Are Companies Successfully Growing Revenues Before Raising Again Online?

CHART OF THE WEEK 📈

By Brian Belley | Read

With Halloween right around the corner, a term you might hear in the startup investing world is "zombie companies." Zombies are companies that, while they haven't failed outright or shut down, continue to limp along—locking up investor capital without providing opportunities for gains or write-offs.

We decided to analyze post-revenue companies that previously raised capital online through equity, SAFEs, or Convertible Notes to examine whether their revenues are growing year-over-year as a potential indication of whether they are in fact finding success, or if they have "zombie" potential. This chart of the week focuses on companies that previously raised at least one round of Reg CF or Reg A+ capital and shows how their annual revenue growth rate has progressed in subsequent offerings.

• From the chart, we observe that the median revenue growth for these repeat issuers increased from 24% in 2021 to 56% in 2022, followed by a decline to 46% in 2023 and further down to 12% in 2024.

  • It's important to note that financials tied to a new raise generally represent the previous fiscal year. For instance, companies launching after April 2022 likely submitted FY2021 financials. That partially explains why revenues in the "2022" start year of the chart increased from 2021, despite 2021 being the true local peak in the financial markets.

• While doubling and even tripling year-over-year revenues was much more common in deals launching in 2021-2022, investors should expect more tempered historical revenue growth for deals launching in 2024-2025.

• The consistent decline in median revenue growth, coupled with the increased number of companies experiencing negative revenue growth, suggests that companies are now shifting away from a "growth at all costs" mindset. This could be attributed to rising interest rates, investor demand for profitability, or reduced access to cheap capital.

  • However, the data (see chart in the full article) indicate that there aren't more profitable companies launching in 2023-2024 compared to 2021-2022.

• The wide variance between the top and bottom quartiles in the early years (2021 and 2022) suggests that companies were experiencing more volatile revenue growth. The combination of a booming market and low interest rates likely benefited some companies immensely while leaving others struggling.

• The fact that mean revenue growth is declining along with the median suggests that there are fewer companies with massive revenue growth driving the overall numbers. Earlier years show more outliers skewing the average upwards.

• We also notice that every year, the bottom quartile (bottom 25% of issuers) experienced negative revenue growth. The bottom quartile even saw revenue growth as low as -97% from 2022 to 2024, suggesting that the lowest-performing companies experienced almost a complete revenue loss compared to prior years.

To read the in-depth analysis, including more charts showing whether companies today are indeed achieving profitability better than companies of the past, read the full article here.

Q4 DEMO DAY ON OCTOBER 30TH!

Don’t miss our next Demo Day on October 30th at 1pm ET, sponsored by Fidelity Investments. Join us as top-rated companies like Our Bond, AptDeco, Citizens Coffee, and Lettuce Grow unveil their latest innovations and pitch their groundbreaking ideas. This is your opportunity to discover emerging leaders and potentially transformative investment opportunities in diverse sectors. Stay tuned for our quarterly event of dynamic presentations and insightful discussions!

PITCH REVIEW 💸

By Léa Bouhelier-Gautreau \ Deal Report

Brief: Printera automates construction through 3D Construction Printing (3DCP) by producing pre-printed concrete elements in an indoor, controlled environment, then delivering them to sites for quick installation. By shifting production indoors, Printera enhances precision, reduces waste, and avoids delays caused by weather, addressing inefficiencies common in traditional construction. This method allows for faster assembly on-site, streamlining the building process and lowering costs while supporting sustainable practices in the construction industry.

Key People: Printera's leadership team, led by CEO Justin D'Angelo and Co-Founder Keith Hill, combines managerial and technical expertise to support the company’s growth. Justin, with three years in the industry, guides Printera through early-stage scaling, while Keith’s technical skills ensure the 3D printing technology’s robustness and scalability.

Summary

Here's what we like: Printera is poised for explosive growth in the 3D printed concrete construction market, a sector expected to surge to $150.8 million with an astonishing 131.8% growth rate. The increasing demand for sustainable construction and affordable housing positions Printera as a front-runner. Despite modest revenues of $111k, the company's pre-money valuation of $15 million is justified, especially when compared to competitors like Apis Cor, valued at $201 million with just $17k in revenue, and Mighty Buildings, which is worth over $300 million with only $5 million in revenue.

What sets Printera apart is its unique approach—producing pre-printed concrete elements in climate-controlled facilities. This eliminates weather-related delays, reduces material waste, and enhances construction precision, giving it a clear advantage over traditional methods. The company has already made significant strides, completing Florida’s first 3D printed house and a major 3D printed concrete project in New York City.

Printera’s off-site production method allows for faster, more precise construction with significantly reduced waste, aligning with growing environmental demands. Printera offers a solution that accelerates project timelines while cutting costs by minimizing the traditional bottlenecks of weather delays and on-site inefficiencies.

Here's what we don't: As an early-stage company, Printera faces substantial execution risks, with little revenue growth to show and uncertainty around scaling operations. Competing in a market with established players like ICON and ApisCor, Printera may struggle to secure long-term contracts due to its smaller resources and market presence.

Financial concerns add to the bearish perspective. With a monthly burn rate of $12k and only $25k in cash, Printera has limited runway, making additional funding critical. If fundraising efforts are delayed or unsuccessful, the company could face serious financial instability.

Technological and regulatory risks also loom large. The scalability of Printera’s 3D printing technology must be proven on a larger scale, and any technical delays could hurt project timelines. Moreover, regulatory hurdles related to construction permits and standards could slow progress. Additionally, market adoption of 3D printed construction remains in its infancy, further complicating Printera’s path to long-term success.

LAST WEEK’S POLL RESULTS

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INSIDE STARTUP INVESTING

By Sam Fiske | Listen

In this episode, Chris sits down with Dr. Cathy Key, the president and chief business officer of World Tree. World Tree offers unique and sustainable investment opportunities through the growth and harvest of the Empress tree. Learn about the environmental impact, the innovative profit-sharing model with farmers, and how these fast-growing trees can provide significant returns while offsetting carbon footprints. Dr. Key dives into the agricultural processes, the risks involved, and the promising future of this green investment.

STAFF PICKS 🌶️

Genomic Expression

Genomic Expression is advancing cancer treatment through its OneRNA platform, a unique RNA-based technology enabling individualized therapy for breast and ovarian cancer patients. With CLIA certification and $4.5 million in lifetime revenue, the company is positioned to impact cancer therapy and drug development significantly.

• Valuation Cap: $50 million

• Minimum Investment: $250

Imago Rehab

Imago Rehab offers in-home rehabilitation services for patients with neurological and cardiovascular conditions through an AI-driven telerehab platform. This approach addresses the challenges of accessibility, convenience, and consistency in traditional rehabilitation, especially for patients with mobility issues. By leveraging AI and wearable technology, Imago Rehab aims to improve therapy adherence and recovery outcomes for individuals recovering from strokes and related conditions.

• Pre-Money Valuation: $12 million

• Minimum Investment: $100

Loosid

Loosid has developed a sobriety app that serves as a social network for individuals recovering from alcohol abuse disorders, offering features like treatment guides, daily sober tips, sober dating, and community support. By addressing the isolation and lack of resources many in recovery face, Loosid provides a comprehensive platform to connect users with a supportive community and practical tools for maintaining sobriety.

• Valuation Cap: $32 million

• Minimum Investment: $100

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