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Alchema

By | Due Diligence | No Comments

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.  

ComicBlitz

By | Due Diligence | No Comments

Company Overview –

ComicBlitz is focused on streaming digital comic books. It provides tools that enable readers to organize, zoom, rate and review the comic books.
*Souce: Crunchbase

Company Investment
Name: ComicBlitz Minimum Raise: $50K
CEO: Jordan Plosky Maximum Raise: $1M
Company Founded: 2014 Structure of Raise: SAFE
Location: Los Angeles, CA Valuation: $5M Valuation Cap
Crowdfunding Portal: Wefunder Minimum Investment: $100
Crowdfunding Link: https://wefunder.com/comicblitz  
Website: https://www.comicblitz.com/  

Review Overview

Positives Risks and Reservations
There is a large and steadily growing market for comic books. Marvel has their own digital subscription service, a partnership to offer their content, which currently about 43% unit share, could prove to be difficult
Negative reviews of competitive products signal room for an improved service It is concerning that ComicsFix, a very similar offering is ‘taking a short pause’
CEO has direct experience in the industry Scribd, which had a digital comics component, has very recently canceled its comics service
Competitor Comixology is Amazon-owned
Not an attractive service to comic book collectors who still prefer hard copies they can collect and have signed
The valuation seems high compared to revenue and other comparable startups at this stage

Problem

The comic book industry is behind the tech curve. People still have to go to a physical store to purchase their comic book for $3.99 a piece. Each time a new issue comes out, customers are forced to pay $3.99. If they are interested in multiple series that cost can add up quickly.

Solution

Current:
ComicBlitz has created an all-you-can-read subscription for digital comics. For the cost of two comic issues per month, customers can get unlimited access to a variety of comics. Customers are able to read the comics from their laptop, iPad, iPhone, and soon Android.

Long Term:
Their focus will be to broaden the user platforms and partner with more publishers to give customers and even greater selection.

Business Model

ComicBlitz currently has a subscription model where they charge $3.99/month for 10 issues or $7.99/month for unlimited issues.

Traction

  • Over 5,500 registered users
  • Signed 29 licensing deals with content providers
  • Over 200% growth rate in current subscribers for 2016
  • 177% increase in monthly page reads for 2016
  • 240,000+ impressions in Apple App store
  • Users in over 133 countries
  • TechWeek LA Finalist in Startup Competition
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Jordan Plosky Gregory Weiss
Position: CEO CTO
Ownership Percent: 56% 37.65%
Linkedin: https://www.linkedin.com/in/jordan-plosky-16b56b6/ https://www.linkedin.com/in/gweiss27/

Advisors:

  • Mark Coleman – SVP Global Sales at DoubleClick
  • Samantha Saturn – Former CMO of Comixology
  • Dinesh Shamdasani – CEO & CCO of Valiant Entertainment
  • Michael Kim – Global HR Business Partner for Spotify

Summary:
The CEO has experience in the comic book sector, but neither the CEO nor CTO appear to have experience running a company. The company does not appear to have a board of directors, however, there is a strong list of advisors.

Market Analysis

Industry: Comic Book, Digital Media

TAM (Total Addressable Market): $1.03B (North American market size, 2015)
*Souce: Comichron

Industry Opinion:
The comic book industry is large and has shown steady growth over previous years. With 74%* of unit share in 2017, two major companies dominate the industry.
*Souce: DiamondComics

Competition

Differentiator:
ComicBlitz has developed a low cost all-you-can-read online subscription service for comics that is available on several different electronic devices.

 Main Competitors

  Comixology Marvel Unlimited ComicsFIX**
Funds Raised $15.68M* N/A N/A
Price $5.99/month $9.99/month $8.99/month
Website https://www.comixology.com/ http://marvel.com/comics/unlimited http://comicsfix.com

* Includes 1.05M of known debt
**On their website: “TAKING A SHORT PAUSE WHILE WE ARE WORKING ON RELAUNCHING OUR SERVICE WITH MORE EXCITING FEATURES AND AMAZING PARTNERS.”

