Modgarden

Early Stage

AI Personalization Allows Your Greens to Thrive

Analytics

Raised to Date: Raised: $127,075

Aggregate Commitments $

Platform

Title3Funds

Start Date

01/01/2021

Close Date

11/25/2022

Min. Goal

$100,000

Max. Goal

$1,070,000

Min. Investment

$350

Security Type

Convertible Note

Funding Type

RegCF

Series

Seed

Valuation Cap

$9,500,000

Discount Rate

20%

Rolling Commitments $

Status

Active

Reporting Date

06/27/2022

Days Remaining

151

% of Min. Goal

127%

% of Max. Goal

12%

Likelihood of Max
unlikely
Avg. Daily Raise

$234

Momentum
cold.svg
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Location

Sheridan, Wyoming

Industry

Farming & Agriculture

Tech Sector

AgriTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

Low

Business Type

Growth

Modgarden, with a valuation cap of $9.5 million, is raising funds on Title3Funds. The company has developed its proprietary soil cartridges that help families grow their own leafy greens and herbs. The device uses AI to personalize the factors like temperature, humidity, and water quality and enables roots to absorb more moisture than artificial sources. Aamar Khwaja and Alan Tratner founded Modgarden in October 2020. The current crowdfunding round has a minimum target of $100,000 and a maximum target of $1,070,000, and the proceeds will be used to pilot tinyFarm and business models before scaling. Modgarden is growing for the foreseeable future and aims to be in over 100 cities globally in the next five years.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$0

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$0

$0

Accounts Receivable

$0

$0

Total Assets

$0

$0

Short-Term Debt

$0

$0

Long-Term Debt

$0

$0

Total Liabilities

$0

$0

Financials as of: 01/01/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

Most Americans are now totally disconnected from their food. In a much-publicized report from the Innovation Center of US Dairy in 2017, researchers noted that 40% of California fourth-graders didn’t know that hamburger meat comes from cows, and french fries and potato chips were voted the nation’s most popular “vegetables.”

In some ways, this is a reflection of how humans can go practically their entire lives without seeing the plants and animals that form the food they consume. This disconnect is prompting a countermovement with 39% of US adults reporting some or most of their diet is now “organic,” free of pesticides and GMOs (genetically modified organisms, or plants whose genes have been “tweaked” for better growth).

Still, the world is growing increasingly more urban. Around 56% of humans live in cities, and the UN expects that that number will increase to 68% by 2050. Some may like the idea of being more connected to the food they put in our bodies, but how can that be possible when we live in houses and apartments that do not have yards or gardens?

Enter modgarden, interior growing for the modern urbanite. modgarden is creating stackable garden modules called “tinyFarms” that employ proprietary soil cartridges and artificial intelligence-powered personalization to enable consumers to grow greens for their own consumption. These systems enable roots to absorb more moisture and completely omit the toxic pesticides that are so anathema to green-oriented consumers. 

The tinyFarm concept was the winner of Milan Design Week and the Innovation Pick of 2021. modgarden plans to conquer the as-yet untapped indoor farming market before expanding into retail grocery and plans to expand to 100 cities globally in the next five years.

modgarden’s current Title3Funds raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

To pilot the tinyFarm concept and its business model, modgarden is raising funds through a convertible note. This raise sees a valuation cap of $9.5 million with notes converted at a respectable discount rate of 20%. This valuation is reasonable when compared to other startups currently seeking funds through online equity. The 20% discount rate and 5% interest rate for this round are very attractive terms for investors. The only downside is that a $9.5 million cap is not justified by the company’s revenue, since modgarden is still pre-revenue at this time. Balancing all these factors, modgarden’s price score is its highest across all five metrics.

Market

Organic crop farming in the US is a growing industry. In 2016, organic sales reached $6.2 billion, 56% of which were organic crops. Even as overall prices of agricultural goods decline, organic produce tends to see a higher price tag for higher revenue. The market is seeing a respectable CAGR of 6.3%. However, modgarden will only be targeting a small portion of this market. The company will sidestep the main portion of the organic crop market — large scale farming operations — by selling growing modules to individual consumers. The steady growth of the organic crops market bodes well for modgarden, though, as it shows continuous consumer interest in organic produce. Thus, the market score for modgarden is middle of the road.

Team

modgarden’s concept is led by a diverse team with relevant credentials. Company founder and CEO Aamar Khwaja is the force behind modgarden’s tinyFarm. Khwaja holds a BBA in marketing from NYU and has conducted postgraduate studies at UPenn. Khwaja spent years in finance, rising to a vice president role at JPMorgan Chase and then having a stint as senior program manager for Bank of America. He later set up Zenmark Limited to invest in green equity ventures and co-founded Elimay Supplements — a pharmaceutical branch dedicated to providing natural pain relief to pets, particularly dogs. While Khwaja has strong finance and investment knowledge, he has limited experience with setting up and scaling a direct-to-consumer (D2C) business model.

