographic expansion
  • Data analysis of product development and online conversion strategy to make that area of the business more sophisticated

Exit Opportunities

Expert Opinion: The most likely exit is to be acquired by one of the larger, better-funded competitors, including Luxottica, Safilo or Warby Parker.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Aug. 16, 2016 MyOptique Group Essilor $147M
Feb. 27, 2014 Coastal.com Essilor $430M
Jan. 7, 2014 Glasses.com Luxottica Unknown

Expert Opinion Summary

Ellison will have to grow a loyal customer base very quickly, maintain a competitive price against better-funded competitors while keeping its cost of good and margins in line with its growth goals.  While Ellison has had success with wholesale and pop-up/direct sales, it recognizes it must transition to primarily online sales model, where margins are excellent  The market power of its main competitors, especially in brick and mortar stores would likely make significant expansion in the brick & mortar channel extremely difficult. The socially responsible aspect of this company is different from most of its competitors and for investors and customers who value this, it could be a key differentiator. However, history has generally shown that customers buy based on brand recognition and price.  It is unclear if socially responsible activities would be enough to either overcome lower brand recognition or better yet, create and enhance Ellison’s own brand.

Finally, the structure of the Crowd SAFE raises concerns with how a return would be handled. With the terms of conversion being left to the discretion of the company, the Crowd SAFE wouldn’t appeal to many venture capitalists.

AngelList: N/A
Crunchbase: N/A

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