Flower Turbines was one of 2021’s most popular online raises. The startup sells small, beautiful wind turbines to businesses. Their unique and elegant design can produce cheap and clean electricity while enhancing the aesthetic of any facility.
The company’s last round was rated a Deal to Watch. It raised $9.2 million from 4,768 investors at a $61.7 million valuation. This is pretty impressive but not surprising. Even though the market for small distributive wind turbines has yet to really take off, Flower Turbines seems to have one of the few products that has the potential to generate interest from customers.
I contacted Flower Turbines founder and CEO Daniel Farb to learn more about the company’s progress since its last raise and its plans for the future.
Disappointing Traction
I like Flower Turbines’ products and I believe the company has potential. But the company faces tight competition, which means its execution capabilities are key. And my call with Daniel did not make me confident about the team’s cohesion — which is important for fast execution.
According to Daniel, the team had internal conflicts with an employee who was handling the European market. This employee is not with the company anymore, and hopefully the problem is solved. But this mismanagement prevented the company from growing its revenue. As a result, Daniel told me, Flower Turbines’ 2022 revenue will be similar to its 2021 revenue — around $300,000. This is pretty disappointing.
A bigger issue is that Flower Turbines increased its valuation from $61.7 million to $124.5 million. Even if the company has a good product and raised $9 million from online investors in 2021, doubling the valuation isn’t justified in this case.
Pushed by a Light Wind
Daniel and I also talked about the company’s growth plan. He plans to achieve key milestones in the near future.
Another positive for the company: Flower Turbines has had a great technological advancement that should help the company’s sales. It figured out the cluster effect. By positioning its turbines at 2.5 meters (or 8.2 feet) away from each other, the cluster effect accelerates the wind’s speed between the turbines and increases their electrical output. Like geese flying in the sky, every turbine added to a group improves the wind flow and increases the wind’s drag. This could help the company sell its turbines even in areas with weak and intermittent winds.
Flower Turbines is also filing patents and improving its technology. It should soon start manufacturing its own electronics too, which should bring costs down. As its production scales up, Flower Turbines expects to achieve a 15% to 30% gross margin on its medium turbine and close to 30% on its large turbine.
Overall, Flower Turbines didn’t grow as much as investors expected it to. But despite disappointing traction, the company still has a competitive product and is making important progress on the technical and manufacturing sides. Investors who backed the company in the past still have a chance to get a return on their investment. However, investors willing to invest now should know that the company is way overvalued, so getting a decent 10x return on their investment might be challenging.
