CopperSmith

CopperSmith

Growth Stage

Building the world's leading custom metalwork platform

Building the world's leading custom metalwork platform

Overview

Raised this Round: Raised: $51,250

Total Commitments ($USD)

Platform

Republic

Start Date

03/03/2022

Close Date

04/15/2022

Min. Goal
$25,000
Max. Goal
$1,070,000
Min. Investment

$250

Security Type

SAFE

Series

Pre-Seed

SEC Filing Type

RegCF    Open SEC Filing

Early Bird Val. Cap

$23,000,000

Valuation Cap

$25,000,000

Discount

0%

Year Founded

2021

Industry

Consumer Products, Goods & Services

Tech Sector

CommerceTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Location

Minneapolis, Minnesota

Business Type

Growth

CopperSmith, with a valuation of $25 million, is raising funds on Republic. The company has developed a technology-driven platform that provides convenient access to metalworkers across the US and around the world. The platform connects consumers with the ideal solution for their custom metalwork requirements. CopperSmith has generated over $30 million in orders with more than 10,000 successful retail transactions. Ryan M. Grambart, Nick Wurm, Brandon Jorgensen, and Ben Goldstein founded CopperSmith in March 2021. The current crowdfunding campaign has a minimum target of $25,000 and a maximum target of $1,070,000. The campaign proceeds will be used to launch a new website, add new manufacturing partners, and make acquisitions.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$6,524,750

$6,134,566

COGS

$3,704,276

$3,875,783

Tax

$0

$0

 

 

Net Income

$-13,528

$-171,116

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$1,549,822

$322,393

Accounts Receivable

$0

$0

Total Assets

$1,755,579

$844,624

Short-Term Debt

$2,774,888

$1,285,273

Long-Term Debt

$658,309

$576,657

Total Liabilities

$3,433,197

$1,861,930

Financials as of: 03/03/2022
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Synopsis

The majority of homeowners perform at least small remodels on their homes each year. Because fewer new homes are being built each year, a huge amount of homes in the United States are decades old. By 2037, the National Association of Home Builders estimates that a full 45% of homes will be more than 60 years old, built in 1970 or before. 

While renovating has always been popular, the COVID-19 pandemic caused even more homeowners to reconsider their spaces. Homeowners spent more on home renovation in 2020 and are expected to continue spending more in 2021 and beyond. Kitchens, home offices, and outdoor spaces are the most popular areas to renovate. 

World CopperSmith, or simply CopperSmith, hopes to take advantage of Americans’ passion for renovation and provide products for houses being newly built. The company manufactures – or partners with manufacturers – custom metal products for homes. Range hoods are CopperSmith’s most popular product, alongside metal sinks, bathtubs, firepits, and more. CopperSmith has been around for more than a decade, but it is experiencing new success thanks to its recently launched online customization portal.  

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

Next Section: Price

Price

CopperSmith is raising capital via a Crowd SAFE at a $23 million valuation. This price is fair given CopperSmith’s current revenue. The company brought in more than $6.5 million in revenue in 2020 (the most recent year of audited financials), and according to the raise page, 2021 revenues were apparently even higher. That means that the $23 million valuation represents a 3.5x or less revenue multiple, which is fair for a manufactured products company. Investors can get a stake in CopperSmith for a reasonable price.

Next Section: Market

Market

CopperSmith’s metal products span a number of specific verticals within the home construction and home goods categories. The company’s most popular product is range hoods for kitchens. The market for range hoods in the Americas was valued at $4.5 billion in 2020 and is expected to grow at a 4% compound annual growth rate over the next six years. That’s a narrow market with a meager growth rate, in line with the other markets that CopperSmith serves. The global market for kitchen sinks is expected to hit $3.1 billion by 2025, with a CAGR of 3.7%. 

CopperSmith’s products are not in mainstream demand. Replacing a kitchen range hood, sink, or bathtub is no small endeavor. CopperSmith is best suited for major home renovations or home builds, but it only caters to a certain niche of those projects that require a custom metal piece aligned with CopperSmith’s specific design options. Given CopperSmith’s limited ability to earn market share even in these small, low-growth verticals, the company’s market prospects are poor.

Next Section: Team

Team

CopperSmith has four co-founders. Ryan Grambart appears to be the principal founder behind the company and serves as president. He worked in custom home construction and manufacturing before pivoting to build a direct-to-consumer online platform for metalwork. 

Co-founder and Vice President (VP) of Production Nick Wurm has a background in digital product marketing. Co-founder and VP of Operations Brandon Jorgenson has an accounting degree and formerly served as a forensic accounting consultant. 

Ben Goldstein is CopperSmith’s fourth co-founder and VP of design. He seems to lend the most directly relevant experience, with degrees in architecture from Savannah College of Art and Design and more than a decade of experience as a design engineer. Goldstein played a key role in launching CopperSmith’s online design customization tool, one of the company’s core differentiators. 

Overall, the CopperSmith team includes several co-founders with complementary areas of expertise. However, none of the co-founders other than Goldstein seem to be particularly experienced in their fields, and two out of four have no experience in home construction, metalworking, or other trades specifically relevant to CopperSmith. There’s room for improvement to bring on senior leadership that can help CopperSmith cement its position in this industry.

Next Section: Differentiators

Differentiators

CopperSmith was founded on the premise that consumers had no easy ways to browse for custom metalwork online. Large-scale metal projects – such as range hoods and sinks – are normally handled by local metal shops, which typically don’t offer robust websites and require calls or in-person consultations to create products. By bringing custom metalwork online, CopperSmith is making it much faster and easier for consumers and professional home builders alike to explore their options for custom metalwork and order products. That’s a big differentiator.

