This edition is a long one but a good opportunity to share some excerpts from ALTS’ world-class Deep Dive for RYSE, written by Stefan Von Imhof…
But before we get to that…Boardroom and ALTS are not the only fans of this hot startup – check out our latest interview with Founder Trung Pham – in particular the 14:48 minute mark where he shares ”a couple weeks ago we closed a large million dollar investment from one private investor.” So take a listen to how Trung is on the trail to continue raising investment and interest in his company HERE.
And you can check out the details of its offering HERE…and now onto that ALTS Deep Dive…
The home automation market
Smart devices may not be a necessity for your home (yet). But the market is heating up.
In just the past year, some big deals have gone down:
- Vacuum Cleaners: Amazon purchased iRobot, creators of the Roomba. They bought a majority stake in the company for $1.7 billion ($61/share)
- Thermostats: In 2021, smart thermostat company EcoBee was snapped up by Generac for $770 million.
- Smart Home Systems: Google bought Nest for $3.2 billion back in 2014.
Doorbells: After developing a hugely successful product, Amazon bought Ring for over $1 billion.
Can’t wait for robot maids.
43% of US homes already have a smart home device, and this is expected to hit 70% by 2026. The market is already worth $30b+, and industry reports predict a CAGR of 11% for the next four years.
Most of the low-hanging fruit in home automation has been picked. But not all of it. There’s one aspect of our homes that hasn’t been automated yet: shades and blinds.
The market for smart shades and automated blind solutions is doing well, and is expected to quadruple in value between 2021 and 2028. This may not be the craziest and most exciting use of home automation, but we all have blinds, and we all use them on a daily basis. You cannot start your day without pulling up the blinds.
Innovation doesn’t always need to be shocking or sensational, but it does need to improve our quality of life.
And that’s exactly what the team at RYSE is doing
What is RYSE?
RYSE is a smart blinds startup. Their tech automates blinds. Opening, closing, it’s all a button push away. And the best part is, they retrofit. That’s right, it works with your existing blinds. You don’t have to buy a whole new system.
RYSE wants to become to smart shades what Dyson is to vacuums. Their goal is two-fold — to save you time and energy. So far, their products only service what’s known as “beaded roller chain blinds,” but they are expanding to support all types of shades.
These are my actual blinds: Often a tangled, ugly mess. Fixing this is always a pain in the ass.
RYSE has sold over 35,000 SmartShade units to residential and commercial homeowners around the world. And now, they’re ready to kick things into high gear with their Pre-IPO Equity, Reg A+ Raise.
Behind RYSE is founder and CEO Trung Pham, who started as a Financial Analyst and changed course after identifying a gap in the roller blinds industry.
The idea for RYSE came about in 2015. Trung moved into a new condo and wanted to buy automated blinds for his windows. After a few unsuccessful purchases, he realized the market lacked an affordable way to automate shades once they’d already been fit. And with that, RYSE was born.
The product: RYSE SmartShade
RYSE’s flagship product is called the SmartShade.
The device looks like a portable charger, and can be attached to any roller shade with a beaded chain. Just install, connect to your WiFi, and say goodbye to manual opening & closing
It may not look groundbreaking, but neither did the Roomba.
You can control the operation of your shades from the app, via voice activation, or by setting up schedules.
The product retails for $169 — far cheaper than full-window alternatives (which can cost thousands). Even low-cost competitors sell their versions for at least a few hundred a pop, and they can’t even be used on pre-fitted shades!
The product is much more than just a convenience, though. Its primary benefit comes through power-saving. With global warming tightening its grip on the globe and supply issues plaguing the energy sector, RYSE’s SmartShades can save you a bunch of money on energy bills.
By scheduling shades to open and close at specific times, RYSE’s tech promises to reduce cooling costs by 24% and lighting costs by 74%. Commercial installations of SmartShades can be integrated with sensors, so the blinds can react depending on weather and light conditions.
The Canadian government agrees. RYSE received CAD $4 million in environmental grants from the Sustainable Development Technology Fund to expand their operations into the commercial sector.
