From what we know about the app, the price being asked by management looks fairly high. In order to keep growing the business, management is hoping to raise $6.05 million through a side-by-side offering. The pre-money valuation assigned to Jassby by management is $25.85 million. This surprisingly high price — relative to the firm’s traction — has netted Jassby a very low price score.

The problem with underserved or unserved markets is that they are often opaque by definition — making it difficult to fully assess the market opportunity. We do, however, know some important things about this space. For starters, total allowances for the 74.1 million children in the US come out to about $41 billion annually. This is based on 66% of parents providing their children with allowances. This brings the average weekly allowance to about $30, up 38% from 2016 alone. Total spending power for all Generation Z members, however, is far larger at $143 billion. This gives us a nice range to work with.

Using the $72 billion allowance figure, and applying the 1.5% commission rate on purchases, this implies an annual market opportunity of $1.08 billion. If we use, instead, total buying power of $143 billion, this grows to $2.15 billion annually assuming complete market saturation. If, instead, we assume that all capital is spent through the platform’s Jassby Mall, the opportunity would be greater. At that point, it would range between $10.8 billion and $21.45 billion annually. In an effort to narrow this window, we dug up some interesting statistics. 

According to one source, 45% of allowance funds spent go toward outings with friends. Another 37% goes toward purchases on digital devices or downloads. That leaves 18% that’s unaccounted for. Using these figures, though, the total addressable market opportunity might look closer to between $5.26 billion and $10.45 billion. This small size warrants a below-average rating from our system when it comes to market opportunity. This is due to one simple fact — even if management can achieve a sizable portion of the market, its overall upside is far more limited than a company in a larger space.

For where its traction lies, the management team of Jassby is fairly large. The company has four executive-level positions. The key member of this team is Benjamin Nachman, Jassby’s founder and CEO. Prior to setting up Jassby, Nachman served as the Chairman of the Board for Credorax, a global e-commerce payment cards acquirer and processor. It had operations established in 34 countries. Experience there is incredibly close to what Jassby’s core operations are, so this alone makes Nachman qualified to run a startup like this. Prior to serving at Credorax, Nachman worked as a Partner at Reifenberg, Eckstein, Nachman & Co. Law Offices. That firm’s focus was on corporate, IP, and investment law, as well as litigation. 

Next in line at Jassby is Jim Glatiotis, the company’s CTO. Prior to joining the firm, Glatiotis worked as the VP of Commercialization at Tego Inc. This is a business that is focused on the technology side of asset tracking and IoT data management. Before that, he was an Executive VP and CTO for REZ-1, a provider of software and services aimed at managing domestic container fleets. 

Another key person at Jassby is Steve Reidy, the company’s CFO. He previously worked as a consultant at Beaver Brook Consulting. That firm’s specialism involved strategic, financial, operational, and human capital consulting services. Before that, Reidy was employed as the CFO for PI Worldwide, an SaaS provider of workforce assessment tools. Reidy’s job prior to that was as a VP of REZ-1. The last key person at Jassby is David Laubner. He currently serves as the business’ Chief Revenue and Marketing Officer. Before this, he worked as the Sales and Marketing Lead for Amazon. There, he focused on marketing strategy, brand, TV, performance marketing, and more. He came into Amazon with that company’s acquisition of Blink, where he served as Head of Digital Marketing, Sales, and E-Commerce. Prior to his time at Blink, Laubner was the VP of Marketing at Fuze. 

This team’s relevant domain experience — particularly that of its CEO — is a big bonus for investors. As a result, Jassby’s team score is one of its strongest across all five metrics. 

Though the concept Jassby is working on may sound novel, there are actually a good deal of firms out there that are similar in nature. In its own filings, management discussed a few of these, including BusyKid, Greenlight, Current, and STEP. Each one of these offers next-generation debit card features through a mobile app. The one that most closely resembles Jassby is STEP, which also provides safety features and a savings account option for users. It is also — unlike many other competitors out there — free to the users. 

We also reviewed some firms not included in the list of competitors, but that do fit the bill nevertheless. Examples include Go Henry, FamZoo, and Chore Check. These players are more aligned with making sure chores are completed with payments made in response. Most of these services do come at a monthly cost, though, so Jassby is different in that regard. Another differentiator is that Jassby does plan to send approved virtual credit cards to its users upon their 18th birthday. Plus, management has made clear their longer-term goal of expanding to other financial products and services. 

While these differentiators are important, they aren’t enough to completely offset the fact that this is a crowded space. Jassby faces much competition, and many of the differentiators it does hold could be replicated by another company. Altogether, Jassby’s differentiators score is above average, but not especially strong. 

Since launching in 2019, Jassby has seen a nice amount of traction. According to management, the app has been downloaded more than 450,000 thousand times. It has also seen more than 175,000 registrations completed. In the fourth quarter alone last year, 4,880 families came onto the platform and over $420 thousand worth of orders were placed on it. With a cost per registration of $2.95, Jassby has the potential to grow and if management is right about the near future, things are looking up for the firm. For 2020, management expects sales to total $2.95 million, though the company is still slated to lose $2.65 million for the year. By comparison, in 2019, Jassby reported revenue of $95,066, and with that it saw a net loss of $3.22 million and net operating cash outflows totaling $3.17 million. In 2018, revenue was just $450, with a net loss of $1.85 million and net cash outflows totaling $1.76 million. Even though these losses and outflows are significant, the annual rise in revenue, combined with user adoption, is all encouraging. Therefore, Jassby’s performance score is strong. 

While there are bullish aspects to the Jassby deal, there are undeniably bearish aspects to it as well. For starters, the valuation looks quite high. This is at least until management can prove its revenue projections for 2020 are accurate. Even then, the net losses are an issue. Another negative to consider is that the app, on the Apple App Store, has a low rating of just 3.1 stars. Many of the competitors we examined have four to five stars. That suggests the business has some issues it needs to contend with. Add on to this the fairly small market size at present, and it’s clear that there are distinct concerns for potential investors. 

Bearish issues notwithstanding, there are some bullish attributes that warrant consideration too. The company clearly is differentiated to a reasonable degree compared to the competitors our team examined. The downloads and user registration figures are definitely encouraging to see. Management’s partnerships, primarily with Mastercard, should be viewed in a favorable light. Another positive for the firm is its broader business strategy to have an e-commerce platform integrated to it. Using this, management wants to eventually expand to other opportunities. Throw in a qualified management team, and there’s a lot that investors can be happy about.

In all, Jassby looks to us to be an interesting business for prospective investors. The company does have some issues that management needs to contend with — a low approval rating, negative cash flows, and more. However, Jassby does have clear potential, if these problems can be solved. As the situation currently stands, the issues that do exist prevent us from giving the business a high rating. Therefore, Jassby is a Neutral Deal.

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

Analysis written by Daniel Jones.