Q1 Overview: Key Takeaways from Online Private Market Investments

CHART OF THE WEEK 📈

April marks the end of the first quarter of the year. We collected data on equity and debt deals raising via Regulation CF and A+. Let’s take a look at how the online private markets fared from January through March of 2024:

• Investors committed $180.8 million to startups raising online in the first quarter of 2024. Equity deals made up $164.9 million or 91% and debt deals made up $15.8 million or 8.7% of committed capital. 

• 357 new deals went live this quarter. 227, or 63.5% were equity deals. 130, or 36.4% were debt deals.

• The top platform receiving the most equity investments this past quarter was Dalmore Group, bringing in more than $58.6 million.

• The top industry for equity investments was Energy, Power, & Natural Resources, with $33 million in funding for the quarter.

• The top platform for debt investments for Q1 was Dealmaker, with just over $4 million in commitments.

• The Food, Beverage, & Restaurants industry topped the charts for debt commitments in Q1 with $4.5 million committed.

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PITCH REVIEW 💸

Brief: Zing Drone Solutions is pioneering in the logistics and delivery industry with its advanced drone technology, aimed at enhancing the efficiency of last-mile logistics amidst the surge in e-commerce. Their FAA-approved Z-RID Series is a testament to their innovative approach to drone-based delivery solutions. The rapid sales of their first batch, with 600 customers and over 350 waitlisted individuals, reflect the high market demand for such technology. Zing's platform not only promises faster delivery times but also supports eco-friendly logistics by reducing the carbon footprint compared to traditional delivery methods. It’s raising $124K with a Valuation Cap of $7.5M and a minimum investment of $500.

Key People: Zing Drone Solutions is led by CEO Ian Annase. Annase, a first-time founder with five years of relevant industry experience, has successfully guided Zing through its early stages, including participating in the Tampa Bay Innovation Center accelerator program. This involvement likely provided valuable resources and mentorship, aiding in developing and launching Zing's FAA-approved products.

Interested in Zing Drone Solutions? Access the deal report HERE 🔓📈

Summary

Here's what we like: Zing Drone Solutions is at the forefront of a transformative shift in logistics and delivery, leveraging its FAA-approved drone technology to revolutionize last-mile delivery services. With a clear demonstration of market demand, as evidenced by the rapid sale of its first batch of products, generating $120,000 in revenue within six months and a substantial waitlist of over 350 customers, Zing showcases significant potential for rapid growth and expansion.

The company’s operational model, which blends both B2B and B2C strategies, allows for a wide-ranging addressable market across the burgeoning US Delivery Drone sector. This flexibility enhances Zing’s market potential and diversifies its revenue streams, making the business model resilient and scalable. Zing’s recurring and transactional revenue model further underscores its potential for sustained growth and profitability.

Zing’s commitment to technological innovation is evident in its pursuit of patents, which will further solidify its competitive position by protecting its proprietary technology. Zing has a fair valuation of $7.5 million and a compelling product that addresses a critical market need.

Here's what we don't: While Zing Drone Solutions showcases promising early traction with its innovative drone delivery products and a growing customer base, several bearish considerations are apparent. First, the logistics, delivery, and supply chain sector, especially involving drones, is subject to stringent regulatory environments. The reliance on FAA approvals introduces a significant risk factor, as any regulatory changes or delays can severely impact the company’s ability to operate and scale. This dependency on regulatory bodies for crucial aspects of operation may deter potential investors looking for less regulatory-reliant opportunities.

Moreover, Zing Drone Solutions’ financial health raises concerns. The company appears to be on a tight financial runway with a relatively low amount of cash ($17,860) compared to its low monthly profit of $4,000. This situation could force the company into making unfavorable financial decisions, such as taking on debt under less-than-ideal terms or a dilutive fundraising round, which could adversely affect early investors.

Zing’s current market position and resources might not suffice to fend off competition, especially from those with deeper pockets and more robust technological infrastructure. This competitive pressure could stifle Zing’s growth and market capture efforts, making it a risky bet for investors.

ON THE POD 🎙️

Chris dives into the innovative world of Infinity Fuel Cell with founder and CEO William Smith. His company, rooted in aerospace and underwater fuel cell technology, has advanced the use of hydrogen fuel cells for various applications, including space and subsea missions. Smith discusses the company's journey from high-stakes government contracts to potential commercial use, highlighting their success in generating clean, efficient electricity and their transition towards green hydrogen systems.

Listen to the full episode here

STAFF PICKS 🌶️

AvaWatz

AvaWatz specializes in collaborative robotics or "Cobots.” These AI-driven air and ground robots, designed for complex operations, set AvaWatz apart in automation by handling tasks too hazardous or arduous for humans. The company has a fully prototyped system that has been tested in collaboration with the U.S. Air Force and the Department of Homeland Security. Its services target critical areas like airfields, ground transit, and surveillance in both private and defense sectors.

• Pre-Money Valuation: $80.8 million

• Minimum Investment: $500

Wagyu House by The X Pot (Debt)

Wagyu House by The X Pot, located in Rowland Heights, California, specializes in fine Wagyu beef and an array of hot pot dishes. The restaurant prides itself on the exceptional quality and taste of its Wagyu selections, known for their exquisite tenderness and marbling. Founded in October 2021 by David Zhao and Haibin Yang, Wagyu House aims to use the funds from the campaign, which seeks to raise between $10,000 and $31,500, primarily to bolster its marketing efforts.

• Interest Rate: $8.5%

• Minimum Investment: $500

Zoop

Zoop is a unique crowdfunding platform, designed specifically for creators and publishers. Co-founded by Jordan Plosky, Eric Moss, and Marvin Osswald in September 2020, Zoop goes beyond traditional crowdfunding, offering comprehensive support that includes marketing, campaign management, production, fulfillment, and more. With a robust user base of 22,000 registered users and a 25% repeat customer rate, Zoop demonstrates significant traction in the crowdfunding space.

• Valuation Cap: $6 million

• Minimum Investment: $150