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Synopsis

Autonomous mobile robots (AMRs) are a popular technology often used in warehouses. These robots can carry heavy loads across warehouses and aid in loading and unloading shipments. The biggest reason why AMRs are disrupting the logistics industry is their ability to increase the efficiency and productivity of order fulfillment operations. They can generate a huge return on investment even though initial costs might be high. 

As good as this sounds, AMRs have some drawbacks. Although a single AMR can work for up to 15 hours at a time, charging can take two or more hours to complete. This limited runtime limits warehouses’s ability to operate for 24 hours with the same set of AMRs. In order to run a full day of production, warehouses would need to purchase even more AMRs – increasing capital costs. Moreover, these AMRs use batteries that need to be disposed of and replaced when their lifetime has ended. 

Nimbus is aiming to solve the charging problem by manufacturing a power relay technology that can convert electricity to light, which is transmitted to AMRs in warehouses. This light will become the energy that charges these robots as they move. Thus, the robots can operate for 24 hours without the need to go to charging docks. Nimbus’ technology is able to transmit energy to AMRs as far as 50 feet away. The company also claims that using its power relay technology can extend the battery life of AMRs by up to 5x. Nimbus’ first target market is warehouses or industrial market automation companies. It will sell its hardware to major corporations with a monthly subscription fee. Additionally, the company plans to deliver custom projects for companies with specific systems. 

Nimbus’ current StartEngine raise has been rated a Neutral Deal by the KingsCrowd investment team. 

Price

Nimbus is raising capital via common equity with a $50 million valuation. Although Nimbus claims to have secured a customer, revenue in 2021 was $0. Thus, the company is technically at the pre-revenue stage. Even for a hardware company, a $50 million valuation is quite inflated. Although the company has great technology, this valuation needs to be justified by other factors, such as revenue or prior round invested. Nimbus does not have these factors in its favor, so this valuation is not favorable for investors.

Market

The US industrial automation market was worth around $32.8 billion in 2019 and is growing at an annual rate of 8.9%. It’s important to note that Nimbus is targeting the industrial automation market, but it is actually offering a complementary product rather than automation solutions. Thus, the actual obtainable market value for Nimbus is much smaller than the overall’s market’s value. Even so, Nimbus’ obtainable market value is still very sizable. The industry is growing at a fairly decent rate, and there is a strong upward trend for the industry. Some of the factors driving market growth are an increase in implementation of various control systems for process optimization, a rapid shift of industries toward smart manufacturing, and growing demand for operational efficiency. Nimbus will benefit from these drivers as it establishes itself in the market. 

With this being said, Nimbus has huge market potential. Moreover, the company’s product is versatile because its technology is compatible with any device with a battery. This functionality gives Nimbus freedom to expand into various markets over time. The company looks well-positioned to secure a niche within industrial automation.

Team

Nimbus is operated by three co-founders – CEO William Diggins, CTO Alexander Diggins, and CFO Matt Jerrild. William Diggins got his bachelor’s degree in business management from Western Illinois University. He then worked as a management consultant in Denardo Consulting for four years prior to founding Nimbus. 

Alexander Diggins got his bachelor’s degree in physics from Purdue University. Prior to founding Nimbus, he did independent research and development on energy storage, was an analyst in Denardo Consulting Group, and worked as an operations agent in The Fin Exploration Company. 

Lastly, Jerrild got his bachelor’s degree in economics from University of Connecticut. After graduating, he worked in HealthPlanOne as a quality assurance analyst and financial analyst. Afterward, he worked in Ring2Media as an assistant controller. 

While all three co-founders have relevant skills to run Nimbus, they have little industry experience. This lack might impact Nimbus’ ability to fully develop its wireless power transfer technology as well as break into the market in a timely manner. Moreover, it seems like CTO Alexander Diggins has very limited experience with energy-focused projects prior to founding Nimbus. The only relevant indicators in his background are his physics degree and two years spent as an independent researcher. Having arguably the most important role in the company, it would be hugely beneficial for the CTO to have vast knowledge and experience in the relevant industry. Besides these co-founders and three advisors, there are no other team members in Nimbus. It is crucial for the company to expand its team so that it can quickly reach the market while also focusing on manufacturing its product.

Differentiators

Nimbus’ core product works by first converting electricity into an LED spotlight (Nimbus claims around 80% of electricity is converted). This LED spotlight then transmits energy (around 50% of electricity) to warehouse robots, charging them as they are moving. Each robot needs its own receiver, and the transmitter can charge many receivers. 

