Cybolt

Growth Stage

End-to-end digital risk management and cybersecurity solutions.

Analytics

Raised to Date: Raised: $2,218,075

Aggregate Commitments $

Platform

Republic

Start Date

08/03/2021

Close Date

09/24/2021

Min. Goal

$105,000

Max. Goal

$5,000,000

Min. Investment

$263

Security Type

Equity - Preferred

Funding Type

RegCF

Series

Pre-Seed

Pre-Money Valuation

$140,000,000

Rolling Commitments $

Status

Active

Reporting Date

09/19/2021

Days Remaining

5

% of Min. Goal

2,112%

% of Max. Goal

44%

Likelihood of Max
unlikely
Avg. Daily Raise

$47,193

Momentum
warm
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Location

Lakeway, Texas

Industry

Security, Cybersecurity, & Defense

Tech Sector

EnterpriseTech

Distribution Model

B2B

Margin

Low

Capital Intensity

Low

Business Type

High Growth

Cybolt, with a pre-money valuation of $140 million, is raising crowdfunding on Republic. The company offers end-to-end digital risk management and cybersecurity solutions. It specializes in delivering technology solutions and services for managing digital risks through information protection, public safety, resilience management, and business resilience. Mauricio Rioseco founded Cybolt in May 2019. The current crowdfunding round has a minimum raise of $105,000 and a maximum raise of $5,000,000, and the funds will be used to capitalize on the current growth and success by establishing new partnerships. Cybolt has over 200 active international clients and generated $26.5 million in revenue in 2020.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$26,669,226

$20,577,329

COGS

$16,201,038

$15,931,760

Tax

$1,535,296

$256,933

 

 

Net Income

$2,475,998

$1,017,583

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$2,775,036

$2,132,963

Accounts Receivable

$7,314,445

$3,275,437

Total Assets

$16,363,781

$10,640,405

Short-Term Debt

$40,365

$4,474,358

Long-Term Debt

$500,000

$0

Total Liabilities

$540,365

$4,474,358

Financials as of: 08/03/2021
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Ratings

Analyst Report

Synopsis

Cybersecurity threats are increasing in severity and have the potential to inflict a significant amount of damage on their victims. By 2025, cybercrime could cost the world $10.5 trillion annually, which makes preventative measures a valuable investment. However, many businesses struggle to find an all-encompassing cybersecurity solution. Instead, they buy and integrate niche solutions that don’t always work together in a comprehensive system.

There is one company that is dedicated to addressing this shortcoming. Mexico-based Cybolt has created a cybersecurity platform with comprehensive offerings. The platform houses IT security services, forensics, resilience management, back office and applications support, cyber intelligence, and more. It is important to note that the company has not developed these solutions itself but has merged with or acquired leading firms in the Latin American market. Such mergers and acquisitions appear to be the company’s main strategy for expanding and improving its services. Today, Cybolt has more than 200 customers across multiple sectors, including financial services, publishing, and manufacturing. Its goal now is to expand into the US and European markets, largely through acquisitions.

In order to generate revenue, Cybolt gives customers a couple of different solutions. The first is a SaaS (Software-as-a-Service) subscription. However, the company has not detailed what this pricing looks like. Customers can also engage Cybolt to purchase solutions out right. This is a one-time commitment with no follow up services provided. 

Cybolt’s current Republic raise has been rated a Deal to Watch by the KingsCrowd investment team.

Price

Cybolt is currently raising via preferred equity at a $140 million pre-money valuation. In comparison to other growth stage startups currently raising capital online, this valuation is extremely high. However, it is somewhat justified by Cybolt’s recent revenue. The company brought in more than $26 million in 2020, which results in a revenue-to-valuation multiple of 5x. That multiple is very reasonable for a cybersecurity software company. Balancing these factors together, Cybolt scores around average for the price metric.

Market

The market opportunity for cybersecurity companies is large and growing rapidly. According to one source, the global industry was worth $167.1 billion in 2020. With an expected annualized growth rate of 10.9%, it should climb to $382.4 billion by 2028. That size and growth rate bode well for Cybolt’s plans to expand into the US and Europe. However, the company is currently only in the Latin America cybersecurity market. That market sector is a little more restricted, coming in at just under $13 billion in 2019. The Latin American cybersecurity market is growing at an annual rate of 13.8%, which offsets the market’s current small size. Because Cybolt is expanding from Mexico to the US and Europe, it has a massive overall market opportunity. The company’s market score is its highest across all five metrics due to this.