It’s not clear whether CopperSmith’s actual products are significantly better than what local competitors would offer, though. Consumers are likely trading some degree of customization and tailored service from a local metal shop when they order through CopperSmith, but they still seem to be satisfied with CopperSmith products. The company has strong reviews on various review sites, and it claims that 97% of CopperSmith customers would buy another product from the company. Even though the custom metal pieces are probably similar in quality to those from competitors, it’s CopperSmith’s easy online ordering experience that keeps customers coming back for more. 

While CopperSmith has succeeded in making it easier to order custom metalwork, this service isn’t particularly defensible. Major metalworking companies could easily create their own web-based ordering platform and directly compete with CopperSmith. The company holds no patents, and the capital intensity needed to build a website is relatively low. CopperSmith is well-differentiated at this time, but it’s not clear that it will be able to maintain that distinction over time.

Next Section: Performance

Performance

CopperSmith has been around for more than a decade, given that founder Ryan Grambart’s LinkedIn profile lists early 2009 as the beginning of his tenure at the company. It seems that CopperSmith resembled a local metalworking shop in its early years and only transitioned to an online business later on. The CopperSmith website was launched in 2015, but the custom online configurator wasn’t launched until 2021. Currently, the company has strong reviews on various sites, and CopperSmith reports that 97% of customers would buy its products again.

It’s unclear how the company was performing prior to 2019, as audited financials are only available for 2019 and 2020. In 2019, CopperSmith generated $6.1 million in revenue. The company posted a small net loss of roughly $170,000. Revenue grew a bit between 2019 and 2020, up to $6.5 million in revenue. The company’s net loss also narrowed to just $13,528 in 2020. CopperSmith projects continued growth in 2022 and beyond, thanks to improvements to the online ordering process and an expanding revenue stream from trade (home builders and designers). 

Overall, CopperSmith is performing well, particularly given that the company is entirely bootstrapped. However, it’s difficult to assess performance without more data from the company’s earlier years. Earning $6 million in revenue after more than a decade isn’t as impressive as it would be from a younger company. 

Next Section: Risks

Risks

CopperSmith is a medium-risk investment. The company has been around for more than a decade (with several years as a direct-to-consumer online business) and is successfully generating several million in revenue each year. However, financials and future funding are still concerns. CopperSmith is carrying a lot of debt on its balance sheet, with more than $2.7 million in current liabilities. That’s particularly risky given the company’s lack of fundraising history. While bootstrapping is impressive, it does increase risk in that CopperSmith doesn’t have loyal investors to rely on if debt becomes a pressing issue. 

Next Section: Bearish Outlook

Bearish Outlook

CopperSmith is offering a significant upgrade in user experience when shopping for custom metalwork. Everyday homeowners and home builders alike can appreciate the ease of browsing for metalwork, customizing their design, and placing an order online. However, CopperSmith is catering to a niche set of buyers with products that cost thousands of dollars and require difficult installation. Trade customers like builders and designers might be better customers for CopperSmith, but even including that segment, the markets for range hoods, metal sinks, and other products are small and growing slowly. 

In addition, it’s difficult to assess whether CopperSmith has been performing well after more than a decade in business. The company has clearly adapted and grown over time, with the introduction of new tools meant to make designing and ordering easier. However, CopperSmith doesn’t seem to be the type of high-growth company that is likely to exit or generate significant returns for investors. 

Next Section: Bullish Outlook

Bullish Outlook

CopperSmith is a bootstrapped business that seemingly evolved from a local metalworking shop into an online custom design and ordering platform for high-end metal products. That’s an impressive accomplishment, and it signals that CopperSmith’s founders have a clear vision for the potential of this company. That vision includes new goals for the next several years, including an expansion into kitchen appliances and custom matching hardware. This product line could open up significant new revenue opportunities for the company in its continued quest to serve a wider swath of customers. 

In addition to CopperSmith’s future plans, the company could be buoyed by trends in the home construction industry. America is suffering from a severe housing shortage, which is likely to lead to an increase in home building in coming years. CopperSmith offers a range of high-end products that are perfect for new home builds. If the company can continue expanding its trade program – which has reportedly grown more than 80% in the last year alone – it could generate millions of dollars by placing CopperSmith products in thousands of homes across America. 

Next Section: Executive Summary

Executive Summary

CopperSmith is a custom metalworking company offering buyers the ability to browse, customize, and order high-end metal products through an online portal, including range hoods, sinks, and more. CopperSmith is blending the benefits of a custom metalworking shop with the ease of direct-to-consumer online ordering, giving amateur home renovators and professional home builders alike a more modern metal ordering experience. The company continues to evolve to improve the customer journey and offer new products to boost revenue, which could be a lucrative opportunity as home building increases in coming years. Additionally, the current raise’s valuation is favorable for investors.

However, CopperSmith is serving a niche industry by offering only custom metal products in a specific set of verticals. Even when each of these markets are combined, CopperSmith’s total market opportunity is relatively small. Although its platform makes the ordering process quicker and easier for consumers, CopperSmith’s products don’t seem to differ much in quality from its competitors’. The company is led by a largely inexperienced founding team, and investors might wonder why it has taken more than a decade to achieve its current level of revenue. Therefore, CopperSmith has been rated a Neutral Deal. 

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

Analysis written on March 23, 2022.

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CopperSmith on Republic 2022
Platform: Republic
Security Type: SAFE
Valuation: $25,000,000

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