About this raise
Driven Technologies, with a valuation cap of $3.3 million, is raising funds on SeedInvest. The company has built a patented and award-winning replacement for greasy bike chains with its Driven bike drivetrain sets. The Driven System is simple, affordable, visually stunning, and mechanically and aerodynamically efficient. Jason Smith founded Driven Technologies in November 2020. The current crowdfunding round has a minimum raise of $25,000 and a maximum raise of $1,000,000, and the proceeds will be used for product development, sales and marketing, manufacturing, and G&A. Driven Technologies has multiple granted and pending patents in the US, Asia, and Europe, and received the Innovation Award at EuroBike 2018.
Investment Overview
$918,357 - Total
Deal Terms
Total Commitments
- Platform
- SeedInvest
- Start Date
- 04/27/2021
- Close Date
- 05/30/2021
$25,000
$1,000,000
$1,000
Convertible Note
Pre-Seed
RegCF
/ RegD 506(c)
$2,970,000
$3,300,000
20%
Company & Team
Company
- Year Founded
- 2020
- Industry
- Transportation, Automotive, Aviation, & Aerospace
- Tech Sector
- Distribution Model
- B2C
- Margin
- Medium
- Capital Intensity
- High
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Synopsis
There are a lot more bikes on the road than there used to be. The dual phenomena of traveler aversion to public transportation and greater levels of time for exercise have led to a so-called “bike boom.” Over the course of four months in European cities, an average of 11.5 kilometers (around seven miles) of “pop up” bike lanes have been built, which has increased cycling between 11% and 48% on average. The US has seen a more modest but still significant spike with bicycle sales jumping 75% from the previous year in early 2020 and total biking jumping significantly in cities across the country.
Aside from revamping the world’s infrastructure to accompany a renewed interest in biking as a healthy and environmentally-friendly way to get around, the time is ripe for a reinvention of the machine itself. Bicycles were the most popular vehicle in the world until cars outstripped them in the last couple of decades. Since the invention of its chain-driven model in 1885 there has been precious little innovation in the bicycle’s design. Indeed, looking at an image of John Kemp Starley’s Rover safety bicycle, it might be hard to tell it’s from more than 130 years ago.
One apt target for transformation is the drivetrain. The drivetrain is that intricate, industrial-looking mechanism of chains and pulleys that connect to pedals to turn the wheels. Drivetrains are complex and unsafe, with plenty of moving parts requiring convoluted maintenance. If the chains slip, they could leave unfortunate bikers with ugly, greasy scrapes on their legs.
Based in Boulder, Colorado, Driven Technologies is transforming the bicycle with a patented chainless system, Driven. Developed through Denmark parent company Ceramic Speed, Driven can be applied to e-bikes and traditional bikes of all kinds. It is cheaper, simpler, better for bike profile, and can be readily enclosed to ensure rider safety. In contrast to traditional drivetrains that operate with 90% efficiency, Driven has been lab-tested at 99.2% efficiency. The product is still in development but has the potential to disrupt a complacent market and better the lives of millions of cyclists the world over.
Driven Technologies’s current SeedInvest raise has been rated a Neutral Deal by the KingsCrowd investment team.
Price
To drive product development further towards market readiness, Driven is raising funds through a convertible note at a $3.3 million valuation cap with a 20% conversion discount rate. Both in comparison to other startups and as a reflection of its current pre-product development stage, this is a very reasonable valuation. Driven Technologies scores quite highly on the price metric.
Market
At first glance, the market for Driven might seem alarmingly small, but there are some mitigating factors to be discussed in the differentiation section. Yes, drivechains account for a very small share of a moderately-sized market. The global bicycle market was valued at $54.44 billion in 2020 and is expected to grow at a CAGR of 7.0% through 2028. Of that market, drivetrains themselves account for a small $2 billion — as niche a market as there can be. As a result, the market score for Driven Technologies is its lowest across all five metrics.
Team
Driven’s team remains small as the entity reshapes itself as separate from CeramicSpeed. It is led by CeramicSpeed’s former CTO and Driven’s current CEO, Jason Smith. Smith holds a mechanical engineering degree from Penn State. He started Friction Facts in 2012, an independent lab for drivetrain efficiency testing. Friction Facts invented the optimised race chain, a development that paid off when the company was acquired by CeramicSpeed in 2016. Thereafter, his American team took the lead on various so-called “skunkworks” projects. His previous exits bode well for his capacity to lead a startup to success.