Team

Mauricio Rioseco is Cybolt’s co-founder and chairman. Rioseco’s only previous employment appears to be as a managing partner for RW Consulting. While there, he focused on mergers and acquisitions, corporate finance, and providing strategic advisory services. He earned a master’s degree in business administration from the IPADE Business School in Mexico. Rioseco’s experience with mergers and acquisitions is a crucial skill set for Cybolt, as the company does not develop solutions in-house.

CEO Luis Adrian Gomez Moreno is Cobalt’s second co-founder. Prior to founding the venture, he served as the founder and CEO of ARAME, a cybersecurity company. He spent more than 15 years at that business. Moreno’s experience at ARAME gives him the necessary industry knowledge and management skills to be a fitting leader for Cybolt.

Cybolt has a large team of additional employees, all of which work on a contract basis. 

Founders Rioseco and Moreno bring a complimentary skill set of merger and acquisition expertise and cybersecurity knowledge. However, neither has any prior exits, and the company lacks advisors. Balancing these factors together, Cybolt scores just slightly above average in the team metric.

Differentiators

Cybolt attempts to stand out within the fragmented cybersecurity market by providing a comprehensive suite of services. In comparison to many smaller cybersecurity firms, the company is successful in setting itself apart. Through its mergers and acquisitions, Cybolt can offer a wide range of services, including forensic investigation, risk management, business resilience, and cloud security. Having all of these services available via one company is a definite advantage for many businesses. However, it would be a mistake to think that Cybolt is the only one with this strategy. Competitors with similar approaches include Palo Alto Networks, IBM, CrowdStrike, and Fortinet. Cybolt also lacks any patents to protect its various solutions — likely because its services are not developed internally — which reduces the company’s defensive moat. There also does not appear to be any other major advantages or strengths to Cybolt’s products beyond them being offered all in one place. These weaknesses result in an average differentiation score for Cybolt.

Performance

One of the strongest areas for Cybolt is performance. The company has done remarkably well in recent years as it has worked to expand its footprint. In 2019, Cybolt generated $20.6 million in revenue. This increased to $26.7 million in 2020, and management forecasts revenue of $51 million this year. The company also went from generating a net profit of $1.02 million in 2019 to $2.48 million in 2020. The company also has notable partnerships, which include BlackBerry and Microsoft, and more than 200 customers. Given Cybolt’s multiple years of profitability, the company scores very strongly in the performance metric.

Risks

The overall risk profile of Cybolt is fairly low. Only two categories of risk were elevated — time and financials. The main concern surrounding timing is related to Cybolt’s business model. Because it provides solutions to other companies, its sales cycle is naturally longer than a company that sells directly to consumers. Longer sales cycles can create risk because they often result in a company gaining customers at a slow pace. Long sales cycles also make expansion more difficult, especially when breaking into a new market sector. However, Cybolt’s impressive performance suggests it will be up to the challenge.

From a financial standpoint, Cybolt’s margins may need to be improved for the business to continue growing substantially. Comparing its 2020 revenue ($26.7 million) and cost of goods sold ($16.2 million), the company had a 39% margin. For a company that offers software-based services, that margin is not as good as investors may want it to be. 

Bearish Outlook

Overall, Cybolt does not exhibit many major weaknesses. The $140 million valuation for this round is very high and may dissuade some investors. There is also always risk when a company attempts to expand into a new geographic market. While Cybolt has found success in Mexico, it is not guaranteed that the same strategy will translate to the US or European markets.

Bullish Outlook

Cybolt’s performance has been very promising so far. The company has earned more than $26 million in 2020 and has been profitable for multiple years. Cybolt has a significant customer base, and its partners include the likes of Microsoft. The cybersecurity market is also large and growing rapidly, which increases Cybolt’s chances of success even more. Bringing many cybersecurity services and solutions together under one brand is likely to appeal to many businesses as it is much more convenient than having to use fragmented tools. As Cybolt expands into the US and Europe, the company could secure a significant market share.

Executive Summary

Cybolt has designed a platform that offers a comprehensive suite of cybersecurity services. Instead of developing solutions internally, the company has grown through a merger and acquisition strategy. While currently based in Mexico, Cybolt is planning to expand into the US and Europe within the next few years. 

Cybolt’s current valuation is somewhat steep — though it is reasonable in terms of its recent revenue. The company lacks a defensive moat as it has no patents to protect its suite of services. However, Cybolt has shown significant growth and traction thus far. The company boasts more than 200 customers and many notable partnerships, including Microsoft and IBM. It has also maintained profitability for multiple years, an impressive feat for any startup. Because the US and European cybersecurity markets are even larger than Latin America’s, it seems likely Cybolt will continue to grow and expand. Due to these factors, Cybolt is a Deal to Watch 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.

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