Company Financials

Revenue to date: $985

Revenue Last Fiscal Year: $985 (2015)

Previous Funds Raised: 15 separate convertible notes totaling $166,500 from 12/2014-8/2016

Use of Funds

  • License premier content
  • Online customer acquisition
  • Outsource further technology development
  • Pay salaries
  • Hire additional team members
  • Rent office space

Exit Opportunities

Potential exits in this space include DC, which has yet to provide an online subscription service, as well as tech giants and other entertainment companies.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
April 10, 2014 Comixology Amazon Unknown
Sept. 21, 2015 Oyster Google $30M

Expert Opinion Summary

While fans in forums have shown an interest in digital comic books and seem to appreciate the cost savings over print copies, the success of this service likely depends on being able to provide quality content. The industry is dominated by two major companies, Marvel and DC. Marvel owns 43%* of unit market share and already has their own digital subscription service, a partnership is likely to prove difficult. To his credit, the CEO has already been talking to them and is confident that ComicBlitz will eventually be able to help them expand their reader base. The valuation for this offering seems high given the current revenue and traction shown to date.
*Souce: DiamondComics

AngelList: https://angel.co/comicblitz
Crunchbase: https://www.crunchbase.com/organization/comicblitz-llc#/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.  

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.   

Safety First Arms

By | Due Diligence | No Comments

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.  

Monday Motorbikes

By | Due Diligence | No Comments

Company Overview –

Their mission is to create a uniquely attractive, fully electric motorbike for urban transport, that is simple to operate, fun to drive & desirable to own.
*Souce: AngelList

Company Investment
Name: Monday Motorbikes Minimum Raise: $50K
CEO: Josh Rasmussen Maximum Raise: $1M
Company Founded: 2010 Structure of Raise: Common Stock
Location: Brisbane, CA Valuation: $20M pre-money valuation
Crowdfunding Portal: Start Engine Minimum Investment: $150
Crowdfunding Link: https://www.startengine.com/startup/monday-motorbikes  
Website: https://mondaymotorbikes.com/  

Review Overview

Positives Risks and Reservations
No license required for operation in most U.S. States High entry cost for consumers at $5,995, entry level traditional mopeds start around $3,500
Perks include significant credits towards the purchase of a motorbike 40-mile range in economy mode at 20 mph, sport mode allows the rider to reach upwards of 40mph but is recommended for off-road use only.
Battery prices have been declining rapidly over the last 4 years making electric vehicles more affordable $20M valuation based off of previous SAFE notes issued, but less than $500k has been invested. Previous SAFEs issued included a 20% discount while this offering does not.
Patented battery and theft-deterrent system $30,000 of the raise will go towards expenses incurred due to the crowdfund round.
No gears or clutch to operate, making an easy learning curve for new riders Company is not currently generating revenue but has collected $240,987 in deposits

Problem

Getting around in a city can be challenging. Cars are expensive, hard to park and cause traffic jams. Buses are slow, unreliable, and also get stuck in traffic. Motorcycles are heavy and require a special license. Bicycles are limited by human power and require effort.

Solution

Current:
Monday Motorbikes created the M1, an electric motorbike that people can ride virtually anywhere a bicycle or motorcycle can. The M1 is simple to use, doesn’t need a clutch or gears, and you don’t need a special license to ride it.

Long Term:
Over the next 5 years, they plan to utilize offshore manufacturing assistance to increase production to over 100,000 units and improve margins. They will also focus on enhancing global distribution while maximizing production output.

Business Model

Monday Motorbikes sells their bikes direct to consumer, through a dealer network, and are working on developing a business to business channel. They expect the majority of the sales to be either direct to consumer or through a dealer network. The retail price for the M1 is $5995.

Traction

  • Intel partnership established with loT groups
  • #1 spot in GQ “Best Stuff of the Year” (2015)
  • 330,000 website visitors from 5 continents, 146 countries
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Josh Rasmussen Dr. Nathan Jauvtis Sarah Rizk
Position: CEO & Co-Founder Co-Founder & Chief Scientist COO
Ownership Percent: 11.5% 69.56% N/A
Linkedin: https://www.linkedin.com/in/joshrasmussen/ https://www.linkedin.com/in/jauvtis/ https://www.linkedin.com/in/sarah-rizk-53607411/

Summary:
Co-Founder Nathan Jauvtis has a significant tract record as a design engineer, along with a a PHD in Mechanical Engineering from Cornell University. CEO Josh Rasmussen has previous founder experience at his last venture ZipKick as well as previous roles in sales.

