Cheers

Growth Stage

A Leader in Alcohol-Related Health

Analytics

Raised to Date: Raised: $1,663,149

Aggregate Commitments $

Platform

StartEngine

Start Date

05/20/2021

Close Date

09/30/2021

Min. Goal

$9,973

Max. Goal

$4,999,979

Min. Investment

$117

Security Type

Equity - Common

Funding Type

RegCF

Series

Series A

Pre-Money Valuation

$49,454,908

Rolling Commitments $

Status

Active

Reporting Date

09/26/2021

Days Remaining

4

% of Min. Goal

16,676%

% of Max. Goal

33%

Likelihood of Max
unlikely
Avg. Daily Raise

$12,893

Momentum
warm
Log in or create a free account today to gain access to KingsCrowd analytics.
Location

Houston, Texas

Industry

Healthcare & Pharmaceuticals

Tech Sector

Non-Tech

Distribution Model

B2C

Margin

High

Capital Intensity

Low

Business Type

High Growth

Cheers, with a pre-money valuation of $49.5 million, is raising crowdfunding on StartEngine. The company makes products that make people feel better after consuming alcohol. It helps protect the liver along with letting people enjoy their drinks. Brooks Powell founded Cheers in 2014. The proceeds of the current crowdfunding campaign, with a minimum target of $9,973.05 and a maximum target of $4,999,978.84, will be used to expand the product line, increase the retail presence, and launch a new brand of sugar-free hydration products called Lightspeed. Cheers has sold over 13 million doses of its products and acquired over 300,000 customers. The company generated a profit of $1.7 million in 2020.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$10,417,210

$8,217,412

COGS

$1,953,775

$1,659,732

Tax

$11,470

$3,197

 

 

Net Income

$1,712,638

$-352,480

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$2,182,487

$577,550

Accounts Receivable

$0

$0

Total Assets

$3,521,891

$2,058,765

Short-Term Debt

$227,962

$469,375

Long-Term Debt

$675,271

$683,371

Total Liabilities

$903,233

$1,152,746

Financials as of: 05/20/2021
Log in or create a free account today to gain access to KingsCrowd analytics.

Upgrade to gain access

Pay Monthly
Annually (Save 17%)

Starter

$8.33 /month
billed annually
Free portfolio tracking. Limited reports and filters.
Plan Includes:
Everything in Free, plus
Advanced company search ( limited filters)
Founder profiles and exclusive webinars
2 Analyst Reports per month
Get Starter Annual

Pro

$25 /month
billed annually
Unlimited analyst reports and market analytics.
Plan Includes:
Everything in Starter, plus
Full access to all Analyst Reports
Filter on Staff Picks (e.g. Top Deal, Deal to Watch, etc.)
Market Analytics
Get Pro Annual

Merlin

$41.67 /month
billed annually
Full site access including Merlin ratings.
Plan Includes:
Everything in Pro, plus
Search and filter companies by Merlin ratings
Company specific Merlin rating and risk assessment
Get Merlin Annual
Already a member? Log in here.

Ratings

Analyst Report

Synopsis

Alcohol consumption is one of the oldest human practices on record. A study released in 2004 describes a jar from the late Stone Age in Jiahu, China with traces of fermented drink in it. That means human beings were consuming alcohol at least as far back as 7,000-6,600 BC. 

Ancient tradition though it may be, alcohol has severe tradeoffs. In exchange for a pleasant buzz, easy social interactions, and stress relief, drinkers suffer painful consequences. Around three-quarters of drinkers report experiencing hangovers after consuming alcohol, suffering fatigue, headaches, stomach pain, and nausea, among other nasty symptoms.

Hangover “cures” have been around for thousands of years. Such remedies are generally unscientific and unhelpful, though there are steps drinkers can take to avoid the worst hangover symptoms. As long as humans drink alcohol, they will be on the lookout for new ways to thwart the dreaded hangover.

