How did online startup investors fare in Q3?
Recap of investing activity across Reg CF, RegA and Debt in Q3 2023
CHART OF THE WEEK 📈
Here's an encapsulated overview of the investment flow, dominant platforms, and industry forerunners for Q3 2023:
Investors committed $127.5 million to startups online this quarter, marking a slight decrease from the second quarter of 2023 when commitments totaled $127.9 million.
335 new deals went live this quarter, down from 370 in the year's second quarter.
The top equity platform for the quarter is StartEngine, with $38 million invested, passing Dalmore Group, the top platform in the second quarter.
Honeycomb saw the most money go into debt deals this quarter. Investments totaled $2.3 million.
This quarter Energy, Power, & Natural Resources had the most committed capital for equity raises of all the industries tracked with $16.5 million.
For debt deals, Media, Entertainment and Publishing was the most popular industry, accounting for $2.9 million in capital.
FUND OPPORTUNITY 💰
OPEN is an indexing and fund management company backed by the New York Stock Exchange. They are creating best-in-class private market indices and associated fund products to replicate them.
OPEN’s first fund, the OPEN Unicorn Index Fund (UIF), LP, aims to capture the space's current price dislocation opportunity. The UIF is a secondaries fund that tracks OPEN’s overlying index of the 50 largest venture capital-backed US private companies, including names like SpaceX, Stripe, Fanatics, etc., in a single, diversified basket.
Recent price dislocation in the secondaries market for these unicorns (48.5% on average across the Index) has presented a timely investment opportunity.
More recently, IPOs of previous OPEN Unicorn Index constituents, Instacart and Klaviyo, show early signs of IPO market recovery heading into 2024.
Invest in the future of innovation with the Unicorn Index Fund.
PITCH REVIEW 💸
Brief: EmotionTrac offers a patented, AI-driven platform that assesses audience emotion and engagement with video content in real time. By delivering actionable insights, EmotionTrac serves creative agencies, content creators, and advertisers, enabling enhanced content engagement and optimizing advertising strategies, promising potential growth in multibillion-dollar markets. It’s currently raising $617,500 at a valuation of $41.2M with a minimum investment of $100.
Key People: CEO Aaron Itzkowitz. Itzkowitz is a first-time founder with relevant industry experience in emotion detection and recognition. He has been building EmotionTrac since its founding in March 2017. With his high-level managerial skills, Itzkowitz has successfully grown the team and raised funds to support the development and growth of the company.
Not an Edge Member yet? Unlock the Ratings 🔓📈
Here's what we like: EmotionTrac provides valuable insights that can significantly improve the return on investment for creative agencies, content creators, and digital advertisers by measuring audience emotion and engagement with video content. The company's patented technology sets it apart from competitors and positions it as a leader in the field.
The addressable market for EmotionTrac's services is substantial and offers a significant growth opportunity, specifically in North America. Additionally, EmotionTrac has demonstrated strong revenue growth since its last round, with annual revenue reaching $241,781 and a growth rate of 144.22%.
With its high-margin business model and low capital intensity, EmotionTrac is well-positioned to capitalize on the growing demand for emotion and engagement measurement in the video content industry.
Here's what we don't: Despite its innovative technology and potential, EmotionTrac faces several challenges that investors should consider. Firstly, given its current financials, the company's valuation of $41.2 million appears to be significantly inflated. With an annual revenue of just $241,781 and a negative net income of $1.1 million, the valuation multiple of 170.57x seems unjustified.
Furthermore, EmotionTrac operates in a moderately competitive market, which adds to the uncertainty surrounding its future success. While the company's patented technology sets it apart, barriers to entry in the industry are relatively low, allowing potential new entrants or existing competitors to develop similar solutions. EmotionTrac must innovate and continually differentiate itself to maintain a competitive edge.
Would you invest in EmotionTrac?
ON THE POD 🎙️
In this episode of the Technori podcast, Scott Kitun sits down with acclaimed journalist and author Taylor Lorenz to set the record straight regarding internet history, the premise of her book, "Extremely Online," (available now). She discusses the evolving landscape of the tech world, the importance of strong social safety nets, the impact of AI on content creation, and Lorenz's thoughts on various social platforms.
Listen to the full episode here
TOP-RATED DEALS 🌶️
Cartel Brewing & Blending (Revenue Share)
Cartel Brewing & Blending is a craft brewery specializing in small-batch beers, encompassing dark beers, kettle sours, ales, house and poured-to-order blends, barrel-aged beers, and a lite fare cafe menu.
Revenue Share Percentage: 4.50%
Minimum Investment: $100
Enviro Water Minerals Company is a water technology company pioneering a sustainable approach to the desalination process. Their technology not only desalinates water but also beneficially recovers all water and minerals, ensuring high water recovery, addressing disposal concerns, and offering applications across industries, all to reshape the desalination industry and combat global water scarcity.
Valuation: $12.6 million
Minimum Investment: $99
HelloSubs offers a streamlined labor marketplace that seamlessly connects schools with substitute teachers, eliminating the hassles of traditional, inefficient methods. Consolidating job management, scheduling, and payroll on a single platform ensures classrooms are never left unattended and administrative processes run smoothly. HelloSubs has reported $3.2 million in revenue over the last year, with projections soaring to $6 million by the end of 2023.
Valuation Cap: $10 million
Minimum Investment: $150