Due Diligence For

CROWDFUNDING

Company Overview-

Snapwire is a platform where talented mobile photographers shoot custom images for people around the world. Simply post an image request, and top mobile photographers respond by competing creatively to submit their best photos. Buyers get unique images that match their vision, and the winning photographers get paid.
*Souce: Crunchbase

Company

Investment

Name: Snapwire

Minimum Raise: $25K
CEO: Chad Newell

Maximum Raise: $750K

Company Founded: August 2, 2016

Structure of Raise: Common Stock

Location: Santa Barbra, CA

Valuation: $4.914M pre-money valuation

Crowdfunding Portal: Wefunder Minimum Investment: $100
Crowdfunding Link: https://wefunder.com/snapwire  

Website: https://www.snapwi.re/

 

Review Overview

Positives Risks and Reservations
Significant traction with over 300k photographers and 1800 paying clients CEO remains a member of previous company Media Bakery
Valuation at $4.914M pre-money Potential CEO conflict of interest with Media Bakery licensing software from Snapwire in exchange for services rendered
Founder has previous startup experience 25,500,000 shares of common stock authorized in addition to 12,400,000 of preferred stock authorized in the cap table
Disruptive business model Non-standard dilution strategy implemented with this offering by calculating pre-money valuation based on book value. Shares being sold under this offering were previously authorized on the cap table. This strategy reduces the dilution that would normally be realized by previous investors.

Problem

The stock photo industry uses mass archives of irrelevant, outdated, pre-shot photos. Right now, searching for the perfect authentic, modern photo is like finding a needle in a haystack: it’s inefficient and sometimes impossible.

Solution

Current:
Snapwire created a site where customers post creative requests and proven photographers respond with their best shots. Buyers get unique images that match their vision, and the winning photographers get paid.

Long Term:
Snapwire wants to give more tools to their photographers so they can upload photos to the platform in volume. The more high quality images on the platform, the more frequent successful searches they will have.

Business Model

Snapwire retains 30% of each custom photography transaction and 50% of each photo transaction purchased through the Snapwire marketplace.

Traction

  • 1800 clients worldwide such as LinkedIn, Scholastic, Google, and Hertz
  • 305,423 users as of October 2016
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Chad Newell

Ryan Dewane

Position:

CEO

Creative Director & Product Development

Ownership Percent:

40.5%

N/A

Linkedin:

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

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

Summary:
CEO Chad Newell has the necessary leadership experience in startups through his previous company Media Bakery. Chad remaining a member of Media Bakery while acting as CEO of Snapwire could lead to some potential conflict of interest given the two business have overlapping interests. With Snapwire and Media bakery sharing offices and resources, there is a lack of clear separation of the two entities.

Market Analysis

Industry: Commercial Photography

Market Size: $10B

Industry Opinion:
The online commercial photography industry is growing but filled with large and well-funded competitors such as Adobe and Getty Images. With plenty of competitors and lack of barriers to entry the commissioned fee structure could see constant downward pressure.

Competition

Main Competitors:

500px Twenty20

IM Creator

Funds Raised

$22.33M $9.7M

N/A

Website

https://500px.com/ https://www.twenty20.com/

http://imcreator.com/free

Financials

Revenue to date: $125,022 in 2015

Previous Funding: Undisclosed amount in 2 rounds

Use of Funds

  • 25% for new hires
  • 20% for product development
  • 5% for marketing
  • 5% for international expansion
  • 10% for including existing employee compensation
  • 20% unallocated (reserved)

Exit Opportunities

Snapwire could be a valuable acquisition to companies such as Adobe or Getty Images or a handful of the other competitors if the model Snapwire has chosen gains significant traction. Although there have been similar acquisitions by the large industry players there hasn’t been many in recent years.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
May 2011 Photolibrary Getty Images $20M
Sept. 23, 2009 BigStock Shutterstock Unknown
Feb. 1, 2006 Istock photo Getty Images $50M

Expert Opinion Summary

Snapwire has taken a disruptive approach on the stock photo model that allows the end customers a more customized solution. This model could potentially increase the spend per customer than is currently being achieved by the industry.

While the business model and implementation has proven some success, it will be an uphill battle against large competitors. The company already being in year 5 and having issued multiple convertible note rounds raises concerns of how fast they can increase growth. I would be concerned given their history, that they will be available to provide a substantial ROI in a reasonable timeframe.

I do believe the model Snapwire has chosen to pursue in regards to online photography sales can win in the long run. My reservations lie in the traction achieved given their years in business along with the complicated dilution structure they have outlined in the offering.

AngelList: https://angel.co/snapwire
Crunchbase: https://www.crunchbase.com/organization/snapwire

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.
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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.

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Jake Fisher
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Jake Fisher

Entrepreneur and Angel Investor. Along with founding Crowdfund Research, Jake is the Managing Partner at Venture Formations.
Jake Fisher
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