Unicorn Hunters Start-up Review S1 E1 on Mon May 10th, 2021
Why Far UV Technologies will NOT become a unicorn
See the two validating updates discovered after I tweeted this article [scroll to the end]
Far UV Technologies is a 4-year old manufacturer and retailer of products for far ultraviolet light disinfection, in occupied settings (human-safe), to stem the spread of Covid-19.
$20m for 20% in equity (first and hopefully only financing before an IPO). If realised, the start-up would be valued at $100m. At the indicated 40% net margin, the expectation would be $250m in revenues, in a reasonable time frame.
The Product(s) and Technology
It is important to note that even though a technology (UVC) and the product(s) may be proven and working exactly as shown on Unicorn Hunters, that this does not translate into the start-up or the CEO being able to convert your investment into projected sales or even scale up manufacturing and other elements of the start-up. So whereas the technology has vast potential, this does not mean the product and the start-up has unicorn potential.
ALL articles on the Krypton-11 product are either from faruv.com or third party reseller/ecommerce sites. NO third-party product review articles were found [similar to what you may see for a new tablet]. Why is this? There are also no traditional media nor social media articles on the company or the products.
At $2,500 for the lowest priced product, it seems pricey and P.J. Piper did indicate that components are still expensive or cost prohibitive. One of the investors did find this price high. There is a possibility that slower sales may be price related, indicating it may be many years before the price can be reasonably reduced.
The statement on patents never used the phrase ‘utility patent’ and may indicate only design patents for each of their products. Utility patents are to be celebrated and CEO P. J. Piper not using this phrase may be indicating that there is nothing proprietary about the technology they are using.
P.J. Piper is a serial entrepreneur and a skilled orator, reminiscent of President Bill Clinton. His LinkedIn lists other ventures including Founder & CEO of Anticipate Ventures (their first venture is creating products using ultra violet disinfection light spectrum called Far UV but also successful exits with Aspen Aerogels and QM Power), Anticipate Properties, Avium, LLC, Aware Vehicles, Inc. and Pick The Time.
[Being a Serial Entrepreneur is not a bad thing but can lead to ‘slasher’ entrepreneurs (no focus). My personal thoughts is that a serial entrepreneur (or anyone with many ideas) should focus on one start-up only, especially use of funds, then after start-up#1 crosses the chasm (the gap after the early-adopters and before the early-majority), then use profits from Start-up#1 to fund start-up #2 and so on.]
Rosie Rios question about “running a P&L” is also relevant. The audience or at-home investor does not have access to the start-up’s financials to perform a more complete due diligence and would have to rely on the findings of the seven unicorn hunters.
The first question, from Alex Konanykhin asked about revenue and P.J. Piper never answered, instead mentioning net margins and free cash flow (from 7.47min on YouTube (https://www.youtube.com/watch?v=hEqow1LzcxQ). Here is a company with a Covid-19 product side-stepping the revenue question. In this Covid-19 climate, if it was a hand sanitizer company doing the pitching and the founder side-stepped the revenue question, red flags would go up. So too, in this Covid-19 climate, Far UV Technologies ought to have revenues to celebrate. Were revenues not given because revenues have not increased in line with Covid-19 expectations? Throughout the show, not even total units sold was mentioned.
Later on, when asked about 2021 revenue projections, the CEO stated ‘from $20m to $200m’. No one projects for stagnation — we all project higher revenues than actual. This means, if the start-up had already crossed $5m (yes five million or 25% of $20m) for the completed first quarter of 2021, his 2021 projections would have started much higher than $20m (Note: this assumes perhaps wrongly that this show was recorded sometime around the end of March 2021).
Barriers To Entry and Competition
In the start-up’s niche of products to disinfect (human-safe) occupied spaces, I found at least two other competitors. They are LumenLabs and Healthe (claiming ‘first-ever human-safe Far-UVC technology to combat coronavirus‘), others. The Healthe product has gotten coverage by MSN, Fox News.
So my major concern if if sales are sluggish, in this Covid-19 environment, is it because of price or because of competition?
What We Do Not Know
Cumulative Revenue to date and 12-mth trailing revenues
Cumulative units sold and 12-mth trailing units sold
How will the $20m be used? With outsourced manufacturing, funds will be used to pay the manufacturers but there is no need for a huge capex investment, for inhouse manufacturing. Other funding needs such as marketing, social media spend, other.
No. of units sold for each product/SKU
Date and values of major government contracts (P.J. Piper “We’ve done well (past tense?) with the government”).
Details of the patents (all design patents or utility patents filed as well?)
My personal opinion is that even though the technology is solid, the start-up has not seen a jump in sales for a product that should be doing extremely well during Covid-19.
There is competition which will limit and erode market share, and in the event of a buyout, the other companies and their products seem to have the upper hand.
So we are looking at perhaps a fundamental product/market fit and I do not know enough details to pinpoint the cause(s).
Added to that, the CEO has not done much in 4 years where he could have shouted on Unicorn Hunters’ “We have $31m in sales”.
Far UV Technologies has not shown a clear path forward to returning USD$20m to investors and I will not invest even USD$1,000 in Far UV Technologies, as I will get a faster return elsewhere. Within a three-year timeline (by May-2024), as long as P. J. Piper remains the CEO, I do not believe Far UV Technologies will become a unicorn. I do not think the CEO even knows why the products are not flying off the shelves (and as such, how to remedy same).
[video, research, take-a-break, analyse, video, research, take-a-break, analyse, over 24 hours]:
I watched the episode 4 times, making notes.
A simple search for articles written on
“Far UV Technologies”
P.J. Piper LinkedIn and other search results
UPDATE #1 on May 18th, 2021(post-publication): Unicorn Hunters TV Show Ep01 start-up has a Patent Infringement lawsuit filed against (it) FAR UV Technologies by… (click here)
UPDATE #2 on May 25th, 2021 (post publication: Far UV Technologies http://netcapital.com filing indicates an audited 2020 Revenue of $2.6m, just over 1,000 units sold.