Why? Automating blinds can have a huge impact on lighting and temperature. Case studies on the Corus Building have shown promising results:
It’s important to note that many of RYSE’s competitors involve fitting new smart blinds into windows, which can be costly. But RYSE smartly predicts that over 80% of market growth will be seen in retrofitting existing blinds — which is exactly what the SmartShade is built for.
Less than 8% of all new window installations are motorized. That’s an opportunity for RYSE to corner the other 92% of non-automated shades.
If you say the average house probably has about ten windows, and there are 140 million homes in the US, that’s nearly 1.3 billion un-automated shades in the United States alone. (The horror!)
Convincing the public that smart shades is something they need is a whole other story. But still, that’s an insanely huge TAM.
RYSE has projected a CAGR for the market of 55% over the next three years.
An example of how similar businesses are doing: Hunter Douglas, a leading window covering manufacturer, was just purchased by 3G for $7.1b.
Investment opportunity: RYSE Reg A+ Direct Equity Raise
This isn’t the first time RYSE has held a capital raise.
Their first raise came in 2015, when all the team had was an idea. They conducted a pre-seed round at a share price of $0.075 and a company valuation of $1.5 million.
This Series A community round values the company at $46.25 million, with an offering price of $1 per share.
The ultimate goal is to corner the smart shades market.
- New product development
- Business scaling – particularly into the retail sector
- Unlocking new B2B channels for product fitting and sales
RYSE plans to complement the current offering with a Series B raise in 2024 with the aim of scaling globally.
RYSE is looking to raise $25 million.
RYSE is offering Class B Shares. This is a type of equity similar to Ordinary company shares, although in this instance, they come without voting rights.
When you register and buy RYSE shares, they will be viewable on SEC-registered equity transfer agent DealMaker (who may take up to a 7% cut of proceeds from RYSE). These shares are not publicly listed, and no secondary market currently exists for their trade.
The RYSE Offering Circular makes it clear that there “can be no assurance a liquid market for the shares will develop.” So as with all startup investing, always be prepared for a long-term hold.
Who can invest?
RYSE’s raise is Series A, which means it’s open to non-accredited investors. Canadian, US, and international investors can all get involved, with a minimum buy-in of $1,000. This is one of the lowest barriers for entry we’ve seen for an opportunity like this.
Because the raise doesn’t have a minimum, RYSE will vary their distribution of proceeds depending on how many shares they sell. Assuming they reach 100% of their 25 million goal:
- $5.3 million will go into R&D, as well as Inventory and Shipping.
- Sales and Marketing will take $4.2 million. The keys here are business scaling, product expansion and reaching new B2B/retail customers.
- The rest of the funds raised will be deployed into Legal and Accounting, Business Ops & Contingencies.
RYSE has experienced healthy growth so far. Based on company valuation, their share price is up 10x since their first raise in 2015.
They are forecasting a valuation jump from $46.25 million to $250 million, and a share price jump from $1 to $3.50 – a 250% ROI.
The next step on their journey may be an exit.
- Using Amazon’s acquisition of Ring as a guide, the share price of RYSE would be about $13 per share (ROI of 1,200%).
- Using Google’s acquisition of Nest as a potential projection, the share price would balloon to $35 (ROI of 3,400%).
Of course, an exit of this size isn’t a foregone conclusion. Ring and Nest are great validation, but using them as comps may not be the right comparison. Doorbells and temperature/lights arguably solve bigger problems than window shades.
RYSE has demonstrated good growth potential, and they’ve got a killer product without a whole lot of competition. But a billion-dollar exit will take a lot of work to get there and could be many years away.
For more information on the raise, check out the Offering Circular.
What we like
- Patents Galore. RYSE has already secured five patents protecting their business and products from being copied and recreated by other manufacturers. They can block off-shore knock-offs from being listed, particularly on Amazon. RYSE’s patents are strong enough that 100% of all copycats for sale on Amazon have eventually been taken down!
- Unique Company. RYSE really is a one-of-a-kind player in the smart shades space. Most of their competitors (such as IKEA and Hunter Douglas) motorize blinds through the rollers rather than the beads. These smart shades must be installed completely new, whereas RYSE’s product can be installed on pre-existing blinds.
