Booxby

Early Stage

AI-powered marketing platform for content creators

Analytics

Raised to Date:
$28,000 - RegCF
$153,000 - Total

Aggregate Commitments $

Platform

SeedInvest

Start Date

11/04/2020

Close Date

12/18/2020

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$1,000

Security Type

Convertible Note

Funding Type

RegCF / RegD 506(C)

Series

Seed

Valuation Cap

$4,000,000

Discount Rate

20%

Rolling Commitments $

Status
Not Funded
Reporting Date

12/20/2020

Days Remaining
Not Funded
% of Min. Goal

112%

% of Max. Goal

3%

Likelihood of Max
Not Funded
Avg. Daily Raise

$636

Momentum
Not Funded
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Location

Sausalito, California

Industry

Media, Entertainment & Publishing

Tech Sector

AdTech

Distribution Model

B2B/B2C

Margin

High

Capital Intensity

Low

Business Type

Growth

Booxby, with a $4 million valuation cap, is raising funds on SeedInvest. It is a market platform powered by artificial intelligence that drives marketing campaigns. The platform uses NLP and machine learning to analyze narrative content and answer critical questions related to marketing. Holly Payne founded Booxby in 2014 and has raised over $1 million in previous rounds of financing. The proceeds of the current crowdfunding round, with a minimum target of $25,000 and a maximum target of $1,070,000, will be used for product development, sales and marketing, services and software, and general and administrative expenses. Booxby has two products in the beta stage and has run multiple pilots. USPTO issued a patent to Booxby for its book analysis and recommendation method technology.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-384,803

$-140,691

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$230,092

$3,433

Accounts Receivable

$0

$0

Total Assets

$237,518

$3,763

Short-Term Debt

$112,833

$100,686

Long-Term Debt

$900,000

$300,000

Total Liabilities

$1,012,833

$400,686

Financials as of: 11/04/2020
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Ratings

Analyst Report

Synopsis

Of all the world’s industries, perhaps the most changeable over the past several years has been book publishing. In 2007, Amazon released the first Kindle e-reader — a handheld device that allowed readers to consume books of all kinds in digital format. Two years later, Borders Group — a long-time dominant force in book sales but a slow-adapter of ebooks — stumbled into bankruptcy and closed its stores. The industry has also seen an explosion in sales of audio media. Audiobooks accounted for $1.2 billion in revenue last year, eclipsing ebook sales for the first time.

For all the changes in how media is produced and distributed, there is one aspect of the industry that has seen relatively little change — distribution and marketing. Writers engage agents to reach out to publishers, who screen manuscripts and send them through teams of experts to estimate how successful a work will be. As the number of would-be authors increase with each passing year, it’s a competitive, difficult, and inaccurate process. It can often result in a predominance of already-popular writers being “seen” and new writers being shut out.

Booxby aims to transform the way book marketing works, and indeed, marketing of all kinds of media. Using machine learning and a technique called Natural Language Processing (NLP), Booxby plans to automate some of the processes of book publishing and do so far more effectively than traditional publishers can. The company’s proprietary software scans stories, analyzes them to filter out derivative works, and targets audiences that are predisposed to favor the chosen works. In theory, the software can elevate the works of unknown but powerful writers while at the same time assisting a publishing industry that is struggling to adapt to market changes. However, it is worth noting that the company’s product is still in beta and has not been fully proven yet.

At the moment, Booxby’s technology is being limited to analysis of “story” books. However, the company plans to expand its offerings into marketing for film, video, audio, and more. As the world’s media production grows alongside its hunger to consume said media, Booxby’s technology is well-timed to revolutionize the industry.

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

Price

Booxby is raising on a convertible note at a $4 million valuation with a 20% discount. The product is targeted and scalable for a large industry, making this low valuation exceptional for a company in this position. Therefore, Booxby’s price rating is above average.

Market

The publishing industry overall is a huge one. Americans remain huge consumers of books in all forms, purchasing more than 130 million units of adult fiction alone in 2019. In the midst of the COVID-19 pandemic, ebook and audiobook sales are exploding. Despite the economic impact of the pandemic, the publishing industry is still expected to remain at 85.9 billion in 2020, then grow at a 2% CAGR and make up most of its recent losses by 2023.

