AphriHelios Global

Early Stage

Leveraging Africa's low-production cost advantage to build a vertically integrated cannabis company bringing African and African diaspora brands to the world

Analytics

Raised to Date: Raised: $33,050

Aggregate Commitments $

Platform

Fundanna

Start Date

01/25/2021

Close Date

12/31/2021

Min. Goal

$10,000

Max. Goal

$107,000

Min. Investment

$250

Security Type

Convertible Note

Funding Type

RegCF

Series

Pre-Seed

Valuation Cap

$15,000,000

Discount Rate

20%

Rolling Commitments $

Status

Active

Reporting Date

11/28/2021

Days Remaining

33

% of Min. Goal

331%

% of Max. Goal

31%

Likelihood of Max
unlikely
Avg. Daily Raise

$108

Momentum
cold.svg
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Location

Bethesda, Maryland

Industry

Alcohol, Tobacco, & Recreational Drugs

Tech Sector

Non-Tech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Business Type

Life Style

AphriHelios Global, with a pre-money valuation of $18.56 million, is raising crowdfunding on Fundanna. The company aims to become a vertically integrated medicinal cannabis company by leveraging Lesotho’s low-cost production advantage. It will cultivate cannabis in Africa due to the warm climate, rich soil, and agricultural expertise in the country. Darin E. Hickman founded AphriHelios Global in July 2020. The proceeds of the current crowdfunding round, with a minimum raise of $10,000 and a maximum raise of $107,000, will be used for sales and marketing, license renewal, site concept and design, events and travel, and general operating expenses. AphriHelios Global is led by a highly experienced management team and has received the initial Lesotho license for cannabis cultivation.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-2,991

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$6,972

$0

Accounts Receivable

$0

$0

Total Assets

$13,319

$0

Short-Term Debt

$16,310

$0

Long-Term Debt

$0

$0

Total Liabilities

$16,310

$0

Financials as of: 01/25/2021
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Ratings

Analyst Report

Synopsis

Anyone following the stock market will have read or heard something about the recent rise in cannabis stocks across the board. With President Biden in office and both chambers of Congress held by Democrats, investors are as hopeful as ever that federal legalization will finally be the catalyst to make the industry boom. This isn’t to say that the market for cannabis products isn’t already sizable. It was estimated to be (globally) valued at $17.5 billion in 2019 and predicted to rise up to $65.1 billion by 2027. Legalization in the U.S is a big event for the industry, but Europe is a growing market as well. Countries are beginning to take a look at their own policies regarding the drug — most notably Germany, with Angela Merkel’s party previously considering the idea of legal recreational use.   

AphriHelios Global aims to capitalize on this recent rise in prominence for cannabis. The company believes that as the commoditization of cannabis products increases, it will be as important as ever to be able to grow marijuana with low cost and on a large scale. Currently, AphriHelios Global has its eyes set on the European market, with eventual expansion into the U.S. The company wants to utilize underused areas of the world to grow its product – in this instance, Africa.

AphriHelios has received an initial license to begin production in Lesotho, whose climate is ideal for cannabis and can yield multiple harvests in a year. This, coupled with the lower cost of work and land, makes the region a good place for a new business in the industry.

AphriHelios Global’s current Fundanna raise has been rated an Underweight Deal by the KingsCrowd investment team.

Price

AphriHelios is raising at an $18,563,000 valuation with no discount. For a young company that has no prior financial data, an $18+ million valuation is  particularly high. The company has yet to really outline exactly what the plan for its product is. Whether or not the company will ever justify this valuation is a big question. Thus, the price score for AphriHelios is far below average.

Market

The global cannabis market was currently valued as a $17.5 billion industry in 2019. In Europe, the market is an estimated $3.5 billion, notably smaller than the overall global market. This is an important distinction to make, as AphriHelios intends to focus on the European market before expanding to the United States. The European market certainly exists — but legalization is more challenging across the pond.

The company also intends to focus on areas of cannabis that are able to grow larger still — such as the incorporation of CBD and THC in wellness products. CBD products saw $4.1 billion in sales in 2019 and was forecasted to reach $4.7 billion in 2020. The uses for CBD and THC products can be more widespread than simple pleasure. If the company can expand into these more niche uses of cannabis, the available market increases drastically.

Due to the high growth of cannabis markets and the potential for AphriHelios to expand into niche market sectors, the company’s market score is strong.