Cheers is addressing the problem by bringing science-based hangover mitigation to the market. Cheers’ products support the liver and rehydrate the body, enabling consumers to enjoy the short-term benefits of alcohol while lessening its painful consequences. Cheers’ flagship product, Cheers Restore, employs dihydromyricetin (DHM), a plant extract with anti-alcohol properties. If consuming alcohol is a universal human tradition, Cheers wants to become just as universal and improve that ancient practice for everyone. It’s well on its way with $25 million in lifetime sales.

Cheers’ current StartEngine raise has been rated a Deal to Watch by the KingsCrowd investment team.

Price

Cheers is offering common equity at a pre-money valuation of $49.5 million. While this feels like a steep asking price, it’s appropriate given Cheers’ late stage of development. Cheers took in just over $10.4 million in revenue in 2020, resulting in an attractive revenue multiple. While its rating in this category is moderate, Cheers is being valued quite fairly.

Market

Though it wants its product to be sold alongside all kinds of alcohol products, Cheers is part of the alcohol-adjacent hangover rehydration supplements market. It’s not a large market, coming in at $1.2 billion globally in 2018. And the US market is a fraction of that size. However, it is growing quite rapidly at a CAGR of 15%, driven by younger consumers and greater access to new varieties of drinks.

Depending on how much growth continues, there’s a lucrative market opportunity for Cheers. In 2018, about 16% of the US adult population reported binge drinking over a 30-day period. Assuming each of those binge drinkers used two Cheers doses every week, they would need to purchase nine $30 packs of Restore capsules. Given that there are nearly 260 million adults in the US, that’s approximately $11,2 billion in revenue from the Restore product alone. These kinds of supplements are also fairly popular in other markets like South Korea, so if Cheers expands beyond the US in the future, it’s likely to see further success. Therefore, its market rating is strong.

Team

Cheers Founder Brooks Powell holds a Bachelor of Arts from Princeton University, where he discovered the potential of Cheers’ flagship chemical, DHM. He started Cheers while still in school and has made it his sole priority since graduating. Though Powell didn’t study business at Princeton, his limited experience appears to have served him well in putting together a strong and seasoned team to expand Cheers’ reach.

One notable member of leadership is Director Melody Koh, who works with Cheers through her role of partner at NextView Ventures. As an entrepreneur and investor, she lends considerable expertise to Cheers. Her years as head of product at Blue Apron (a breakout startup employing the same business model as Cheers) while it was in its early months are a boon to Cheers. Overall, its team rating is strong.

Differentiators

Though Cheers hasn’t yet fully established its product defensibility, it has taken steps in that direction, resulting in a strong rating. It has cleared some of the barriers to entry, creating an FDA-registered facility. The Cheers Restore formula using DHM is patent-protected, though the patent for its DHM permeabilizer technology is still pending. The price point is reasonable, and the blends are not proprietary, so consumers know exactly what they’re ingesting. Cheers offers a “feel 50% better” guarantee as well. If its product ratings are any indication, these measures have garnered goodwill among its customers. It is also shifting into the lifestyle space with a liver health-scoring app, marketing itself as a way to improve everyday health.

It’s worth noting that Cheers is facing some competition in this space as well. One example is Blowfish, a startup with an FDA-approved hangover cure combining aspirin, caffeine, and a stomach-soothing agent. Other offerings are comparably priced, and some, such as Flyby and No Days Wasted, even employ DHM Detox, though not in the same quantities as Cheers. Overall, Cheers’ differentiator score is one of its highest.

Performance

In its early stages, Cheers has performed remarkably well using a direct-to-consumer (D2C) model, selling through its own website and Amazon. Cheers took in $10.4 million last year during the pandemic, up from $8.2 million the year before — slow but steady growth. After years of negative profits, as is usual for startups, Cheers went into the black last year with $1.7 million in net income. The business has sold more than 13 million doses to date, earning $25 million in revenue over its lifetime, and now holds less than $1 million in liabilities. It has nailed the search engine optimization game and has garnered more than 8,000 Amazon reviews, rated overall at around 4.5 stars. Its impressive performance thus far gives it one of the highest ratings on this metric.

