Helios is raising via Crowd SAFE at a $10 million valuation cap with no discount. The company has generated only $77,000 in revenue, which is little revenue for a company that has been incorporated since 2017. This yields a 130x valuation-to-revenue multiple, which is excessively high. Overall, Helios’ valuation is quite inflated given its early stage.

The US speech and voice analytics market is worth nearly $500 million in 2022. While Helios’ market size is small, it is expected to grow at a rapid pace of 21.6% between 2022 and 2032. The growth is supported by widespread efforts to make artificial intelligence (AI) emotionally intelligent. Many industry experts believe that emotional intelligence is the natural next step for AI development. If AI becomes emotionally intelligent, machines will be able to provide a more human-like and empathetic response to a wide range of human needs.

Most existing AI technology cannot understand emotions, which limits its ability to carry out human commands. However, some companies, such as OTO Systems, have already made some headway in developing AI that can recognize speakers’ feelings. Helios is targeting an untapped niche of the market, though: hedge funds. It currently has no direct competitors in the hedge fund space. If Helios finds product-market fit, it could dominate this niche.

Overall, the market seems to be showing bullish trends toward emotionally intelligent AI, which works in Helios’ favor. Although the market is small, it’s growing rapidly, and Helios doesn’t have to worry about competition.

Helios co-founder and CEO Sean Austin got his bachelor’s degree in information technology from Rensselaer Polytechnic Institute. Prior to founding Helios, Austin acted as the co-founder and CEO of Motalen, where he worked on product development projects in the mobile domain for two and a half years. He later worked in marketing for a few years at Tunigo and Marketing Wiz. He also had multiple experiences as a product manager at Spotify, Fueled, Klarna (where his role involved assessing machine-learning platforms), and Kaspien. Austin also spent about two years overseeing software at nfrastructure, an IT company, and then became the chief product officer at aptihealth. Given his extensive business and marketing background, Austin seems to have the skills to lead Helios. He also seems to have solid leadership skills, considering he has been in C-level positions multiple times. 

Second co-founder and CSO Gerwin Schalk, on the other hand, has deep experience in neuroscience. He received his bachelor’s and master’s degrees in electrical engineering and computer science from Graz University of Technology. He then pursued his master’s degree in information technology and his PhD in computer and systems engineering from Rensselaer Polytechnic Institute. Schalk co-founded Neurolutions to develop a brain-based stroke rehabilitation device. He also gained more than 20 years of experience in the voice processing and machine learning space by conducting neuroscience and neuroengineering research at Wadsworth Center. Multiple news outlets and books have spotlighted Schalk’s research, as mentioned in the company’s raise page. 

Helios’ raise page, however, failed to mention Schalk’s run-in with the law in early 2020. At that time, he was a research scientist employed by the New York State Department of Health (DOH) in Albany and served as deputy director of the National Center for Adaptive Neurotechnologies. Schalk had a responsibility to disclose any conflict of interest regarding applying for and receiving federal research grants. However, he failed to disclose that he had been receiving payments – at least $70,000 – from a company whose products he regularly purchased and used for his research at the Center. He was sentenced to a one year probation and agreed to resign from his position.  He was also forced to pay back the $70,000 as well as perform 50 hours of community service. 

Since one co-founder has extensive managerial skills and the other is an industry expert, Helios has a solid team. Furthermore, Helios has nine team members spread across technology, sales, strategy, and marketing. The team seems well balanced on both its business and technology sides. All in all, the company’s co-founders have impressive expertise, and they have successfully built a lean yet sturdy team. 

Helios’ flagship product is Comprehend, which analyzes the “tonal fingerprint,” or distinct tonal characteristics, of individual speakers in a corporate communications voice recording. These tonal fingerprints are then used to explain the tonal attributes of the speakers. Comprehend: Elite analyzes more than 1 million corporate audio events. By analyzing the tonal information conveyed through these audios, Helios can provide deeper insight into investment opportunities. According to the raise page, this product is showing stellar early signs of its quality and benefits. Comprehend: Elite was used to successfully build a portfolio that outperformed the S&P 500 Index between January 2019 and October 2021. 

Helios does not have a ton of competitors in this space. One well-known competitor is OTO Systems (acquired by Unity), which has developed a voice analytics model that can identify a user’s language, gender, sentiment, and even level of energy. Another famous voice assistant, Amazon’s Alexa, is also starting to tap into the industry. Alexa can be adjusted to speak happily, sadly, or somewhere in between. However, unlike OTO’s model or Comprehend, Alexa doesn’t interpret the mood or tone of users.

