Nickelytics current raise has it valued at $6.5 million at a 0% discount. Considering the size of the total available market, this appears to be a safe valuation for a company at Nickelytics stage. Thus the company’s price score is middle of the road.

The out-of-home advertising market saw $39.5 billion in total revenue in 2019 (for which an estimated $6 billion is strictly for billboards). Nickelytics does not intend to address billboard advertising, which does lower its total addressable market slightly. COVID-19 has also set the entire industry back, as the cost of outdoor advertising has dropped.

One aspect of Nickelytics’ business that allows them more access to market size is its international presence. Earlier in 2020, the company announced pilot programs being run in Europe after much early success in Italy. For a company as early in its operation as Nickelytics, it does bode well that it has seen such success across international borders.

However, by avoiding billboards Nickelytics limits the areas where its advertising services can be offered. Ads that use assets like cars, benches, bikes, and the like are going to be most effective in highly populated areas. One of the strengths of billboards is that they are present in both urban and rural regions. Furthermore, by limiting itself to urban areas, Nickelytics also increases the chance of facing competition as the outdoor assets in cities are highly valued for their advertising potential. Due to the combination of the outdoor advertising market shrinking and Nickelytics’ limitation on how much of that market it can realistically address, the company’s market score is below average.

Nickelytics was founded by Judah Longgrear and Sven Hermann. Prior to founding Nickelytics, Longgrear was the founder and CEO at The Nickel Ride — an eco-friendly on-demand rideshare service paid for by advertisers. Longgrear grew the business to operate in 5 different cities with 60 advertisers. Prior to his entrepreneurial endeavors, he worked as a business development executive at companies like Salesforce, Netapp, and Gartner. His prior experience in outdoor advertising at The Nickel Ride does provide Longgrear with some relevant — if limited — knowledge that could prove useful to Nickelytics.

Sven Hermann acts as CTO and formerly worked at Siemens. He also has entrepreneurial experience. He runs his own software development and consulting firm Hatch It. He also created a disaster relief platform called Supply Samaritan to relieve the pain in his community after Hurricane Irma. Hermann met Longgrear while they worked in the same office building and subsequently joined him as CTO of The Nickel Ride.

While Longgrear brings some experience with outdoor advertising and Hermann has solid tech skills, neither founder has significant advertising experience. With Nickelytics so focused on making outdoor advertising more effective, this skill gap is concerning. Thus, the team score for Nickelytics is its lowest across all five metrics.

Nickelytics is looking to make the out-of-home advertising industry streamlined and easy for businesses — similar to ad placement through Facebook or Google. The company’s platform offers real time analytics, bridging the gap between the technological side of advertising and the real-world applications of it.

The largest differentiator for Nickelytics is its avoidance of traditional outdoor advertising options, billboards being the most notable example. The use of items like scooters and various mobility assets allows Nickelytics placed ads to reach a new, potentially wider audience while being supposedly more cost-effective for clients. However, this attribute isn’t particularly innovative or revolutionary for outdoor advertising. Furthermore, there’s very little defensibility in Nickelytics’ concept. The company holds no patents to prevent competitors from creating similar solutions. A more mature marketing company could easily pivot into offering something very similar to the Nickelytics’ platform and ad placement services — and without issues of scalability or finding clients. Due to these factors, Nickelytics’ differentiators score is below average.

Nickelytics has shown the ability to exist profitably, and it seems that it is continuing to grow. The company’s revenue grew from $156,167 in 2018 to $214,370 in 2019, while lowering debt as well. Nickelytics has found early traction within the market of outdoor advertising — and has the potential to grow much more.

With the help of Boulder-based seed accelerator company Techstars, Nickelytics has managed to expand its reach to Italy, where it has also seen early success. So much early success, in fact, that the company is continuing to set up more pilot programs in the country (the company states its intentions of international expansion).

Overall, the profitability of Nickelytics coupled with the company’s budding international presence are very encouraging signs. As a result, the performance score for the company is quite high.

Nickelytics does have some potential risks that may well lead to difficulty. The shrinking nature of the out-of-home advertising market due to COVID does hinder the small company, as it only has $20,000 of cash on hand. The pandemic could stop revenue growth in its tracks, which would force the company through difficult financial times. Also to consider –  if the international product of Nickelytics doesn’t scale beyond its early success in Turin, Italy, that could be a costly failure. Furthermore, the risk of competition creating a similar solution and the team’s lack of strong advertising industry experience bring more uncertainty to Nickelytics’ potential for success.

Nickelytics is off to a solid start with its growth. It has already shown that it can run profitably, and the company looks like it has the potential to continue growing. Its international presence and successful early indicators coming out of Italy all open possibilities for sustained growth on a large scale. The product has already shown itself to have traction among small and medium sized businesses. If the clients continue to come in for Nickelytics, the company might be able to secure a healthy market niche for itself. 

Nickelytics has indicators that suggest it may be a viable long-term investment, but there are still notable risks that come along with the company. A shrinking market is never a positive sign for an up-and-coming business, but Nickelytics has shown its appeal amongst small and medium sized companies. Taking into account both the risks and prospects for Nickelytics, the company is a Neutral Deal at this time.

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Analysis written by Ethan Thomas.