Risks

As with any product that purports to provide medical benefits, regulation is a significant concern for Cheers. While the facility is FDA-registered, it has not gotten FDA approval as some competitors have. Additionally, Powell’s lack of experience is cause for caution from investors, though it certainly hasn’t hurt Cheers’ prospects thus far.

Cheers’ future is uncertain as the brand attempts to expand with a new product and branch out into the retail market. While retail is certainly the way to significantly expand its reach, there’s no evidence that Cheers’ D2C model will translate well into retail, where pricing is key. Finally, the business is launching a new product just as it attempts to expand into retail markets, and that product is not guaranteed to repeat the previous product’s success.

Bearish Outlook

Cheers’ competitors are likely to present significant challenges as the company attempts to grow. Industry leader AfterDrink in particular has proven spectacularly effective with its all-natural ingredients — including DHM. Cheers is still missing comprehensive patent protection to capitalize on its DHM permeabilizer tech. Cheers is also introducing a new product, Lightspeed, at the same time as it encroaches on the new retail market. Cheers hasn’t done enough to mitigate these risks.

Bullish Outlook

Despite potential obstacles, it’s impossible to dispute that Cheers has shown great traction so far, a trend that is unlikely to reverse. The business is profitable and holds a large cash reserve, significantly growing its revenue even as COVID-19 shuttered businesses across the country. It has a strong team with significant startup experience, and its market is likely to continue growing at a rapid pace. While challenges lie ahead, Cheers is over the hump of early-stage startup struggles and now needs only to continue its pattern of growth. If it clears its defensibility hurdles and lands securely in the retail market, its competitors might have simply cleared the way for its continuous rise to the top tier of alcohol-related health products.

Executive Summary

Cheers is using science and natural ingredients to take the edge off hangovers. These products enable consumers to enjoy the benefits of a night of drinking without suffering as much the next morning. The company’s products support the liver and rehydrate the body and come with a “feel 50% better” guarantee.

Cheers has sold 13 million doses of its patent-protected formula and managed to reach profitability during the COVID-19 pandemic. It is in excellent financial health and has proven quite reputable and popular in its early direct-to-consumer stage. However, significant market competitors with comparable or cheaper prices threaten Cheers as it wades into the untested retail space. The product line has some defensibility issues even as it expands, and the market isn’t particularly large. That said, reaching profitability is a huge deal, and Cheers’ steady rise shows no signs of reversing. Therefore, Cheers is a Deal to Watch.

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

Analysis written by Benjamin Potts.

Other Deals

SelfDecode on Wefunder 2021

The company has developed an AI-based platform that analyses DNA, labs, and the environment to provide personalized health recommendations. The…

Valuation: $34,948,219
Min Investment: $100
Industry: Healthcare & Pharmaceuticals
Raised $1,011,129 of $1,069,999 max
RegCF

Covira Surgical on StartEngine 2021

The biotech company is focused on novel therapeutic alternatives to reduce post-surgical infections. The procedures of Covira Surgical leverage the…

Valuation: $9,987,500
Min Investment: $250
Industry: Healthcare & Pharmaceuticals
Raised $191,886 of $1,070,000 max
RegCF

Fluo Labs on StartEngine 2021

The medical device of Fluo Labs uses light therapy to relieve patients of their allergy symptoms without the use of…

Valuation: $12,000,000
Min Investment: $250
Industry: Healthcare & Pharmaceuticals
Raised $82,123 of $3,800,000 max
RegCF

Create your first portfolio

Create your very own investment portfolio on KingsCrowd.

Now you can track all of your startup investments in one place utilizing our state-of-the-art portfolio tracker tools. To begin, create your first portfolio below.

Add to portfolio
Add Cheers on StartEngine

Follow company

Follow Cheers on StartEngine