Attn: Grace is raising on Republic via Crowd SAFE with an $11 million valuation cap. The company’s $11 million valuation is somewhat reasonable. According to its Form C, Attn: Grace generated $877,010 in revenue in 2021. Its revenue results in a valuation-to-revenue multiple of 12.5x, slightly above the personal care industry average multiple of 2x to 7x. At this time, management claims to have earned more than $1 million over the past 12 months, which would make for an even lower revenue multiple with respect to the $11 million valuation. 

The founders project the company will generate more than $4 million for 2022, a reasonable prediction given its 132% monthly revenue growth since March 2021. Considering the company’s growth trajectory, investors who get in on this round at an $11 million valuation could see strong returns.

The US incontinence market sits at approximately $3.8 billion as of 2022. The market is expected to grow annually by 6.4% from 2022 to 2026. This growth rate is slow but reliable. It’s unlikely to dip or be affected by outside factors like a recession. 

Incontinence products are a necessity for many older individuals, especially women. Going out in public with soiled clothing is simply not an option. These products are essential to everyday life for those suffering from urinary incontinence. So though the market likely won’t explode any time soon, it is unlikely to crash, even in tough economic times. 

There are two other factors investors should consider when evaluating this market. While there are competing products on the market from established brands like Depend, this is certainly not a winner-take-all space. There is room for multiple brands to capture market share and still see solid returns. Additionally, with the general population aging and incontinence being heavily correlated with advanced age, market demand could skyrocket in the long term. Being ahead of this curve with an established company name as demographics shift is a strong indicator of future success for Attn: Grace.

Attn: Grace was founded by a wife-and-wife team. Co-founder Mia Abbruzzese has an economics degree from Smith College. Starting in 1990, she spent seven years in product management and development at sports retail giants New Balance and Fila. In 2003, she founded Morgan & Milo, a children’s lifestyle company, and worked there for 16 years until it was acquired by Zutano for an undisclosed amount. Abbruzzese’s extensive experience in consumer goods and leadership should put investors at ease. 

Abbruzzese’s background in consumer goods and as an entrepreneur is complemented by her wife Alexandra Fennell’s background in patent law. Fennell received her JD from Boston University and spent more than a year with Goodwin Procter LLP and eight years with Pepper Hamilton LLP. 

Neither of the founders has a background in healthcare or personal care products. That said, Abbruzzese’s tangential experience in the consumer products space is a positive signal for investors, especially when paired with a co-founder who’s well versed in patent litigation. Abbruzzese and Fennell likely recognized this gap in their personal knowledge when filling out the advisory board for Attn: Grace. The board includes an obstetrician and gynecologist and an urogynecologist. Overall, Attn: Grace has an experienced, well-rounded team.

Differentiation may be one of Attn: Grace’s largest hurdles and a pain point that investors should take into consideration. For one, even with patents, it is hard to stay defensible in the incontinence market. Many large incumbents in the personal care space, from diapers to tampons, have noticed a shift in market sentiment toward natural products and responded with new product lines or acquisitions. Examples include Pampers Pure and Tampax Pure Cotton. 

This market is also crowded with large incumbents that are household names, including Depend and Always. Smaller companies like Rael are also aiming to differentiate with all natural, cotton-based products and reusable incontinence pads. The Honey Pot Company, known for all-natural period products and feminine care, has also released incontinence products. 

Attn: Grace’s products do stand out from these natural alternatives. Its products are not cotton based. Attn: Grace’s products are sustainably created with a polyethylene made from sugar cane waste. Management likens this to the difference between wearing a synthetic shirt as opposed to a cotton shirt when exercising, a major distinction in comfortability.

When it comes to price, Attn: Grace falls just above big brand alternatives and just below boutique companies. Attn: Grace sells 14 incontinence briefs for $16.50 or $14.85 with a subscription, with unit prices of $1.18 and $1.06, respectively. A 19-count box of Depend incontinence underwear can be purchased at Walmart for $13.72, coming out to a unit price of $0.72. A 28-count pack of Attn: Grace’s highest-absorption incontinence pad costs $16 without a subscription and $14.40 with one, with unit prices at $0.57 and $0.51. The Honey Pot Company’s highest-absorption pads stand at $11.99 for a pack of 16, with a unit price of $0.75. Rael offers a 30-pack for a one-time charge of $22 or $19.80 with a subscription, making for $0.73 and $0.66 unit prices. These are minor differences in price, making Attn: Grace’s product suite in line with the market overall. That said, the products are not differentiated from a price standpoint, as none of the products are significantly cheaper than either name brand or boutique alternatives. 

Investors should note that prices on Attn: Grace’s Amazon storefront are marked up to compensate for Amazon’s selling fees. The $16 pack of the highest-absorption incontinence pads available on the Attn: Grace site goes for $24.97 on Amazon. This pricing puts the products on the higher end of the spectrum, though not by much. Management reports that once products are available in Target and Walmart, prices will reflect what is seen on the Attn: Grace site, not those on Amazon.

Finally, Attn: Grace’s business model of offering discounts through subscriptions is not particularly unique, as most competitors offer discounted subscription models. Overall, Attn: Grace’s product stands out, but its prices don’t.

Performance metrics for Attn: Grace are strong indicators for future return on investment. The company’s revenue went from $74,097 in 2020 to $877,010 in 2021, a 1,083% increase. Management projects closing the year with more than $4 million in revenue. If estimations prove correct, this will be another huge leap in revenue. However, Attn: Grace’s long-term debt has also grown, going from $966,664 in 2020 to almost $2 million in 2021. The company also has a high monthly burn rate of around $153,000. Although management credits these numbers to supply chain issues that have since been sorted out, investors should still keep them in mind. 

