AtomBeam

Early Stage

Radically Efficient Software for IoT

Analytics

Raised to Date: Raised: $2,571,098

Aggregate Commitments $

Platform

StartEngine

Start Date

01/13/2021

Close Date

09/15/2021

Min. Goal

$10,000

Max. Goal

$2,750,000

Min. Investment

$500

Security Type

Convertible Note

Funding Type

RegCF

Series

Seed

Valuation Cap

$10,000,000

Discount Rate

20%

Rolling Commitments $

Status
Funded
Reporting Date

09/22/2021

Days Remaining
Funded
% of Min. Goal

25,711%

% of Max. Goal

93%

Likelihood of Max
Funded
Avg. Daily Raise

$10,494

Momentum
Funded
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Location

Moraga, California

Industry

Business Services, Software, & Applications

Tech Sector

EnterpriseTech

Distribution Model

B2B

Margin

High

Capital Intensity

Low

Business Type

Growth

AtomBeam, with a valuation cap of $10 million, is raising crowdfunding on StartEngine. The company has developed an advanced software technology that helps reduce the size of the internet of things files by 75%. The technology uses machine learning and adds a high level of security to the data. Charles Yeomans and Asghar Riahi founded AtomBeam in 2017. The current round of crowdfunding has a minimum target of $10,000 and a maximum target of $1,070,000, and the proceeds will be used to deploy the software and start earning commercial revenue. AtomBeam’s technology can be used in any IoT device and will help reduce cost along with the size of files.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-822,940

$-386,369

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$65,860

$78,798

Accounts Receivable

$0

$0

Total Assets

$128,647

$115,547

Short-Term Debt

$89,997

$13,914

Long-Term Debt

$830,595

$263,086

Total Liabilities

$920,592

$277,000

Financials as of: 01/13/2021
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Ratings

Analyst Report

Synopsis

The Internet of Things (IoT) is a term that refers to networks of “smart” devices that are connected to the web. It includes household devices such as the garage door controlled from a phone, the car that can start from a distance, and the thermostat that can sense when occupants are home or away and adjusts the temperature accordingly. Any physical device that connects to the internet can be considered part of the IoT, which can make it “smarter” and more responsive.

The explosion of the IoT is readily measurable, as it started not too long ago. It can be tracked from the phrase’s coining in 1999 to its takeoff in 2011 to today, when the number of connected devices in 2021 is projected to hit 46 billion. Going from practically zero to nearly fifty billion in a few short decades is quite a jump by any measurement. 

The IoT has implications for all aspects of life, not just on a personal scale. It has medical, military, industrial, and scientific applications that can change the game for all manner of businesses and organizations. As IoT advancements continue to transform society, development around the data itself can be centered around two things: streamlining data management and securing said data. Basically, users want to send and receive data more cheaply and have it be safe from theft or sabotage. 

AtomBeam is meeting the  Moment of the Internet of Things (MotIoT) with advanced software designed to accomplish both these aims. AtomBeam’s patent-protected, yet-unproven program uses machine learning to shrink the size of IoT files in ways that traditional data compression cannot. The company claims that its software could reduce file sizes by as much as 75%, which could quadruple data storage capacities and transmission speed. The value of this should be apparent for anybody who’s ever kept data stored on a smartphone or used the internet.

Furthermore, AtomBeam claims its software has “ultralight” security capabilities built in, which can add secure layers to IoT data and render it searchable in databases. AtomBeam’s initial product offering is currently undergoing customer field testing.

AtomBeam’s current StartEngine raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

AtomBeam is raising a convertible note at a valuation cap of $10 million with a 20% discount rate. The valuation is a bit high for a company with a product whose efficacy has yet to be verified and has high levels of debt for its pre-revenue stage. However, the valuation is not stratospheric, and the discount rate does help investors as well. Taken all together, the price score for AtomBeam is above average.

Market

AtomBeam’s target is in the IoT market, which is expected to expand to a massive size in the coming years. The global market was valued at $219 billion in 2019 and is forecast to reach $1.567 trillion by 2025. That’s rapid growth, if current forecasts can be relied upon.

However, AtomBeam’s software will account for only a small fraction of each data transaction or transfer. It is providing its software to businesses, which then provide those services to the consumer. The IoT market currently accounts for smart fridges, smart cars, and smartphones — though other devices will be added over time. AtomBeam’s only role is reducing the cost of data transmission for these smart devices. Therefore, AtomBeam’s obtainable market size will be significantly smaller. It is due to this limited market niche that the company’s market score is its lowest across all five metrics.

Team

At AtomBeam’s head, CEO Charles Yoemans holds an MBA in Finance and Strategy from Stanford University. Yoemans is a longtime executive in insurance and employee benefits work, culminating in nearly five years as president and CEO of Portal Group Holdings, an employee benefits technology firm. Following an acquisition by Relation Insurance Services, Yoemans migrated to biotech with the presidency of Trigemina, a small company possessing two unique pain relief compounds (one of which was recently sold). Yoemans remains chairman of the company. While Yoemans’ leadership experience is adequate, it’s not clear that he has any relevant experience in data compression or security.

