GroGuru is currently raising at a pre-money valuation of $14.7 million. Our proprietary system sees this as a bit high but not outrageously so. As such, it is a bit below average on its one-to-five scale.

The global agricultural industry is worth trillions of dollars. However, the market opportunity for a company like GroGuru is significantly smaller. According to one source, the agricultural sensors market was worth $1.2 billion in 2018. Current forecasts suggest that it should grow at an annualized rate of 11% between 2019 and 2026 to reach $2.6 billion. A second source estimates that the market was worth $2 billion in 2019. With an estimated 15.3% annualized growth rate, the industry should grow to $6 billion by 2027.

GroGuru is also tapping into the smaller soil moisture sensor market. According to one source, this market was valued at $173.6 million in 2018. But with an annualized growth rate of 14%, it should grow to $434.4 million by 2025. A second source sees the market growing by 12.9% per annum, climbing from $370 million in 2020 to $680 million by 2025. A third source sees it growing from $529.2 million in 2019 to $853.4 million by 2027 at an annualized growth rate of 6.7%.

On the whole, it appears that this space is incredibly small. However, the growth rate of this agricultural niche is appealing. This led our proprietary system to rate the market opportunity for investors just below average on its one-to-five scale.

Leading GroGuru is Patrick Henry, one of its two co-founders, its president, and its CEO. Prior to founding the company, Henry was the founder and CEO of QuestFusion, a business focused on angel investing, advising, and providing guidance to startups through its e-learning program and online tools. Before that, Henry worked as president and CEO of Entropic Communications, which focused on providing silicon solutions and software for connected home entertainment. At its peak under his watch, it generated $320 million in revenue one year. Prior to that position, he worked as president and CEO of Pictos Technologies. There, he focused on providing silicon solutions for digital cameras and camera phones. That business was ultimately sold for $27 million. Henry also worked as CEO of LinCom Wireless, an entity that focused on silicon solutions for broadband entertainment.

The second co-founder of GroGuru is Farooq Anjum, who also serves as the company’s chief technology officer.  He previously served as an adviser at Manifold, an AI product innovation lab. He was also a senior director of engineering for On-Ramp Wireless, which created a network to enable efficient machine-to-machine communication. His role before that was a project engineer at MediaFlo Qualcomm USA, where he worked on server-side components involving content distribution over the company’s FLO network. He also worked as a senior scientist at Telcordia Technologies, where he focused on wireless network security, open network architecture, and similar developments. He holds a PhD in electrical and computer engineering from the University of Maryland.

The company also has Chief Scientist Jeff Campbell, who has a PhD in physics from Dartmouth College, and Chief Agronomist David Sloane, who has a PhD in agronomy from the University of Adelaide. Due to these stellar qualifications, our system rated the company’s team highly.

Management touts the fact GroGuru does not use wires to connect its technologies together, unlike many of its competitors. However, it is far from the only player that offers a wireless connection. CropX and Hortau both use cellphone technology to connect their devices. GroGuru is just one of a few firms with this business model. Because of this, our system rated the company near the very low end of its one-to-five scale.

In some respects, GroGuru’s performance has been stellar. Since its inception, the company has deployed more than 2,500 sensors across 20 crop types throughout the US. It has also managed to generate revenue over time. In 2019, revenue totaled $674,113. This did decline to $617,986 in 2020, but that may not be unreasonable considering the impact caused by COVID-19. It is important to note that in order to generate revenue like this, the business has had to develop its entire technology platform. This shows that it’s active and attempting to grow. This is not to say, however, that everything is perfect. In 2019, the company generated a net loss of $1.8 million. In 2020, its net loss grew to $2.9 million. Even after raising over $1 million in capital in 2020, the business saw its debt rise from $3.89 million in 2019 to about $7 million in 2020. Even so, our system rates the company’s performance near the high end of our scale.

In all, only two categories of risk are elevated. One is time. This is simply because other players are emerging and 2020 was not exactly a great year for early-stage companies in general. The other risk is financial. The business is generating significant net losses, and its debt is astronomical. This poses a significant risk to the company’s survival. Without its current capital raise or any other raises coming through, the business could fail. Because of this, the financial risk is very high.

Investors should consider the high debts and net losses GroGuru has generated since its inception. Additionally, the valuation for its current raise is a bit lofty, especially considering the company’s decreasing revenue. The market opportunity for the business is small, and the business is not as differentiated from its competitors as some investors might like.

GroGuru has a fully formed product, which is significant in and of itself. The company survived 2020 and is generating revenue. In addition, the team guiding the business is highly qualified. While the market opportunity is limited, it is experiencing an impressive growth rate. Keeping in mind the demand to feed an ever-growing population, GroGuru certainly has potential for success.

GroGuru has a completely developed product, a strong team, and incoming revenue. In addition, its target market is growing. However, there are significant drawbacks to consider. The company has incurred severe losses and debts, and its valuation is too high in relation to its rather small market. Overall, the advantages and disadvantages are rather balanced. As such, the KingsCrowd team has rated GroGuru as a Neutral Deal 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.