Alex Rosenberry works with Driven as its lead mechanical engineer, though he’s officially with CeramicSpeed as Driven spins off. Rosenberry is a recent graduate of the University of Colorado Boulder with a bachelor’s degree in mechanical engineering and was behind the original development of the initial Driven mechanism. Cameron Frazer is Driven’s senior project manager and holds a Master of Engineering from the University of Auckland. He served with the New Zealand Defence Force as a composite manufacturing engineer before joining up with GTP Services in Colorado as an engineer. GTP is a software developed for construction procurement and logistics. After a brief one year diversion to Redpoint Positioning corporation, another engineering role, Frazer is again committed to GTP.
Overall, the experience of CEO Jason Smith is a huge boon for Driven Technologies. He has ample experience in drivetrain design, and he has a successful exit under his belt. As a result, Driven Technologies’ team score is quite strong.
Differentiators
Product differentiation is what makes Driven such a tempting prospect. Drivetrain manufacturing is essentially a captive market, with 10 or so general manufacturers here in the US. All existing competitors in this space rely on the old chain-based drivetrain, and all developments in this space are basically safe-for-business variations on a theme. Thanks to its patent protection, high product quality, and its reimagining of the drivetrain, Driven is in a coveted “first mover” status where it could secure a decisive advantage as it moves from the development stage to the production stage. The differentiators score for the company is near perfect in reflection of these factors.
Performance
Measuring Driven’s performance at this point is a bit misleading as the company has just formed out of its parent company specifically for the purpose of raising funds for Driven development. As such, it has no revenue or user traction. However, it has drawn interest in biking-centric media and won awards for its innovative approach to the drivetrain, such as the 2018 Eurobike Innovation Award. Therefore, the company’s performance score is below average.
Risks
While Driven Technologies has shown some good progress on the tech so far, there is significant risk for investors to be aware of. While CEO Jason Smith is committed, his team members Rosenberry and Frazer show a notable lack of dedication. Rosenberry is still publicly part of CeramicSpeed, and Frazer is committed to GTP. This may change as Driven becomes more fully fleshed-out as its own organization, but in the meantime, investors would prefer to see total commitment to the organization itself. Additionally, Driven’s product is still in development. Smith estimates the market will start seeing Driven-equipped bikes in late 2022, so revenue is still a ways off, presenting a significant time risk as well.
Bearish Outlook
With regards to Driven’s future, there is little investors can rely on for sure. The company holds only $2,186 in cash as of mid-April and has no audited financial statements. Its limited and uncommitted team — combined with a product still in the development stage — are also good cause for hesitancy. Finally, bike drivetrains are an extremely niche section of a limited market. Furthermore, while the Driven system has drawn some attention as a novelty, it has yet to prove a market fit.
Bullish Outlook
The benefit of this particular risky investment is the chance to get in on the ground of something at a game-changing level of market disruption, albeit on a limited scale. Competition in this space is complacent and much lower quality next to Driven’s highly efficient system. CEO Jason Smith is also an old hand at this. After starting and leading Friction Facts to acquisition after development of a more optimised racing chain, he does appear to be the right pioneer to lead the charge. Lastly, the valuation on this round offers investors a very attractive price.
Executive Summary
Driven Technologies is developing an entirely new kind of bicycle drivetrain, a system that has hardly changed in a hundred years. The Driven system eliminates the greasy chain in favor of a highly-efficient gear system using a shaft drive. It is cleaner, more compact, and can be covered for better rider safety. The system is still in the throes of laboratory development, but parent company CeramicSpeed has formed Driven under industry expert Jason Smith to lead this innovation to market success.
Drivetrain manufacture is an incredibly small proportion of a suddenly-explosive biking market. While the market is niche and competitors are well-established, Driven has the potential to completely disrupt the existing competition with its patent-protected tech and be the first mover in a space that has been oddly lacking in innovation for many decades. If Driven can pull off its development and secure a sizable portion of even the tiny drivetrain market, investors who got in now at the startup’s generous valuation will see significant returns. Balancing all these factors together, Driven Technologies has been rated a Neutral Deal at this time.
For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to [email protected].
Analysis written by Benjamin Potts.