One interesting note is board member Zachary Levenberg is currently an Electronic Design Engineer for Tesla. The team seems to be well rounded and off to a great start with its board.

Market Analysis

Industry: Transportation

TAM (Total Addressable Market): $311B
*Souce: Portal Page

Driving Trends: The market for electric vehicles is growing at 60% a year
*Source: portal page

Industry Opinion:
Urban commuters have shown a desire for additional transportation options and the recent trend has been towards electric options vs. gas. With the cost of batteries significantly becoming more affordable in recent years, the entry point for electric vehicles have now entered into an affordable range. Although the price of the Monday Motorbike is still significantly higher than a traditional gas moped, the continued decline in costs of battery technology will benefit the industry.

Although Monday Motorbikes states their total available market as $311B, that is the entire global transport industry. The $16B e-bike industry is a more accurate depiction of the total industry.

Competition

Differentiator:
Monday Motorbikes has developed a patented battery and theft-deterrent system that addresses a previous major issue to e-bikes given the high value of the batteries. The sport mode on the M1 which allows the bike to reach upwards of 40 mph is also a major differentiator in the industry.

Main Competitors

  Zero Motorcycles Inc Brammo Outrider USA Voltbike
Funds Raised $64.66M $70M N/A N/A
Website http://www.zeromotorcycles.com/ https://www.brammo.com http://outriderusa.com/ http://www.voltbike.ca/

Company Financials

Revenue Last Fiscal Year: $3,451 (2015)

Previous Funds Raised:
The company has raised money through a SAFE round. They raised $365,000 at a $15 million valuation cap and a 20% discount, $30,000 at a $16.5 million valuation cap and a 20% discount, and $50,000 at a $18.5 million valuation cap and a 20% discount.

Use of Funds

  • Selling
  • General
  • Administrative
  • Working capital
  • Purchase inventory and material to produce motorbikes

Exit Opportunities

The acquisition of Brammo Electric Motorcycle by Polaris in 2014, shows the major manufacturers have taken notice of the newly developing electric bike and motorcycle trend. Brammo had previously raised $50M+ in capital prior to being acquired with a majority coming from Polaris

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
2014 Brammo Electric Motorcycle Polaris Unknown

Expert Opinion Summary

Monday Motorbikes will be an interesting to watch as they evolve. Currently, the cost of entry is significantly higher than alternative options but as with many vehicle companies at similar stages the costs to produce tends to drop significantly as production increases. The valuation is certainly significant given the lack of revenue and it is disappointing that previous SAFES issued by the company included a 20% discount when this offering does not.

I would evaluate this company as being a hybrid of the traditional rewards based crowdfunding and equity crowdfunding. If your intent is to preorder an M1, this is an exciting deal with a $500 investment getting a $500 credit towards an M1 purchase. A $2,000 investment gets a $1,000 credit. By looking at this offering as more of a preorder with a bonus of receiving equity, there are a lot of appealing qualities. If evaluating this purely as an investment, concerns of valuation and offering terms could be more prominent.

AngelList: https://angel.co/mondaymotorbikes
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.  

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.  

BLAZnTECH

By | Due Diligence | No Comments

Company Overview –

BLAZnTECH is the world’s first motorized weapons cleaning system. A pocket-sized tool that manages to effectively clean most commonly used rifles and handguns.
*Souce: Wefunder

Company Investment
Name: BLAZnTECH Minimum Raise: $50K
CEO: Benjamin Bondar Maximum Raise: $1M
Company Founded: 2014 Structure of Raise: Future Equity (SAFE)
Location: Res Triangle Park, NC Valuation: $10M Valuation Cap
Crowdfunding Portal: Wefunder Minimum Investment: $100
Crowdfunding Link: https://wefunder.com/blazntech  
Website: https://blazntech.com  

Review Overview

Positives Risks and Reservations
First movers advantage of being the first motorized cleaning tool Currently oversold and ill prepared for commercial growth
Early bird bonus: $9.5M valuation cap Government and regulatory agencies could influence decision making
R&D conducted in Iraq by military servicemen Saturated market
Projected to sell $50,000 units by December 2017  

Business Model

BLAZnTech has two primary revenue streams. The first is from the sale of their MWCS kits. The MWCS kit boxes have a suggested retail price of $200 with the current cost of production being $55. They predict the production cost the decrease to $30 in 2017. The second revenues stream comes from proprietary consumables such as nylon brushes, cotton brush socks, and weapons high-value CLP gel. The weapon cleaning consumables retail between $3.95-$5.95 and make up over half of their gross revenue. Each revenue stream has gross margins more than a 200% markup.