At the moment, Booxby is limiting its customer base to independent publishers, which may limit how quickly it can grow and how much of the market it can reach. In an industry that — while still massive — is shrinking in important metrics, this narrow target market presents challenges for the kind of aggressive growth Booxby hopes for. As a result, the company’s market score is its lowest.

Team

Booxby CEO and founder Holly Payne is herself an independently published writer. Her third novel, Kingdom of Simplicity, won the highest award in independent publishing, the gold Benjamin Franklin Award. Payne received an MFA in Professional Writing from the University of Southern California and has formed her own publishing company, Skywriter Books. She brings a high level of industry knowledge to Booxby.

Josh Conviser, who serves as the company’s COO, works in Hollywood as a writer and producer. His books have been published by one of the “Big Five” in publishing, Random House. Les Chasen is the chief architect. He holds a B.S. of Information Systems from Central Connecticut State University and has decades of experience in systems engineering and software development. 

Overall, this is a team with a high level of industry experience (though not as much entrepreneurial experience as one might hope for), leading to a decent team rating.

Differentiators

Booxby has now spent six years building up its software by feeding it massive quantities of content to better “teach” its AI to recognize standout works. Beyond relying on publicly available media from Project Gutenberg, Booxby purchased a license from Ingram Content Group, which holds the industry’s largest active book inventory. This partnership also led to Ingram strategically investing in Booxby.

Booxby has also secured a patent for its content-recognition and marketing technology, which may pay dividends as publishers move to take advantage of advances in artificial intelligence. Despite the seeming strengths here, Booxby’s system has not actually been proven. There is still a risk that it will not perform as strongly as the company expects. Thus, Booxby’s differentiators score is above average, but not particularly strong.

Performance

While Booxby has yet to turn a profit, it has secured a strategic investment from the Ingram Content group and a non-equity STTR grant from the National Science Foundation. The company currently has two products in beta. It has also run pilots with Hachette Book Group, Simon & Schuster, and ICG. For all of that, the company has no clear proof of product. And no revenue as a result. Balancing the lack of sales with the impressive partnerships and pilots, Booxby’s performance score is — again– above average, but not particularly strong.

Bearish Outlook

After six years, Booxby’s product is still in development — a concern for any responsible investor. As the business has yet to turn a profit and is suffering from cash concerns, it is vital for the software to be proven viable and for contracts with publishers to be secured. If neither of those things happen, Booxby’s prospects are not encouraging. And the company may face resistance from the very publishers it wants to work with. The traditional publishing process has proven remarkably resistant to change in a transforming market. The use of AI to market unproven authors may be a difficult leap for these old-school sales targets. If Booxby only works with indie publishers, growth may be slow, resulting in disappointing returns. As the company plans to ramp up spending following this raise to meet growth targets, it will need to show promising results in a relatively short amount of time.

Bullish Outlook

Booxby’s proprietary machine learning is unlike any other on the market and is coming into its own at a time when traditional publishing is struggling to remain afloat. If the current, targeted version of the product proves to be reliable, Booxby should be able to secure contracts with publishers and scale to similar content. By expanding to other content forms — like audiobooks, podcasts, and video media — Booxby could tap into a total market in the billions of dollars. There is plenty of room in the market for a new player like Booxby to emerge and thrive. Depending on how successful the software is at unearthing unknown writers and promoting them, the business could see profits in the millions over the next several years.

Executive Summary

Booxby is a marketing technology company that has developed machine learning software to analyse fiction. The software — which used Natural Language Processing to analyse thousands of texts from the Gutenberg Project and the Ingram Content Group — can determine the difference between works that are derivative and unlikely to perform well and works that are innovative and could lead to massive sales when properly marketed. The program then calculates the most suitable audiences for these texts and targets those audiences with fine-tuned strategies.

While Booxby has developed a software that is highly targeted for a massive market, a long development process and financial woes spell possible troubles for the business if it fails to start producing results and proof of concept. The team has relevant industry experience, however, and the concept is patent-protected while being unlike other market offerings for publishers. Therefore, Booxby has been rated 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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