GroGuru

Growth Stage

Strategic Irrigation Management for Commercial Farmers

Analytics

Raised to Date: Raised: $955,091

Aggregate Commitments $

Platform

StartEngine

Start Date

04/06/2021

Close Date

10/05/2021

Min. Goal

$10,000

Max. Goal

$3,930,000

Min. Investment

$250

Security Type

Equity - Preferred

Funding Type

RegCF

Series

Series A

Pre-Money Valuation

$14,716,317

Rolling Commitments $

Status
Funded
Reporting Date

10/20/2021

Days Remaining
Funded
% of Min. Goal

9,551%

% of Max. Goal

24%

Likelihood of Max
Funded
Avg. Daily Raise

$5,248

Momentum
Funded
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Location

San Diego, California

Industry

Farming & Agriculture

Tech Sector

AgriTech

Distribution Model

B2B/B2C

Margin

Low

Capital Intensity

Low

Business Type

Growth

GroGuru, with a pre-money valuation of $14.7 million, is raising funds on StartEngine. The company is helping farmers by using sustainable ways to increase crop yield and reduce the consumption of water and other resources. GroGuru implements strategic irrigation management and uses soil sensors to measure soil salinity, temperature, and moisture. Patrick Henry, Farooq Anjum, and Jeff Campbell founded GroGuru in June 2014. The current crowdfunding campaign has a minimum raise of $10,000 and a maximum raise of $3,930,000. The funds will be used for expenses related to product development, sales channel expansion, and growth. GroGuru has a patented technology and has deployed over 2,000 sensors across more than 80 customers in the US.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$617,986

$674,113

COGS

$623,445

$471,029

Tax

$0

$0

 

 

Net Income

$-2,912,074

$-1,755,950

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$483,012

$183,770

Accounts Receivable

$59,534

$352,691

Total Assets

$1,226,363

$974,606

Short-Term Debt

$3,228,231

$373,114

Long-Term Debt

$3,770,127

$3,512,526

Total Liabilities

$6,998,358

$3,885,640

Financials as of: 04/06/2021
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
GroGuru 10/05/2021 StartEngine $14,716,317 $955,091 Equity - Preferred Funded RegCF
GroGuru 08/08/2020 Wefunder $8,500,000 $1,070,000 Convertible Note Funded RegCF
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Ratings

Analyst Report

Synopsis

Agriculture is one of the foundations of civilization. It allows us to produce our own food rather than depend entirely on nature. Farmers have come a long way from relying solely on rain and carrying pails of water all the way from the nearest water source. And as the human population continues to grow, it’s more important than ever for farmers to maximize their yields with efficient irrigation systems. 

Fortunately, GroGuru is here to help. The company provides an in-ground sensor that measures various metrics such as soil health, moisture, estimates for root growth, and more. This data is systematically transmitted to the cloud, where it undergoes analysis that utilizes machine learning and artificial intelligence (AI). Once the analysis is complete, it transfers the results to the GroGuru’s smart irrigation system. Using this data, farmers can ensure proper irrigation and increase their harvests. Farmers can use the GroGuru platform to visualize the root zones and soil profiles of their properties through a feature called Farm Scale. The company also provides crop-specific templates to help plan for optimal growing.

When GroGuru last raised capital, its strategy was to sell these devices and to allow farmers to subscribe to its software. Over the past several months, the company has shifted to providing its hardware through operating leases. It then charges for access to its software, also allowing its software to be used on third-party hardware. While this approach may ultimately reduce revenue, it should be higher margin in nature.GroGuru’s current StartEngine raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

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.

Market

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.

Team

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.

Differentiators

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.

Performance

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.

Risks

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.

Bearish Outlook

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.

Bullish Outlook

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.

Executive Summary

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.

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GroGuru on StartEngine
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Platform: StartEngine
Security Type: Equity - Preferred
Valuation: $14,716,317
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