CabinetM is raising via a Crowd SAFE at a $10 million valuation cap. For early investors the cap is discounted to $9 million. CabinetM is an early stage startup and only brought in $145,000 in 2020 revenue. As such, it’s valuation is not strongly justified by its financial performance. However, a $10 million valuation is in line with other early stage companies that are raising capital online. Thus, the price for this round is reasonable.

CabinetM estimated that the initial market size for its service offering is around $2 billion. That figure is based on an estimate of the number of viable companies in the US that might utilize the platform. This is a reasonable, serviceable obtainable market. However, according to one source, the global market for digital marketing software was worth about $47.8 billion in 2020. It is forecast to grow at a rate of 18.2% per year, taking it to $182.2 billion by 2028. Another source pegged the global market at $49.1 billion in 2020, and it predicted a growth rate of 19.4% yearly. In this case both the total addressable and obtainable markets for CabinetM are sizable, and the most conservative growth rates are still quite appealing. CabinetM is targeting a very attractive market, making it well-positioned to grow as the market expands.

Co-founder and CEO Anita Brearton is also the founder and CEO of LibraryM. LibraryM provides marketing technology education, among other services. She is also the author of Attack Your Stack, a guide to building and managing a marketing technology stack, and the managing director of Golden Seeds. Golden Seeds focuses on investing in women-led ventures. Previously, Brearton was a vice chairman of the board at MassVentures, and she served in multiple roles in an executive capacity at a fashion company called FashionPlaytes. She was a board member of the Angel Capital Association, and she was a marketing consultant on an independent basis. Brearton has had other roles over the years, such as serving as the vice president of corporate marketing for Sycamore Networks. Brearton’s marketing experience is deep, which gives her a strong foundation for running CabinetM.

Previously, co-founder Sheryl Schultz held multiple positions at Golden Seeds, including managing director. She also worked as a member of the board of directors for a non-profit called The Capital Network. The Capital Network provides educational programs and a community to help early-stage entrepreneurs. She was also previously an angel investor at Launchpad Venture Group. Schultz has served as a director on the board for Crimson Hexagon, the president of SRS Associates, a vice president of account services at Sterling Hager, and as a director of marketing communications at satellite communications company RCA Cylix. Lastly, she was an account executive for a company called HWH PR/New Media. Like Brearton, Schultz brings strong experience in marketing.

CabinetM’s founding team has plenty of relevant experience in both the industry and with entrepreneurial ventures. Both also have plenty of managerial experience from directorial boards and other leadership roles, and they have prior shared experience at Golden Seeds. They do, however, appear to be the only two employees at this time and will need to scale the team as they continue to build out the product offering. Some employees appear to be connected with the company on LinkedIn, though their status is unknown and none are mentioned in the raise page.

Although there are many marketing applications available today, CabinetM does not directly compete with these other services. Instead, investors should view it as more of an aggregation service that helps to assess and present the value of those other marketing applications. Very little, if any, competition exists in this niche. Furthermore, with the number of marketing technologies continuing to increase, CabinetM’s platform offers a very useful and needed solution to many businesses. This makes the company highly differentiated from most of what is out there. The main point of concern is a lack of defensibility, as the company has no patents for its software. However, being a first mover may outweigh this weakness for the time being.

On the product side, CabinetM has succeeded in building out a useful platform with more than 15,000 products represented across five hundred categories. It has also managed to attract some major companies as customers, including Williams-Sonoma, the MLB, and Capita. The founding team has also raised $1.5 million in prior rounds from angel investors.

Revenue is not expanding particularly quickly, but it is still significant. In 2019, the business generated $126,625 in sales. This figure increased to $145,931 in 2020. The company did generate significant net losses over this period of time, totaling $255,108 in 2019. This increased modestly to a loss of $262,008 last year. However, the operating cash flows of the business did improve, dropping from a net outflow of $148,390 in 2019 to $125,362 in 2020. 

For an early stage startup, CabinetM’s limited financial performance is to be expected. However, its strong product performance, customer acquisition, and partnerships are very encouraging and bode well for future success.

The overall risk profile for CabinetM is quite low. Financial risk was the most elevated. This makes sense, given the fact that the company is generating significant net losses and material net outflows. This cannot be sustained indefinitely. In order to overcome its financial troubles, growing further and cutting costs will be necessary. Finally, as the round is being raised on a SAFE, investment terms risk is slightly elevated.

CabinetM has financial challenges that could become a risk. The company is bringing in limited revenue while holding $1.9 million in long term debt. Revenue will need to ramp up substantially in order for the company to continue growing. This need will become more important as the team expands beyond the co-founders. Brearton and Schultz have done a good job of establishing the company, but a tech platform like this will require engineers, developers, and other skill sets that they cannot provide. That kind of growth takes substantial time, so potential investors should be prepared to wait.

This funding round for CabinetM has many positive signs. The $10 million valuation appears reasonable given the company’s traction so far. The market opportunity is encouraging, and it is growing at a rapid pace across sources. The company is clearly differentiated, as little to no competition exists. Although there are many marketing applications available, CabinetM does not compete directly as its solution is more a command center than true marketing technology. The company is generating revenue, and it has significant operational traction to boast about. Finally, the overall risk profile is fairly attractive.

CabinetM has developed a platform to make using and organizing marketing technology much simpler. Users can connect their marketing technologies in the platform, and the platform also helps them find new marketing technology. The Software-as-a-Service platform acts as an operations command center to improve marketing performance, increase efficiency, and reduce costs. Using the service, marketing teams can visualize their tech stacks and learn what products fit or don’t fit their needs.

CabinetM has only brought in limited revenue thus far, so its business model and product are not fully proven. The company appears to be run by only the two co-founders, neither of whom has any engineering or technical skills. Unless the team expands and revenue grows, CabinetM could struggle to expand.

On the other hand, the company’s target market is large, competitive, and growing rapidly. Fortunately, CabinetM is distinct enough that it has little direct competition. The two co-founders have shared experience as well as plenty of marketing industry and entrepreneurial expertise. Finally, the current valuation seems like a fair deal for investors. Because of this, CabinetM is a Neutral Deal at this time.

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

Analysis written by Daniel Jones.