Team

AphriHelios’s current CEO is Darin Hickman. Hickman’s prior experience includes investment banking and 12 years as the Director of a strategic advisory firm. He is joined by Lesotho natives Marcel Ratisu, Forrest Branch, and Brian Wheeler.

The most notable takeaway from the executive leadership team is that there is no experience in the cannabis field among them. It’s always helpful to have someone who understands an industry from an insider perspective, especially in a field that’s so heavily regulated and tied up in legislation. Not having anyone on the staff who knows the ins and outs of the field may make it difficult for AphriHelios to fully take advantage of the booming market. The company’s team score is very low as a result of this gap in knowledge.

Differentiators

The biggest change that AphriHelios makes to the existing market is through utilization of areas in the world that have been previously untapped for cannabis growth. The company notes the low prices of both labor and land in Lesotho and other African nations as well as the lack of knowledge that other companies have of the legality and regulations surrounding cannabis growing in these locations. AphriHelios Global utilizes its Lesotho Directors to take full advantage of the location – and has parlayed it into already receiving a permit to begin growing and cultivation in Lesotho.

The climate in Lesotho is ideal for growing marijuana, with the sun shining 3202 hours out of a possible 4383. This will allow the company to harvest multiple times in a year, increasing its total yield. AphriHelios Global will also be able to grow entirely outside, saving a huge amount of money that other companies spend on indoor facilities.

Despite the clear suitability of Lesotho’s climate for growing cannabis, this is a weak differentiator. It’s almost entirely undefensible, as any other company could do the research to learn about Lesotho’s laws before applying for a permit. Additionally, there’s no indication that AphriHelios’s products would be more appealing because they come from Africa. While there could be some allure held by African cannabis in a European or American market, buyers may also prefer products that are produced locally and with regulations they are familiar with — such as pesticide free, organic, or other possible designations. While AphriHelios may save money as the cannabis grows, the company will have to contend with shipping its products much farther than other producers. This shipping distance could offset the growth savings for the company. Due to all these reasons, AphriHelios’ differentiators score is very low.

Performance

Financially, AphriHelios has no data on their Form C filing. The company does have some debt, to the tune of $16,310.

Thus far, most of AphriHelios Global’s operations have been laying the groundwork for future success. The company has built its team to span multiple continents, with a group on the ground in Lesotho overseeing operations and a headquarters in the United States as well. The company has also received a license from the country of Lesotho to begin cultivation of its product. In AphriHelios’s seed capital funding round, the company managed to raise $65,000.

Without any financial data and no products produced, the performance score is AphriHelios’ lowest score across all five metrics.

Bearish Outlook

AphriHelios is looking to capitalize on a currently booming market — but at the moment, much of it remains speculative. If European countries or the United States are slower to adopt federal legalization of recreational marijuana, that greatly limits the market size that the company can obtain. On top of that, the product plan for the company is very shaky, and it remains to be seen if the company can run profitably at any point in the near future. An unexpectedly bad harvest yield in the early goings of operations could set the company back a long way as well. The executive team also is lacking in market experience – which could negatively affect a business in an industry that’s so heavily regulated. Overall, there are many different scenarios that could lead to an unsuccessful venture for AphriHelios Global.

Bullish Outlook

The current boom in cannabis stocks isn’t a fluke. Legalization is becoming a topic of conversation in many of the world’s largest countries, and the industry will likely only grow from here. AphriHelios has positioned itself in a good location for cheaply producing a large quantity of product, which could make it a primary producer of marijuana. The lower cost of labor and land that can be found in Africa should also allow the company to run more profitably than a similar country operating in the United States.

Executive Summary

The cannabis industry is going through a period of huge growth, and AphriHelios wants to capitalize on that. The market is ever expanding for weed companies, and AphriHelios’s low-cost production model will help them with profitability. However, the executive leadership team has never navigated the cannabis industry, and the current product plan is shaky at best with no real, outlined path towards revenue. Even if the company were to grow, the starting valuation is already high, meaning AphriHelios’ investors may struggle to see a return on their investments. A lack of defensibility adds further risk to the company’s goals. For all of these reasons, AphriHelios has been rated an Underweight Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

Analysis written by Ethan Thomas.

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AphriHelios Global on Fundanna
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Platform: Fundanna
Security Type: Convertible Note
Valuation: $15,000,000

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