BioLight is raising capital via Crowd SAFE at a $9 million valuation with a 15% discount. BioLight’s valuation is slightly below the $10 million average for healthcare and pharmaceutical startups. This valuation is fair to investors given that the company earned more than $1 million in revenue in 2021. BioLight has a revenue-to-valuation multiple of 8.6x, which is favorably low for the industry. Therefore, investors are getting a good price in this round and can likely expect a good return on investment if the company successfully exits in the future. 

BioLight operates in the North American light therapy market. The light therapy market is valued at about $387 million in 2022 and has a 5.1% annual growth rate. The market is mainly broken down into three segments: blue light, red light, and white light therapies. BioLight is focused on selling red light therapy devices, which represents approximately 17% of the market. Therefore, the Northern American red light therapy market is valued at about $64 million in 2022. 

Red light therapy can potentially help treat depression and anxiety, improve sleep,  boost the immune system, help heart health, and more. The market for the treatment of these diseases is expanding thanks to a growing preference for non-invasive procedures and the increasing number of patients affected by anxiety — already 40 million adults in the US. Because red light is said to boost energy, the widespread decrease in physical activity due to the pandemic offers wider opportunities for BioLight to find potential clients.

But BioLight’s target market is small and fragmented, and its growth rate is only moderate. The light therapy market’s growth rate is similar to the tea market’s growth rate. New players often acquire market share only through strong branding and face limited growth opportunities. In fact, with a revenue of more than $1 million, BioLight already owns 1.6% of the North American red light therapy market. If the company tried to enter foreign markets, its products would need to be adjusted to foreign electrical requirements, which would create additional costs.

Therefore, despite the slight increase in demand for non-invasive procedures, BioLight’s obtainable market is small, and its growth is only moderate. With BioLight’s current set of products and direct-to-consumer business model, the company’s revenue and valuation will be limited in the future.

BioLight founder and CEO Dr. Mike Belkowski is a physical therapist who graduated from the University of Montana. Prior to BioLight, he founded ProActive Health PLLC, where he was a physical therapist and offered dry needling, fitness training, and health coaching services. Dr. Belkowski’s previous experience running a business is an asset, but there are differences between running a physical therapy practice and running a startup. His medical skills help him understand the medical conditions that his product addresses. Belkowski’s background likely helped BioLight conduct a study using its products and publish the results, which benefited the company’s credibility.

Dr. Belkowski is the only full-time employee on the team. He is working with a contractor for customer service and receives help from Nate Peterman and Daniel Kiani for sales and marketing. However, both Peterman and Kiani have full-time positions at Symba Marketing and likely do not plan on joining BioLight full time in the future. This small team considerably limits the potential growth of the company. Given that the founder doesn’t have any startup experience, the team needs to expand to scale this business. If the business doesn’t scale, investors are unlikely to see returns on their investments.

BioLight currently sells six red light therapy (RLT) devices ranging from small devices meant for oral care to red light panels that are 63 inches tall. The devices are composed of LEDs emitting both red and near-infrared (NIR) lights. The oral care RLT products are sold for $189 and $349, while the light panel prices range from $369 to $3,599. Each panel has between 12 and 700 LEDs, depending on the panel’s size. The different sizes  can fit different use cases, budgets, and storage spaces. 

One of BioLight’s main competitors is Joovv. Joovv offers red and NIR light panels with 12 to 900 LEDs, and prices ranging from $599 to $9,499. Joovv offers a larger selection of panel sizes, but its products are at least two times more expensive than BioLight’s products for a comparable amount of LEDs. The maximum light irradiance — the power of the LEDs per unit of surface area — of BioLight’s products generally seems slightly higher than that of Joovv’s products. This suggests BioLight’s products might be a bit higher quality. At a distance of 4 inches, Joovv’s products also create slightly stronger electric and magnetic fields (EMFs) than BioLight’s products. EMFs are a safety concern for some customers. However, Joovv’s EMFs are negligible compared to the emissions produced by other common household devices, such as hair dryers and clothing irons.

RLT panels can also be found on Amazon at cheaper prices than those offered by BioLight and Joovv. Hooga sells a 60-LED panel that’s similar to Joovv and BioLight products, with similar irradiance and EMF levels. Its design is not as refined or elegant as Joovv and BioLight’s designs. But it costs $169, which is $520 cheaper than BioLight’s equivalent device.

In addition to red light panels, BioLight sells skin cream designed to protect against the aging effects of ultraviolet light and to enhance the benefits of RLT. Although there is no scientific study showing that using a cream enhances the results of RLT, this cream may bring an additional revenue stream from customers and tap into a different demand. But its high price, from $85 to $105 (for the cannabidiol option), will likely limit customer adoption. Therefore, this product is a nice way to get additional revenue from the most price-insensitive RLT customers. But since BioLight currently doesn’t seem likely to advertise its cream to non-RLT customers, the product probably won’t help BioLight expand to a different market.

BioLight mostly differs from competitors by offering mid-level luxury and prices. Joovv is targeting price-insensitive customers, while options on Amazon address the most price-sensitive customers. BioLight is strategically situated in the middle, offering midrange prices. Aside from slight differences in design, BioLight’s products don’t seem especially distinguished. 

BioLight has patents pending for its RLT devices and education. However, investors should keep in mind that the barriers to enter this market are very low, and new competitors can easily enter this small market. Therefore, unique branding will be key for the company’s success.

