Brane

Early Stage

Brane is an emerging FinTech company, using AI to predict the future

Analytics

Raised to Date: Raised: $65,377

Aggregate Commitments $

Platform

Wefunder

Start Date

06/17/2021

Close Date

10/17/2021

Min. Goal

$100,000

Max. Goal

$1,070,000

Min. Investment

$100

Security Type

Convertible Note

Funding Type

RegCF

Series

Seed

Valuation Cap

$10,000,000

Discount Rate

0%

Rolling Commitments $

Status

Active

Reporting Date

09/19/2021

Days Remaining

28

% of Min. Goal

65%

% of Max. Goal

6%

Likelihood of Max
unlikely
Avg. Daily Raise

$696

Momentum
cold
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Location

Plano, Texas

Industry

Energy, Power, & Natural Resources

Tech Sector

Fintech

Distribution Model

B2B

Margin

High

Capital Intensity

Low

Business Type

High Growth

Brane, with a valuation cap of $10 million, is raising crowdfunding on Wefunder. It is a FinTech company that is using AI to convert raw data into insightful information for investment funds looking to invest in oil and gas. Brane’s data is used by funds to decide when to buy oil and gas for high profits. Paul Carlisle founded Brane in October 2020. The proceeds of the current crowdfunding round, with a minimum goal of $100,000 and a maximum goal of $1,070,000, will be used for marketing, engineering and development, and operations. Brane is making data valuable and usable with its software. It collects licensing fees and a share of profits generated using its AI insight.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-177,475

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$50

$0

Accounts Receivable

$0

$0

Total Assets

$50

$0

Short-Term Debt

$167,500

$0

Long-Term Debt

$0

$0

Total Liabilities

$167,500

$0

Financials as of: 06/17/2021
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Ratings

Analyst Report

Synopsis

In 2018, the US became the world’s top crude oil producer. In 2020, the US produced 11.3 million barrels of oil per day, despite a decrease in demand during the pandemic. But the oil drilling process is far from easy. The oil and gas industry is notorious for having low margins and outdated technology.

That’s where Brane comes in. Brane wants to change the way that oil and gas companies search for and evaluate drilling locations. The company wants to build a digital platform with AI and machine learning tools to collect data from oil and gas companies. Brane will then analyze the data to create a heat map that will help companies decide where to drill for optimal results. Brane may also apply this technology to other natural resource opportunities down the road.

Brane’s current Wefunder raise has been rated an Underweight Deal by the KingsCrowd investment team.

Price

Brane is raising at a $10 million pre-money valuation cap ($9 million for investors who contribute the first $100,000) via convertible note. Unlike most convertible notes, this one does not convert at a discount to the company’s future valuation. It is also worth mentioning that the convertible note comes with a 6% annual interest rate. Therefore, Brane’s price is rated above average on our one-to-five scale.

Market

The global oil and gas industry is massive. But Brane’s particular niche — AI in oil and gas — is rather small. The entire global AI market for the oil and gas space was worth just $2 billion in 2019. But the market is expected to continue growing at a rather impressive rate of 10.96% per annum through at least 2025 to reach $3.81 billion. This small market and robust growth rate even out to rate Brane’s market opportunity just below average on our scale.

Team

Brane co-founder, CEO and director Paul Carlisle has a decent amount of experience in the oil and gas industry. Carlisle founded his own energy company, Carlisle USA Energy Company, in 2008. In 2012, he opened EOI Eagle Operations, where he helped companies plan and obtain licenses for the planning and drilling phases of the oil and gas exploration and production process, among other services. EOI owned one drilling rig and multiple service rigs. 

COO and CTO James McConnaughay previously served as a consultant and fractional CTO/CIO for Vans Kitchen and Garcia Technology. He also at one point worked as a specialist in agile management, big data, development programs, web analytics, and more for different companies. 

While Carlisle does have experience in the oil and gas space, he does not have any significant technological experience, and his partner does not appear to have any direct experience in energy. Thus, our system has rated Brane’s team near the low end of our scale.

Differentiators

It is difficult to evaluate Brane’s differentiation because the company has not yet revealed the full range of services it intends to offer. But it is far from the first company in the energy sector to incorporate AI and machine learning. According to Ernst & Young, more than 92% of oil and gas companies are currently investing in or planning to invest in AI to improve their operations. Many have already implemented AI. TotalEnergies, for example, began investing in AI and machine learning in order to characterize oil and gas fields as far back as the 1990s. Its partnership with Google Cloud helps it to interpret images from seismic statistics using computer vision technology. This also allows for the automated analysis of different technical documents. Shell has also been using AI for its drilling processes. Brane is a simpler service targeted toward companies that don’t yet have these technologies. Because of this, our system still rated the differentiation of the product slightly above average.

Performance

It appears that Brane is a long way from completing a finished product. According to the company’s raise page, the product is still in development and “the idea for the product exists with our CEO.” This makes it unclear whether the product is actually in development or just in the idea stage. In addition, the company generated $0 in revenue and a net loss of $177,475 last year. This is because the company decided to pay each of its two co-founders $100,000 signing bonuses and $150,000 annual salaries. The company has delayed payment until the company can raise capital. 

For a business still in the idea phase that has earned little in the way of financial contributions, these signing bonuses and salaries are exorbitant. It also raises the possibility that management might use the proceeds of this raise to pay these salaries instead of investing all of the capital in business development. Because of all of this, our system has rated the performance of the business at the very low end of the scale.

Risks

Overall, Brane has a low risk profile. The only category that is elevated is product risk. Brane’s product is nowhere near completion, and it is unclear whether management can complete it with the capital from this raise. And its projected product development timeline seems unrealistic. Its goal is to complete development between four and six months after closing the round of funding. Development of any quality platform can take much longer than that, especially when involving complex features like AI and machine learning.

Bearish Outlook

The biggest concern about Brane involves its performance to date. Its product is far from complete and possibly not even in development yet. The company has generated zero revenue and a net loss of more than $177,000. Despite its lackluster performance, the company has also prioritized giving its founders $100,000 signing bonuses and $150,000 annual salaries.The team also appears to be lacking expertise. Though the AI oil and gas market is growing rapidly, it is small. This will limit Brane’s potential. If and when the company finishes its product, it is unclear how it will measure up to existing services.

Bullish Outlook

One thing working in Brane’s favor is its attractive valuation. Its product is aimed to serve clients of all shapes and sizes, and the pricing model the business intends to use could provide incentive for the company to execute well, since it is partially contingent on its success. Finally, though the market opportunity for the company is small, the growth rate in the space is significant. That could help it to expand at a rapid pace.

Executive Summary

Overall, Brane has some potential, but investors should be wary. The company offers a reasonable valuation, envisions a product that could appeal to a wide base of clients, and operates within a growing market. However, the company also has many causes for concern. The biggest problem is that its product is nowhere near complete. There’s also a possibility the founders will use capital earned from the Wefunder raise to pay their own salaries in addition to the equity they are to receive. Investors want to see founders who value their business above all else, and Brane’s team doesn’t seem to fit the bill. Because of all this, our team has rated the company as an Underweight prospect.

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

Analysis written by Daniel Jones.

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