Traction

  • Sold over 1,000 units to date and this is just in the R&D stage.
  • Patent pending in the U.S. and internationally
  • Manufacturing partner with PRIDE Industries
  • Partnered with FrogLube; providing cleaning, lubricant, and protectant in every BLAZnTECH kit
  • Developed international circuit board to reduce labor time and increase production capability
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Benjamin Bondar William H Tate

Michael Penny

Position: CEO & Founder CFO CMO & Chief Evangelist
Ownership Percent: 78% N/A N/A
Linkedin: https://www.linkedin.com/in/benjaminbondar https://www.linkedin.com/in/william-h-tate-8a23237 https://www.linkedin.com/in/michaeljpenney

Summary:
Founder and CEO, Benjamin Bondar, is a former stock market analyst – managing over 2.3MM with his own trading floor. He is a veteran of Iraq, FAA certified pilot, and inventor of the Motorized Weapons Cleaning System. The CFO, William H. Tate, and the remaining management team all have military experience.

Market Analysis

Industry:
BLAZnTECH is targeting gun & sporting enthusiasts, military, and police.

Market Size:
There are over 270 million guns in the US. The firearms and accessories industry has a market opportunity of $6B. Weapon owners spend $13B annually on accessories.

Industry Opinion:
The firearms manufactured by year in the US is increasing every year. This ramp-up in spending includes rifles, handguns, revolvers, shotguns and other miscellaneous firearms. I’ve personally been approached by veterans pitching they’ve created the next best innovative tech for firearms. The hesitancy investing in this space is the heavy regulating hacking one must do to make any sort of headway. BLAZnTECH is different because their products are complimentary to firearms and don’t compromise the integrity or intend to replace the firearms. This product is replacing an out of date cleaning tool and has already demonstrated quality traction in the market.

Competition

 

Main Competitors

  Otis Technology RamRodz
Funds Raised N/A N/A
Website http://www.otistec.com/ http://ramrodz.com/

Financials

Revenue to date: $0

Previous Funds Raised: $20,838 on Indiegogo

Use of Funds

  • Ramp-up production
  • Fulfill growing demand
  • Supply chain management

Exit Opportunities

They have developed future concepts with Ranier Arms which could be a potential exit opportunity as well as other incumbents in the space.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Nov. 26, 2014 Battenfeld Technologies Smith & Wessen $130.5M

Expert Opinion Summary

Their production costs are currently really labor intensive. Their ability to scale will be important to their success. However, given they’ve already aligned with a non-profit, PRIDE Industries which employs 5,600 Americans, to conduct product assembly and distribution they may have a great chance to take a large slice of market share. BLAZnTECH also has established defensibility around the product and holds patents on the tech.

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.

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.  

Alkane Truck Company

By | Due Diligence | No Comments

Company Overview –

Alkane Truck Company is an American assembler of trucks and off-road vehicles powered by LPG and CNG.
*Souce: Crunchbase

Company Investment
Name: Alkane Truck Company Minimum Raise: $25K
CEO: Robert Smith Maximum Raise: $1M
Company Founded: 2012 Structure of Raise: Common Stock
Location: Myrtle Beach, SC Valuation: $7.6M pre-money valuation
Crowdfunding Portal: Start Engine Minimum Investment: $247
Crowdfunding Link: https://www.startengine.com/startup/alkane  
Website: http://alkanetruckcompany.com/  

Review Overview

Positives Risks and Reservations
Alternative fuels are growing Huge amount of short-term debt, mainly from the CEO
Assembly model lowers infrastructure cost As an assembler, very little intellectual property
Seems to have found a niche Alternative fuel infrastructure is underdeveloped
Class B shares, no voting rights

Problem

North America has seen an increase in the use of alternative fuel vehicles over the past decade. Well-known vehicle manufacturers have overhead requirements that make it unfeasible to produce alternative fuel vehicles for the relatively small market segment. A second problem is the carbon emissions being produced by diesel-powered trucks that rely on foreign oil.

