KhemoSafe is raising at a $2,750,000 valuation cap. The valuation is quite low for crowdfunding startups in general. However, for a company that’s operating in the healthcare space, it’s even more of an outlier. Due to the significant return potential this valuation could provide to investors, KhemoSafe’s price score is its highest across all five metrics.

The market for hazardous waste collection in the United States is relatively small. It sits at a market size of $4 billion as of 2019. The industry is set to grow at a CAGR of 5.1% between 2019-2021. KhemoSafe itself offers up the statistic that oncology waste revenue is $1.2 billion – Because the company is currently only operating in the relatively niche market of chemotherapy waste management, its total addressable market is quite small. KhemoSafe does have the potential to address the larger hazardous waste disposal market in the future by developing further products. However, due to the company’s narrow focus and limited market potential at this time, its market score is below average.

KhemoSafe was founded by Louis Soto. Soto worked as a pharmacist for most of his career, and he experienced the effects of improper waste management firsthand. This led to him being diagnosed with Sarcoidosis (a disease characterized by the growth of tiny collections of inflammatory cells in any part of your body). After this unfortunate diagnosis, Soto created and patented the KhemoSafe Smart-Unit design, to ensure no one had to go through his negative experience. While Soto has a deeply personal connection to the goals of the business, he does not have strong prior technical or managerial experience. Thus, KhemoSafe’s team score is its lowest across all five metrics.

As stated previously, there is currently no official process for disposing of hazardous waste in hospitals. Different hospitals have different processes — all centering around the use of yellow bins that often do not provide full protection for those who work around them. 

KhemoSafe’s patented product looks to create the industry standard for housing hazardous chemotherapy waste materials. Yet again, there is no guideline that is the same for every hospital – with every single state having different guidelines surrounding not only hazardous waste in general, but chemotherapy hazardous waste. KhemoSafe would become the first product on the market that simplifies this process, allowing for an easily replicable system in every hospital that deals with chemotherapy. The company’s auto sealing technology can be utilized in hospitals to allow for a safer environment for patients and clinicians alike — providing a much needed barrier between the harmful waste that may seep out of the yellow bins that are currently used. 

The concept of the product looks promising, and it’s encouraging that KhemoSafe has already secured patents for its design. As a result, the company’s differentiators score is above average.

KhemoSafe is so early on in its development that there are very few metrics that can be used to ascertain a proper review of its performance. The business plans to operate as a B2B company, selling its product to hospitals to mitigate their healthcare workers’ exposure to hazardous waste. They will license the unit and collect a monthly or annual fee.

Currently, KhemoSafe has $38k of cash on hand, along with total assets worth over $2 million. The company does have some debt, with just under $41k of long-term debt. In the most recent fiscal year, KhemoSafe saw a net loss of over $1.2 million – which does not bode well for a company with only $38k of cash on hand. Due to the lack of revenue data and the fact that KhemoSafe has not yet tested its product with any hospitals, its performance score is very low.

While KhemoSafe’s technology does seem innovative, the transition to profitability is still a large question mark. With the company’s focus on chemotherapy waste management, it is limiting its own market size considerably — which may lead to difficulty in turning a profit.

The team at KhemoSafe is also extremely small — it is currently just the founder Louis Soto. A change in his mindset or poor direction is a very real possibility for a company with such a small team. There is also no well-defined pipeline for the product yet, no trials, no partnerships with hospitals — just an idea for a product. There is no guarantee that KhemoSafe will have enough time or money to create a prototype, show it off to hospitals, and then parlay that into business. An innovative idea is a good start for a startup, but the company has yet to show it can take a good idea to the next level.

KhemoSafe’s auto sealing technology is innovative in its field and could provide much needed safety for healthcare workers. The current method of hazardous waste removal in oncology isn’t streamlined. KhemoSafe would provide much needed symmetry between hospitals that would make the entire process of waste management easier. The founder also has a personal connection to the product and the healthcare industry, which may help him as he attempts to grow the business.

Taking everything there is to know about KhemoSafe, it looks to be a shaky business. There can’t be any denying that the technology it has patented is innovative. However, upside is limited by the niche market that it operates in. The team is tiny, and the net loss from the most recent fiscal year certainly is something to worry about — especially considering the company is still in its pre-prototype phase. Until KhemoSafe can successfully manufacture and test its product in a hospital environment, there are many uncertainties for investors. Thus, KhemoSafe has been rated 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 Ethan Thomas.