Before founding BioLight, founder Michael Belkowski first created BioLight LLC, which recorded BioLight’s revenue and profit up to 2021. BioLight LLC is now merging with a new entity, BioLight Inc., which will allow the company to sell shares to investors. For this reason, the company’s Form C shows very little financial information. But investors can find BioLight LLC’s previous revenues in the offering circular. 

BioLight generated more than $1 million in 2021 revenue, 3x revenue growth from its $367,304 in 2020 revenue. BioLight also previously raised $25,000. The company spent only $73,918 on marketing and partnerships with influencers to achieve this revenue. Furthermore, its revenue is comfortably 68% higher than the cost of goods sold. BioLight has also been profitable since 2020. Its profit grew from $184,017 in 2020 to $281,289 in 2021. Additionally, the company has no debt except for a low credit card balance of $9,017 that accounts for less than 50% of its cash on hand. Overall, BioLight generated strong financial results in 2020 and 2021, proving its product-market fit.

BioLight has also established partnerships with influencers, including Brittney Palmer and Aimee Song, and the company boasts the first red light therapy podcast, The Red Light Report. The company’s social media marketing campaign has helped it achieve profitability. However, BioLight does not appear in Google’s first page of red light therapy results, nor in the first articles listing the top red light therapy products. BioLight is facing competitors with similar products in a small and fragmented market, so branding is key to its success. To grow and obtain a greater market share, the company will need to also improve its sales and search engine optimization capabilities through a larger variety of channels.

Overall, even though BioLight has room to improve its marketing strategy, the company is currently showing strong financial results that are a positive sign for investors.

BioLight is a medium-risk investment. The US red light therapy market is worth just $64 million in 2022, which is small, and BioLight already captures more than $1 million of that market. Furthermore, the market is growing at just a moderate pace, which limits BioLight’s obtainable market further. There are more than 20 competitors offering similar products, including red light panels or different designs, such as masks. These factors, combined with a lack of product differentiation, considerably limit BioLight’s opportunities to scale.

BioLight’s growth is also limited by the size of its team. Founder and CEO Dr. Mike Belkowski is the only full-time employee at the company. He has been able to generate $281,289 in profit with only the help of a contractor for customer service, part-time partners for marketing, and engineers working on the product’s manufacturing. But he might not have the business skills to expand the company beyond a successful small business. At this stage, it is difficult to picture Dr. Belkowski leading the company to an acquisition or a public listing.

In order to acquire shares in this small market and grow the company enough to exit, BioLight needs to hire a few employees and raise more funding than it ever has. But for now, the company has only been able to raise $25,000. Therefore, the lack of previous funding is an additional risk for the company. It could be overcome if the company continues to generate a profit, but it would then take longer for BioLight to scale.

BioLight sets its red light therapy (RLT) products apart mostly through price and design. Its technology isn’t especially distinct. BioLight might struggle to grow in a market that is already divided among similar players, some of which offer much lower prices. BioLight might draw in more business by educating consumers about the benefits of RLT. However, BioLight’s midrange prices are still relatively high, and the RLT market’s small size and moderate growth indicate a lack of popularity. These factors might limit how many new consumers the company can attract. For many people, spending more time outdoors is a cheaper and more efficient solution than paying for a RLT product.

The main risk is that BioLight will not succeed in branding its product beyond a direct-to-consumer health gadget. Despite BioLight’s current profitability, it’s unlikely that a competitor would acquire the company when it has a limited opportunity in a highly fragmented market. Furthermore, BioLight’s founder and CEO, Dr. Mike Belkowski, is the company’s sole full-time employee and lacks the startup experience to improve BioLight’s chances. To set itself up for an exit, the company will need to explore its business-to-business sales options and obtain a bigger market share. 

At first glance, the technical simplicity of red light therapy panels may make customers skeptical about their medical efficacy. But Dr. Mike Belkowski, founder and CEO of BioLight, analyzes and simplifies scientific studies that substantiate the health benefits of BioLight’s products. The company even conducted and published a scientific study that supports the efficacy of its products. At a time when Americans spend an increasing amount of time indoors, BioLight products may attract sedentary customers who want to improve their health.

BioLight demonstrated its product-market fit and had successful marketing campaigns in the last two years. After spending less than $74,000 on marketing, the company generated revenue of more than $1 million and a profit of more than $280,000 in 2021. These numbers are impressive, especially for a team with only one full-time employee and a marketing strategy limited to partnerships with social media influencers. And with only a small amount of debt, the company is in great financial health.

BioLight offers red light therapy products to enhance energy production in cells and improve hair health, joint health, mental health and more. Its other products include skin creams and a teeth-whitening pen. The company mostly sells its products online and finds customers through partnerships with social media influencers.

BioLight achieved a profit in 2020 and 2021. Last year, the company grew its revenue by 3x to more than $1 million. Its financial performance has been excellent so far. Therefore, BioLight’s $9 million valuation is fair to Republic investors. The company’s traction demonstrates a great product-market fit and a successful marketing strategy through social media influencers. 

However, BioLight is not unique in its offerings. BioLight offers mid-priced products, which is a small differentiation from some of its competitors. But this doesn’t compensate for its general lack of technical competitive advantages. Most players in the small US red light therapy market have similar products, so BioLight will likely struggle to grow with its current direct-to-consumer business model. Additionally, the founder is the only full-time team member. His lack of experience in developing startups may further hinder BioLight’s growth. At this point, exit opportunities seem limited. Therefore, BioLight is a Neutral Deal.

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

Analysis written by Léa Bouhelier-Gautreau, May 31, 2022.