Flash Scientific Technology is raising at a pre-money valuation of $10,200,000. For a company still in the pre-product stage, this valuation is simply too high. There’s neither revenue nor product-market fit to can justify the amount. As a result, Flash Scientific’s price score is low.

When it comes to preventing death and destruction, there is always a market. Flash intends to start by targeting three main industries: aviation, public safety, and insurance.

For aviation, the team observes that airlines lose billions every year in aircraft delays, 40% of which are caused by thunderstorms. By predicting lightning strikes, Flash claims it could mitigate some of those delay costs by pinpointing periods of diminished lightning threats. Ostensibly, this functionality would enable planes to take off and land safely on schedule and prevent the resultant cascades of delays as one delayed takeoff delays another. One should note  it’s not intuitively obvious that predicting lightning would entirely prevent aircraft delays. Modern aircraft are actually highly resistant to lightning strikes. Most concern is for ground crews and equipment that are vulnerable out on the tarmac. Lightning prediction would not do much for the planes themselves, which specifically are vulnerable to thunderstorms’ severe wind patterns and precipitation, not lightning. However, Flash is in discussion with a number of airlines. If these talks bear out, it should be noted that delays cost airlines approximately $33 billion in 2019.

Public safety and insurance industries could be even more receptive to the technological applications. One use case described by Flash is enabling smart devices to turn off powered devices in homes before lightning strikes, thus preventing potential destruction from strikes and saving customers and insurers from resultant damages. As discussed above, insurers paid out $900 million in lightning-related damages to homeowners in 2019, and they’d likely be happy to get some of that money back — especially as losses increase year-over-year (partly due to climate change). 

Finally, with its unparalleled capability to predict lightning strikes, Flash could carve a narrow sliver out of the global weather forecasting industry, sized at $2.51 billion in 2016. In an industry notorious for its inaccurate predictions, Flash’s 99.6% detection rate could be a boon.

Flash Scientific has multiple industries it can target with its lightning prediction technology. However, all of these use cases are niche in nature, limiting the total market potential of the company. Thus, the market score for Flash is below average.

In its current setup, Flash has essentially one employee and founder, with an expansive group of eight advisors. Founder Jason Deese holds a Bachelor’s Degree in Atmospheric Sciences and Meteorology from the Florida Institute of Technology. Deese has been a research and operational meteorologist for the National Oceanic and Atmospheric Administration, or NOAA. He has also spent a number of years studying thunderstorm formation as well as working with Hartsfield-Jackson Atlanta Airport, the busiest airport by passenger traffic from 1998 to 2019. His long experience with NOAA and expertise in lightning makes him the perfect fit to lead Flash, particularly in its push into the aviation market. 

While Deese brings industry expertise to Flash Scientific, the lack of other team members is concerning. Additionally, Deese has no entrepreneurial or managerial experience, so his ability to run a profitable business is uncertain. Taking all these factors together, the team score for Flash is middle of the road.

Flash is fairly well-differentiated from its competitors, the closest of which would be traditional weather-prediction services like the National Weather Service. Flash is in an entirely different camp from these competitors. Not only can it predict first- and last-strike locations with high accuracy, it can do so up to 25 minutes in advance. Existing lightning predictions are basically just extrapolations based on past strikes. Flash also secured a patent from the USPTO in 2019, which lends key defensibility to its product. Thus, Flash’s differentiators score is its highest across all five metrics.

At the moment, Flash is in an extremely early pre-beta stage, though it has a working prototype. It was incorporated just prior to this raise, so there is no financial performance as yet to observe. The company’s early results seem quite promising, and the tech does make a certain level of sense as explained in promotional materials. However, as Flash has not provided any way to validate its success — nor explained the small dip in performance during the summer — there is no way to accurately gauge its performance on the development front. This lack of data is reflected in Flash’s very low performance score.

It’s hard to gauge the potential market interest in a technology that has yet to be duplicated by other companies, which is a significant challenge for directing Flash’s sales targets. The fact that, despite Flash’s dramatic claims, it has yet to provide verification for its product’s efficacy should also give investors cause to hesitate. If the only question was whether the product could really find a profitable market fit, that would be one thing — but for the product itself to be unproven for a company at this valuation makes this investment a real gamble.

As its target markets are not massive, Flash will need to secure large customer bases in most of them. Much of that success will depend on how accurate Flash’s algorithm proves to be beyond the prototype phase and also in how the company builds up its sales team as it seeks to scale up. Until its product can be proven to provide the cost-saving benefits it claims to, Flash will need to secure as broad a target market as possible to establish credibility and usefulness.

Flash has the advantage of being the first in its field to really accurately predict lightning strikes, and being first comes with considerable advantages. Assuming it continues to see similarly high levels of accuracy as it moves beyond the prototype stage, it will enter its target markets basically uncontested. If it can secure a number of airline customers and prove its cost-savings for even a small number of them, other airlines eager to cut costs are likely to leap at the chance to buy in.

As the program will be fairly cheap compared to the damages it has the potential to prevent, insurance companies and public safety organizations are also likely to have significant interest in Flash — especially in lightning-prone regions, like the US Southeast. This interest is likely to escalate further as the ongoing effects of climate change drastically increase the level of dangerous weather patterns around the world. That pattern is something more long-term, but organizations seeking to look more than a few years ahead might be inclined to secure an early solution. To that end, Flash does have the potential to start seeing substantial revenue once it moves past its early stages, likely several years down the road.

Flash Scientific Technology employs a patent-protected algorithm that can predict lightning strikes. The algorithm works with 99.6% accuracy, suffering a small dip during the summer season. By analyzing data, the algorithm can narrow the region of the first and last lightning strikes to a radius of one to two miles from five to 25 minutes in advance. Not only does this early warning enable potential victims to seek shelter, it can enable homeowners and businesses to take steps to avert lightning strike damage.

The technology is in a very early stage, and the company’s valuation is far too high for that stage. The technology is also unproven, which leaves Flash’s impressive claims of accuracy unverifiable. However, it does have potential applications for a number of markets, and the company’s founder has extensive experience studying lightning and meteorology in general. Therefore, Flash Scientific Technology is a Neutral Deal.

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Analysis written by Benjamin Potts.