While Helios’ product has shown impressive initial performance, its key advantage lies in the fact that the company mainly targets hedge funds. No other competitors in the space are tapping into the hedge fund market. So Helios has huge potential to dominate this particular niche. Overall, Comprehend: Elite’s unique focus on building a more successful portfolio could help it stand out.

Helios has little debt and seems to be burning through a reasonable amount of money per month. However, the company generated just $77,000 in revenue in 2021 — not an impressive amount for a company that’s been operating for five years, although this is an improvement from its complete lack of revenue in 2020. 

Helios has also raised only $740,000 to date, indicating that investors have little awareness of the company. A couple of noteworthy investors are Baron Davis, a former NBA All-Star athlete, and Vy Le, COO of BIG Factory and Baron Davis Enterprises. In the raise page comments, Helios claims to have booked $200,000 from major hedge fund firms in 2021 and another $200,000 in 2022, but this is not reflected in its revenue so far. The company doesn’t provide a clear customer pipeline for 2022, yet it claims to have dozens of potential customers lined up. Helios predicts it will generate almost $1 million in revenue by the end of 2022 and $5.5 million in 2023. If true, these results would be a drastic leap from its current revenue. 

Overall, Helios has not shown much financial growth since 2017. The company seems to be gaining some customer traction, but that traction hasn’t significantly impacted Helios’ revenue yet. Its performance thus far is lackluster.

Helios bears moderate investment risk. First of all, the company has quite a bit of time risk. Honing its artificial intelligence (AI) technology might take some time, as the company has to constantly feed it audio data in order to improve its capabilities. Moreover, the company mainly targets the hedge fund industry, which is an old industry that’s difficult to disrupt. Hedge funds may be hesitant to adopt new technology. This also leads to some market risk. The hedge fund industry is a new and niche target for an AI-based voice analytics company. There is currently no proof of product-market fit, as Comprehend: Elite could be the first voice analytics tool used to build hedge fund portfolios. So Helios will need to build its reputation and educate the hedge fund industry on the benefits of voice and tonal analytics. Moreover, the company has to convince not only the hedge fund firms but also their clients. If the technology has low market acceptance, this will likely translate into slow market adoption.

Helios is raising at an inflated valuation, which is not favorable for investors. Considering the company’s low traction, the valuation is not justifiable. As of 2021, Helios has generated only $77,000 in revenue despite being around since 2017. The company’s claim about signing major hedge fund firms does not seem to be reflected in its revenue so far. Moreover, Helios’ unclear customer pipeline may not convince investors that it has successfully tapped into this niche market. 

Voice analytics companies typically target markets such as voice assistants and customer service agents. Targeting an old and mature industry, hedge funds, could hinder Helios’ market adoption, especially when there is no proof of product-market fit. Hedge funds may be hesitant to adopt new technology. The company will likely need to spend a lot of time and energy breaking into the market. This additional effort could delay investors’ returns.

Although it’s risky to target the hedge fund industry, this approach could help Helios outperform its competitors. Helios has few direct competitors to begin with, and none of its existing competitors target the hedge fund industry. Its technology has already helped an investment portfolio outperform the S&P 500. If these positive results continue, it could find a comfortable niche in the hedge fund industry. While it might take time to pave the way and disrupt the hedge fund industry, it could be worth the potential revenue in the long term. 

If Helios’ claim about securing major hedge fund clients is true, it is likely to open a lot of doors for the company. With its foot already in the door to the hedge fund industry, Helios could experience smoother market adoption. There is also a strong upward trend working in Helios’ favor because many experts consider acquiring emotional intelligence to be the next step for artificial intelligence technology. This is supported by the speech analytics market’s rapid growth. Finally, Helios is run by founders who have very strong managerial and technology backgrounds and a lean but balanced team. 

Helios is a voice analytics platform that uses artificial intelligence (AI) to understand human tones of voice. Its flagship product, Comprehend, analyzes the tonal attributes of the speakers in corporate communications. Helios has not shown much traction since its inception in 2017. Therefore, its current $10 million valuation is quite inflated. Because Helios has an unusual target industry — hedge funds — it will likely need to spend extra time and energy breaking into the market. As a result, the company might experience slower market adoption.

However, mainly targeting this niche market has its own advantages. None of Helios’ competitors target the hedge fund market. Thus, Helios has huge potential to dominate the hedge fund voice analytics market, especially with a product that shows convincing initial performance. The voice analytics market is bullish on the idea of emotionally intelligent AI, which works in Helios’ favor. The company is also run by an exceptional team filled with experienced and skilled professionals. Overall, Helios is a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Inez Sanjaya, June 24, 2022.