Other financial metrics are improving. According to the founder, management cut customer acquisition costs by a third by diversifying acquisition channels to include YouTube, Amazon, and TikTok, which helps reduce Attn: Grace’s burn rate. Finally, average order value sits at $40 to $41, but management is aiming to increase it to $44 to $45 by the end of the year, with a $50 target the following year. This improvement is attainable with add-ons like natural deodorant that are inexpensive to produce and low in inventory. If successful, Attn: Grace could earn a significant revenue boost.

On the product side, Attn: Grace operates both direct-to-consumer (D2C) and through the Amazon marketplace. Its incontinence pads currently have more than 570 reviews on Amazon, averaging a 4.1-star review. In addition to D2C and Amazon channels, management has established distributors leading products into Target and Walmart this year, a massive indicator for future success. 

Attn: Grace has raised more than $2 million from investors, including Precursor Ventures and Gaingels, proving the company’s ability to raise capital. The company has partnered with manufacturers that aren’t specified on the raise page, and it earned press mentions in publications like Glamour, Forbes, and Well+Good.

Overall, Attn: Grace has strong performance metrics indicative of a return on investment, and it boasts favorable attention from investors, customers and the press.

Attn: Grace is a moderately risky investment. Much of the risk lies in the company’s financials. The company had almost $2 million in long-term debt in 2021, up from $966,664 in 2020, and has a monthly burn rate of $153,000. Management mentioned supply chain issues at ports due to container shortages that have since been ironed out. Regardless, potential investors should take these debts into account. It is likely that revenue growth will mitigate the impact of the debts in the near future, but that growth is not certain. Finally, the company is raising on a Crowd SAFE, one of the more risky investment vessels. Unlike preferred equity, this offering has no liquidation preference. 

Attn: Grace is a strong proposition for investment but not without a few strikes. Namely, incontinence care is a crowded market littered with big-name incumbents like Depend and Always as well as smaller, organic alternatives like Rael and The Honey Pot Company. The company is on par with competitors when it comes to price and subscription model. Investors might be concerned about whether the company is differentiated enough to succeed. Its customer reviews are strong, but it’s unclear if quality ingredients alone are enough to eat up a significant percentage of market share. 

Additionally, the company has significant financial risk, with almost $2 million in long-term debt from 2021 and a $153,000 monthly burn rate. The supply chain issues that management faced in the past could realistically happen again and impact revenue projections. Finally, despite overall credentials, the team is very lean. In order to scale and keep up with products and demand, management should look to hire out key roles in sales, marketing, and product in the near future.

Attn: Grace is reasonably valued for investors at $11 million. Although the team is small, its founders are experienced, with one having an exit under her belt. The founders also have complementary skills and are supported by advisors with industry knowledge. 

Market trends are moving in the company’s favor. The general population is aging, and menstruation and other femine hygiene products are shifting to become more sustainable and all natural. Despite there being several other direct competitors, Attn: Grace stands out from a product perspective, even from companies with a focus on sustainability and all-natural products. Attn: Grace’s products are not made with cotton but rather upcycled sugar cane waste, a unique alternative that prioritizes comfort.

Much of Attn: Grace’s strength lies in its recent performance from both a product and financial standpoint. Revenue is up 1,083% from $74,097 in 2020 to $877,010 in 2021. The team is also expanding beyond selling directly to consumers on its website and Amazon, with plans to be in Walmart and Target by the end of the year. 

Additionally, the natural body care market is hot with acquisitions. Kimberly-Clark acquired a majority stake in Thinx, a reusable period underwear company. Billie, a popular shaving kit, was acquired in 2021 for $310 million, suggesting movement in the personal care space. Should the incontinence market trend toward natural products, it is entirely possible that a large name like Depend could scoop up Attn: Grace as opposed to building out a new product line.

Attn: Grace is an incontinence products company with a focus on sustainability and clean ingredients. The products are made with a unique ingredient — upcycled sugar cane waste — and the line includes incontinence pads, liners, briefs, natural deodorant, barrier cream, and body oils. The incontinence products market is littered with price-matched household names like Always and Depend, as well as organic alternatives like Rael. The team is burning $153,000 per month to keep up operations, a small financial risk that investors should consider. With nearly $2 million in long-term debt, it may take time for this risk to diminish despite the company’s strong revenue projections for the coming year.

On the flip side, market trends are strongly favoring the incontinence products industry. The general population is aging, and feminine hygiene products for a younger demographic are in the midst of a shift toward sustainable and organic ingredients. It is only a matter of time before the rest of the feminine care industry catches up. Average order values and margins are high and on the rise. Revenue increased 1,083% to more than $877,010 in 2021, up from $74,097 in 2020. Management projects more than $4 million in revenue for 2022. This is a reasonable prediction, as the company expects its products to hit the shelves at Target and Walmart to complement its existing Amazon marketplace. Finally, co-founder Mia Abbruzzese has an exit under her belt and plenty of experience shipping consumer goods. Her wife, co-founder Alexandra Fennell, has a very complementary background in patent law, which could serve the company well in creating a defensibility moat. For its strong upside potential, Attn: Grace is a Deal to Watch.

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

Analysis written by Olivia Strobl, July 5, 2022.