- Strong Investors. RYSE boasts some high-profile investors, including Anthony Lacavera (founder of Wind Mobile), Shawn Dougherty (founder of Mophie), and Cogita Capital (among VCs).
- Commercial Growth. A couple of companies sell products similar to RYSE’s. However, none of these businesses have offline distribution or target commercial solutions.
- Booming Market. The smart shades market alone is expected to increase more than 50% YoY between now and 2024. RYSE’s SmartShades apply to pretty much every market demographic. Big businesses can automate their blinds to save on energy costs, while the average retail consumer can easily buy products online or in-store.
- High Acquisition Potential. RYSE could be a small tuck-in acquisition for a larger tech or home products company looking to enter or expand into the smart-home space.
- Growing Product List. Currently, RYSE’s product only works on beaded roller blinds. However, they plan to release three new products over the next few years. These new products will work with all types of blinds and curtains – even those without cords.
- Low Investment Requirements. This offering is available to almost anyone worldwide, and the minimum investment is only $1,000.
- Lack of Liquidity. The lack of liquidity or a secondary market on the RYSE offering might be a little scary for some investors. There’s no clear timeline on exactly how long the holding period will be.
- Competitors. RYSE are certainly the market leaders in the smart shade space — but they are not the only players in the industry. It might be worth checking out some competitors to see how the tech compares.
- Profitability. Like with most startups, much of the growth is based on projections. Sales will need to continue scaling upward for the projections to be met. Early-stage startups are often unprofitable and may never reach profitability and positive cash flow.
- Hardware Margins. Hardware companies, in the smart home space and elsewhere, can often be in a race to the bottom, competing on price and margin over time, especially if a lower-cost competitor in a country like China emerges.
- Patent Challenges. RYSE’s moat is primarily based on the strength of their patents. While these have been successful in fending off current competitors, someone could build a “better mousetrap” in the future and work around the patents, especially in foreign countries with weaker intellectual property rights.
- Supply Chain Exposure. As a hardware product, RYSE is susceptible to the global supply chain. Delays in obtaining semiconductor chips and other needed materials would negatively impact their ability to scale production in a meaningful way.
- Unproven New Products. The launch of new products from RYSE (smart drapes and blinds) carries execution risks. There could be issues with production or market adoption.
RYSE is definitely onto something here.
The SmartShade has the rare distinction of being a niche product with an enormous TAM. At the consumer level, it’s the kind of product you didn’t realize you needed until you actually have one.
But the devices’ scope for use is more than just a helpful time-saver. Businesses with large offices can save energy costs and move toward the net-neutral carbon emissions target by 2030.
And those who live with mobility issues will find the SmartShades super helpful in their day-to-day lives. You could even set up a schedule and use the device as a natural light alarm clock.
RYSE wants to become the name associated with smart blind technology and with their strong patent support, great investors, an experienced team, and most of all — a legitimately great product, this sounds like a very achievable goal.
So, if you think the home automation market is only beginning and you’re looking for an opportunity to join while it’s still on the ground floor, RYSE might be right up your alley.
You can get involved via RYSE’s investor center.
Disclosures (ALTS disclosures, see bottom for Boardroom’s disclosures)
- We have no holdings of RYSE shares in the ALTS 1 Fund, and have no immediate plans to add any.
- None of the authors of this issue own any personal shares of RYSE.
This issue has been a sponsored deep-dive, meaning Alts has been paid to write an independent analysis of RYSE. RYSE has agreed to offer an unconstrained look at their business & operations. RYSE is a sponsor of Alts, but our research is neutral and unbiased. This should not be considered investment advice, but rather an independent analysis to help readers make their own investment decisions. All opinions expressed here are ours, and ours alone. We think you’ll find it informative and fair.
With the conclusion of this Deep Dive, we thank our friends at ALTS for allowing us to pass this on to the Boardroom!
And if the information in this report interests you or you have more questions about it, head on over to RYSE to dig a little deeper!
Please see our disclosures below.
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