Solution

Current:
The Alkane Truck Company’s goal is to produce a line of clean-burning, alternative-fueled trucks and use domestically-produced, cost-effective fuels such as propane and CNG. They will be an assembler of trucks instead of a manufacturer to eliminate the debt burden that comes along with purchasing equipment needed to manufacture.

Long Term:
Their future plans are to begin production of the Dominator in 2017 and launch an extended range electric prototype of the Dominator by 2020. They also plan to develop a Class 8 and Class 7 truck and pursue production of pickup trucks.

Business Model

Alkane truck company has partnered with dealerships throughout the United States and Canada to sell their trucks. Over the next three years, they will have three different vehicles available on the market. The Dominator retails for $87,500. Their goal is to sell 3,00 trucks a year through their dealership network.

Traction

  • Signed agreements with 100 well-established dealership locations nationwide to sell & service the trucks
  • Foton-Daimler signed Alkane Truck Company as exclusive AOS for USA
  • Agrale of Brazil signed Alkane Truck Company as exclusive AOS for North America
  • Sold a production lot of class 7 trucks
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Robert Smith III Miguel Pena Sandro Stedile Ricardo Takeo Kuwabara
Position: CEO Operations Manager General Manager Chief Engineer
Ownership Percent: 98.86% N/A N/A N/A

Summary:
The management team seems to be on par with what this company needs. There is quite a bit of import experience, which is a strength. My one reservation is the amount of control the CEO has.

Market Analysis

Industry:
Automotive; with each Alkane truck representing a “one-of-a-kind” vehicle, it will also represent a new category so there is no direct comparison to market categories of existing vehicles.

TAM (Total Addressable Market):
Alkane will target less than 1% of the total market share of medium and heavy-duty truck sales.
*Souce: Portal Page

Industry Opinion:
I think there is a tremendous amount of potential for growth in the alternative fuels market, but it is up against a big, tough auto industry. For alternative fueled vehicles to grow, the infrastructure for alternative fueling needs to expand. It also relies heavily on incentives from the government, which are very uncertain at the moment.

Competition

Main Competitors

Market Cap Revenue
Ford $49.85B $149.56B (2015)
Chevrolet, GMC (GM)

$54.17B

$152.36B (2015)

Toyota

$169.82B

$252.71B (2016)

Nissan $38.66B N/A
Honda $55.23B $129.91B (2016)
Hino $5.87B $1.75T (2016)
Kenworth, Peterbilt (Paccar) $23.92B $18.67B  (2015)
Volvo, Mack $26.32B $312.51B (2015)
Western Star, Freightliner (Daimler Trucks) $72.37B $149.47 (2015)
International $2.26B $8.11B (2016)

Company Financials

Revenue Last Fiscal Year: $221,160 (2015)

Previous Funds Raised:

  • $2,013,845, Promissory Note, November 10, 2016
  • $400,000, Common Stock, June 8, 2016
    *Source: Offering Details Document

Use of Funds

  • Production
  • Marketing
  • Salaries & General Admin
  • Working Capital
  • Professional Fees
  • Intellectual Property

Exit Opportunities

There is the potential for a large automaker to purchase the company, but I see that as highly unlikely. Since they are an assembler, rather than a manufacturer, there seems to be a lack of proprietary intellectual property to acquire.

Expert Opinion Summary

I really like the idea of alternative-fuel vehicles and there seems to be an incredible amount of room for growth in the US Market. If the cost per mile of alternative fuels can stay less than that of gasoline engines, there is a tremendous opportunity—although the infrastructure for alternative fueling needs to scale in order for this to really catch on.

There are a few points that the investor needs to consider while evaluating this company. There is an over $2 million in short-term debt, primarily financed from the CEO. This could be an issue if he would like to draw money out of the company, creating a real financial squeeze and hurting the investors. Another point is the equity offering. The class B shares have no voting power and almost all of the voting power belongs to the CEO. This does not make an investor-friendly situation. Finally, it seems like the minimum requirement is extremely low, especially for what they need to do to get this product to market. If they met the goal of $25,000, there is very little they would be able to do with that amount of capital.

 AngelList: https://angel.co/alkane-truck-company
Crunchbase: https://www.crunchbase.com/organization/alkane-truck-company#/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.