MOJO Licensing is raising at a $10.1 million pre-money valuation. However, for the first $50,000, the firm has set a lower pre-money valuation of $8.1 million. Given the company’s traction so far, its price is decent. Thus, our system has rated the price of the company above average on our one-to-five scale.

On one hand, MOJO Licensing’s market size seems decent. According to one source, the sports merchandising industry was worth $34.4 billion in 2020. It’s expected to grow at a 5.4% annualized rate to reach $49.8 billion by 2027. This represents a reasonable chunk of the $167 billion global sports apparel market. 

However, the US market — where MOJO operates — is smaller. In 2020, the licensed sports merchandising space was worth $9.3 billion. It is also important to consider that though MOJO claims to have little to no competition, this is a competitive space. MOJO may have some traction in backpacks, luggage and golf bags, but there are hundreds of competitors in the market. Because of the fairly small market size, moderate growth rate, and stiff competition, our system has rated MOJO Licensing’s market opportunity near the low end of our scale.

One area where MOJO Licensing fares better is on the team. At the head of the company is its president and founder, Mario Simonson. Simonson was previously the vice president of Aminco International, which branded and sold emblematic jewelry and accessories, including sports-related products. Prior to that, he was the president of Denco Sports Luggage, a very similar company to MOJO Licensing. It appears Simonson previously sold Denco, only to buy it up again and combine it with MOJO. 

CEO Adrian Degroot previously worked at NBA Properties, where he handled licensing, sportsmanship, team services, and NBA entertainment. He was also, at one point, the COO of Aminco International. The team’s highly relevant experience gives MOJO an above-average team score on our one-to-five scale.

MOJO Licensing has a ton of competition. But the company appears to be focused on the backpacks and luggage space, which it claims to dominate. It also claims it is the only company with licenses from all major professional sports leagues for all bags and luggage. Add in the deal with the PGA Tour and Shark Wheels, and there is clearly some differentiation. That said, it’s not enough to prevent our system from rating MOJO’s differentiation as around average.

MOJO Licensing has managed to land several licensing deals with all major sports leagues. That alone represents phenomenal traction. It is also selling its products in major retail outlets nationwide, which is also no easy feat. On the other hand, there are some problem areas. In 2019, the firm generated revenue of $3.4 million. However, due to the COVID-19 pandemic, revenue dropped to $1.9 million in 2020. MOJO generated a net loss of $728,800 in 2019 and $696,849 in 2020. Operating cash outflows totaled $665,350 in 2019 and $54,974 in 2020. 

The company did benefit from changes in working capital during this period. Inventories dropped from $953,472 in 2019 to $571,832 last year, and accounts receivable declined from $814,416 to $387,725 over the same period. In all, our system rated the company above average on the basis of performance.

MOJO Licensing’s overall risk profile is slightly higher than average. The biggest risk for the company appears to be on the funding side. While the valuation of the firm is attractive, funding and financial risk is elevated because the significant losses of the firm, not to mention its hefty net debt, imply that the company will probably need additional funding soon. Market risk is above average because the industry is not very large and is full of competitors. Team risk is also elevated because the company has a single founder — meaning the fate of the company rests on him.

MOJO Licensing’s market is fairly small and growing at just a moderate rate. Competition is always a concern, as is the fact that there is no guarantee MOJO’s licenses will remain in perpetuity. The company has a single founder, which exposes it to risk in the event that something were to happen to him. It is also difficult to see many ways in which the product is significantly differentiated from the competition.

MOJO Licensing’s price appears reasonable given its financial and non-financial traction. Examples include revenue that is in the six digits and partnerships across the value chain. Additionally, while the company has a single founder, both he and the CEO have highly relevant domain experience.

MOJO Licensing is a sports licensing company with a focus on sports-branded backpacks and luggage. The company has deals with all major professional sports leagues for all bags and luggage and is already selling its products through major retail businesses, including Amazon and Walmart. It is taking in significant revenue. On top of that, the founder and CEO have extensive industry experience that will prove useful to the company. However, having only a single founder puts any company at risk. While MOJO is making sales, its products are not particularly unique, and there is no guarantee the company will retain the licenses that have helped it until now. Management has done well to get the enterprise to where it is today, but there are headwinds that they must contend with. In all, our team believes that the risk-to-reward ratio more or less evens out. As such, we have decided to rate the company a Neutral prospect.

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

Analysis written by Daniel Jones.