Company Overview –
Pearachute helps children discover and explore activities that best fit their family’s schedule.
|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|
|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.|
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
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.
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.
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.
- 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|
*Builders VC, LLC owns 30% of the company
- Sam Yagan – Chairman, Co-Founder of OkCupid
- Paul Lee – Board Member, CEO & Co-Founder of Builders Studios, general partner at Builders VC
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.
Industry: Kids Activites
TAM (Total Addressable Market): $32B
*Souce: Portal Page
As 75M millennials start having kids the market is expected to grow. 78% of millennials prefer to spend money on experiences over things.
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.
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.
Revenue to date: $140,580
Revenue Last Fiscal Year: $140,580 (2016)
Previous Funds Raised: $1.2M, seed, February 11, 2016
Use of Funds
- Native App
- User Growth
- Market Growth
- In-House Development Team
- Improve the Partner Portal
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
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