CTO Asghar Riahi brings the relevant expertise. Originator of the AtomBeam concept and developer of this IP, Riahi holds a Master’s Degree in Computer Science from TU Wien, known until recently as the Vienna University of Technology. Riahi has two-and-a-half decades of experience working in system architecture and cloud storage systems. One particularly significant period is the 13 years he worked for computer industry giant HP, integrating some of the first cloud solutions. On a more personal level, Riahi is a volunteer, serving for 12 with Boy Scouts of America and a volunteer member of LAMORINDA’s Community Emergency Response Team.

These team leaders are supplemented by a number of part-time employees, including CRO Kent Warren and Chief Scientist Josh Cooper, Ph.D. Warren is also a principal with K3 Clouds, following stints at @Risk and ManTech in senior leadership roles. He also spent 13 years with German software company SAP working with the U.S. Department of Defense. Cooper is a professor of mathematics at the University of South Carolina and has published more than 40 papers on discrete mathematics and, more relevantly, computer science.

Overall, this is a team that has respectable levels of relevant experience across its membership but has no notable exits in this space. However, the strength of the team outweighs the lack of entrepreneurial experience, thus yielding AtomBeam with a strong team score.

Differentiators

In the interest of protecting software that could be readily duplicated by industry experts, AtomBeam has taken the precautions of obtaining seven patents. These patents cover its basic concept, its autonomous codebook, the use of a concept called “count-sketch” to estimate probabilities, and other technical aspects. Three other patents are currently pending. It can’t be said that AtomBeam doesn’t have its bases covered in this area.

And have its bases covered AtomBeam must, because this kind of software would not be technologically difficult to duplicate. Barriers to entry for this kind of non user-facing software are low, enabling AtomBeam and any potential competitors to set up shop without large investments in intensive capital. The good news is production is basically free after design is complete, so profit margins are as high as can be, and the tech is easy and safe to integrate into devices.

It should be noted that while AtomBeam’s particular program is unique, data compression has been around almost as long as data has. A number of companies provide data compression services that offer similar benefits to various market sectors. Wandera, for example, is a U.K. company specializing in mobile phone data compression.

Balancing AtomBeam’s many patents against the ease of replicating the services its offering, the differentiators score for the company is middle of the road.

Performance

When it comes to performance, there are definite questions potential investors will want to consider. AtomBeam’s raise page makes much of the innovative capability of its software, but such praise has yet to be substantiated by validated testing results. It should be noted that demonstrations of the product have been favorable.

Of more significant concern is AtomBeam’s finances. The company has been burning funds in excess of what is expected for a pre-revenue startup. Short-term debt increased by $76,083 to almost $90,000 from 2018 to 2019, and long-term debt ballooned by $567,509 to reach around $830,600 over the same period. The company has seen no appreciable increase in assets. With such a high burn rate, AtomBeam will need to prove successful and do so quickly. The company’s middling performance score reflects the need for better financial health.

Bearish Outlook

The fate of AtomBeam will largely rest on the performance of its first product, which is in the testing phase. Performance will need to be in line with or at least comparable to company estimates. Its various other benefits — traceability and ultralight security — will also need to be demonstrable.

These things must be true, because given the company’s extravagant expenses, it will have a limited runway to reach significant levels of revenue. AtomBeam must absolutely demonstrate that its product is safe, effective, and easy to use while also securing a sizable portion of its limited available market. However, these are major requirements to place on an early-stage company, and there is currently little evidence indicating that AtomBeam will be up to the task.

Bullish Outlook

The internet has become a factor of daily life. Software that can reduce the cost of internet connection across multiple use cases, enhances security, and is easy to integrate into existing devices could be a massive boon to the market.

Thanks to AtomBeam’s extensive patent protection, it has a lot of leeway to worm its way into relations with established and emerging service providers, and there are a number of companies already testing its products. Depending on how successful the early product is, AtomBeam could see huge levels of interest in its program, enough to justify its early financial expenditures and drive significant revenue increases. As society grows ever more interconnected, the use cases for AtomBeam’s services could be quite large.

Executive Summary

AtomBeam is providing a patent-protected software that shrinks and adds previously-nonexistent security to data files used across the massive Internet of Things. The company claims to use machine learning to reduce redundancy and increase storage capacities by up to 75%. The technology is unproven but has broad use cases for devices across various military, industrial, and commercial markets. 

Despite the promise of AtomBeam’s proprietary program, the technology has yet to be verified in efficacy, which means it could fail to significantly surpass existing data compression software in the space. Furthermore, significant early financial expenditures for a project requiring low capital investment cast some doubt on the company’s long-term viability, given its early stage. Therefore, AtomBeam is a Neutral Deal.

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

Analysis written by Benjamin Potts.

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