Advisor Alan Tratner is a former professor of environment and energy with a history in the sustainability movement. Tratner was part of the team that established the first Earth Day, and over the years, his work culminated in a 2012 induction into the International Green Industries Hall of Fame. He is the chairman of the Environmental Education Group, which participated in the first International United Nations Conference on the Human Environment in Sweden. He is fully dedicated to combating all manner of social challenges, like war and drugs. Tratner’s presence as an advisor for modgarden could prove quite useful on the development and marketing side.

The modgarden team is filled out by COO Siddarth (Sid) Apaya, CMO Hope Paterson, and Chief Horticulture Officer (CHO) James McMillen. Apaya has spent around 20 years with big brand companies like Nestle and The J. M. Smucker Company in various marketing and managerial roles. Currently he is a partner at Elements Ventures Accelerator — a startup accelerator focused on plant-based consumables and goods — as well as an independent contractor offering strategy and business transformation advice. Paterson brings a work record focused on providing healthy food and food education. She was the Director of Engagement for eight years at Real Food for Real Kids, a catering company focused on providing healthy meals to child care organizations. Most recently, Paterson has worked as a culture coach for businesses that need brand development help. McMillen has more than 25 years of experience in landscaping, giving him ample knowledge of plant growth and tending. He is also a listic health and wellness coach and the co-author of Ignite Your Life for Men.

The modgarden team is well-rounded, with members bringing marketing, horticulture, strategy, and entrepreneurship experience to the company. Founder Khwaja does not bring the industry expertise that many investors might look for, but he has done a good job of filling his skill gaps with the greater team. Overall, modgarden scores above average for the team metric.

Differentiators

Despite its indisputably unique concept of modular small farms, modgarden’s product is not unprecedented. Organic grocery stores, like Amazon acquisition Whole Foods, are already enormous and dominant players in this space, accounting for the majority of organic food sales. Indoor gardening itself is a highly contested market with many small players, the most prominent being aeroponics farming company AeroFarms.

modgarden is planting its flag with one patent and some patents pending as well as some defensibility in the form of its proprietary soil mixes. While the product has yet to be proven of superior quality to existing options, the concept of modular interior growth systems that employ a subscription model is particularly unique and sets the startup apart from other offerings. Thus, modgarden scores well in the differentiators metric.

Performance

As a startup in the pre-revenue stage, there’s not much to evaluate in terms of modgarden’s performance. As of this writing, it has secured no users, prior funding, or partnerships with other businesses. Despite several years of operation, the company has generated essentially no traction. modgarden’s price score is its lowest across all five metrics as a result.

Risks

Risk associated with an investment in modgarden is high. This rating is driven primarily by the product still being in the prototype stage. The time that is required for the company to scale production — and consequent sales and distribution — leads to additional variables that could negatively impact potential returns. Furthermore, for a pre-revenue company, a valuation cap of $9.5 million is steep. On the flip side, the founders appear to be fully dedicated and the product poses little legal risk. Much work will need to be done, however, to bring the product to market. Until this is accomplished, sales and distribution plans cannot be prioritized.

Bearish Outlook

Using AI-bolstered, modular units to grow food is a neat idea, but it may not be enough to generate returns for investors. Without a proven market fit for homegrown organic food, the upside potential for modgarden is particularly limited. It’s unclear at this point how many consumers will be interested in growing their own organic food at home, especially given the propagation of meal preparation and delivery services. While modgarden’s product is unique, the company has yet to turn its product into revenue. This leaves investors unable to fully assess modgarden’s operations and potential.

Bullish Outlook

While it seems unlikely that tinyFarm could present a serious form of self-sustaining interior growing for consumers, it could provide something just as valuable to sustainability-minded consumers: enablement of a particular lifestyle. The product could appeal strongly to environmentally and health conscious consumers who do not have the ability to create outdoor gardens. If modgarden can appeal to this audience and prove its product-market fit, the company could secure an ample niche for itself. The team is well-qualified, with a diverse set of skills, and the investment terms for this round are relatively attractive for investors.

Executive Summary

modgarden is bringing organic, pesticide-free farming to cramped urban apartments with its patent-protected tinyFarm. Its tinyFarm modules can be compactly stacked and rotated for different growing conditions. The tinyFarm uses AI to provide ideal growing conditions for every environment, and proprietary soil modules are provided through a subscription model. Through these innovations, tinyFarms provide higher root absorption to grow high-quality greens free of pesticides and concerns about GMOs.

While the team employs some relevant advisors, the CEO’s lack of a prior exit and an absence of any existing market fit raises doubts as to modgarden’s upside potential for investors. The product itself is patent-protected but has yet to generate any revenue. The business still hasn’t demonstrated any proper traction in its years of operation. Nonetheless, once tinyFarms are on the market for consumers, they could see a role as a lifestyle-enabler for green-minded urban dwellers. Therefore, modgarden 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 Benjamin Potts.

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Platform: Title3Funds
Security Type: Convertible Note
Valuation: $9,500,000

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