There are other companies with similar technologies that allow them to charge devices wirelessly, such as Wi-Charge and WiTricity. According to co-founder William Diggins, Nimbus is specialized in targeting the industrial automation market or any other industries that require more power and longer distance. Most competitors in the market target consumer electronics, such as phone charging, laptops, and electric cars. Diggins also mentioned that many competitors are not able to do high power (most capped out at three to five watts), while Nimbus offers thousands of watts. Many competitors can only do shorter distances as well, while Nimbus can do up to 50 feet (for industrial applications) or even thousands of feet (specifically for the military market). To compare, Wi-Charge’s AirCord technology can only deliver up to 250 milliwatts at a time and has a range of up to 33 feet. 

Additionally, Diggins states that warehouse robots that use Nimbus’ technology could extend their battery lifetime from six months to five years. This benefit will have a positive impact on the planet by decreasing carbon dioxide emissions from frequent battery disposal. All these features make Nimbus’ technology quite disruptive to the market and boost the potential of it becoming a market winner. Additionally, Nimbus has secured patents for its technology, giving it key defensibility.

Performance

Nimbus is ready to commercially sell its product. According to co-founder William Diggins, the company has been mass producing all the parts necessary. Thus, the company is ready to deliver the product as soon as it receives orders. Nimbus has also raised more than $2 million in the prior investment rounds. 

Nimbus claims to have secured one customer. However, it is uncertain how much revenue will be generated or even when it is going to be realized. Although the company is ready to sell commercially, it does not provide a foreseeable customer pipeline that could assure investors there is a demand for the product. Nimbus is only in the negotiation stage with multiple customers, including Amazon, which does not guarantee anything. The long period of time needed for the company to initiate conversations and secure a customer is also a major issue. Co-founder William Diggins mentioned that it could take at least a year and maybe longer. This long customer acquisition timeline is the reason why the company’s revenue decreased from $150,000 in 2020 to $0 in 2021. It might take another year or more to see results from the company, especially when Nimbus has no clear signs of traction. Furthermore, the company has more than $2 million in both short-term and long-term debt without having cash nor assets that could cover this. All in all, the company does not show signs of healthy financials.

Risks

Nimbus bears moderate-to-high risk as an investment opportunity. First of all, the company is still pre-revenue, and Nimbus does not provide a clear customer pipeline, resulting in some product risk. According to co-founder William Diggins, the company is still in the negotiation stage with most of its target customers, which is quite an early stage. Moreover, Nimbus claims that the process to secure a customer can take a year or more. As a result, it is likely that Nimbus will need significant time to start generating revenue, and it could require further capital funding to support its operations over that time period. Considering these two factors, the company bears time risk and funding risks. The current high valuation also imposes some investment term risk for investors in this round. The high valuation might limit investors’ return, as it is not comparable to the stage where the company is at now.

Bearish Outlook

Overall, Nimbus is a risky investment. The company has not commercialized its product yet, which makes it only in its pre-revenue stage. The company also does not have a clear customer pipeline. As a result, investors should be wary of its product-market fit or the potential magnitude of its demand. The company does claim to be talking to multiple target customers, but it is only in the negotiation stage, so there are no guarantees. Nimbus’ revenue dropped to $0 in 2021 due to the lengthy process of securing a customer. This factor further implies that it will take a long time for investors to see results from the company, as it has a very long sales cycle. Additionally, Nimbus might require more capital funding to support its operations while it’s trying to secure customers. 

With the current stage of the company, Nimbus’ valuation is inflated. A $50 million valuation is not attractive for investors, especially as companies tend to raise another funding round at a higher valuation, which further dilutes the current investors’ shares. The current team, which consists of only the three co-founders, might not be enough to expand the company’s sales. While the founders have a nice mix of skills, none of them have a background in Nimbus’ target industry. Having someone that is deep in the wireless power industry might hugely help the company expand its network, enrich its knowledge, and eventually scale sales more quickly. 

Bullish Outlook

Nimbus has developed a disruptive technology that might be better than most products existing in the industry. The product is able to generate higher power at a longer distance than most competitors. Nimbus is also targeting a completely different market than its closest competitors, giving it stronger differentiation. The industrial automation market is quite large and growing at a decently rapid rate. Nimbus’ product is also versatile enough to target multiple markets other than this one. Hence, the company could be on its path to grab massive market share and become a market winner. Once Nimbus begins securing customers, it has the potential to begin generating significant revenue. Considering how innovative the product is, there is a fair chance that the company will realize its revenue potential in the next year or two. 

Executive Summary

Nimbus manufactures a power relay technology that converts electricity to light and wirelessly charges warehouse robots. This technology could enable the robots to operate for 24 hours without the need to go to charging docks. Although this technology is promising, an investment in Nimbus bears moderate to high risk. The company is still in its pre-revenue stage, and it does not provide a concrete customer pipeline to convince investors of its product-market fit. Given these factors, this round’s $50 million valuation is quite inflated. The founding team has limited background in the industry, and it is necessary to expand the team to accelerate its sales pipeline. 

Regardless, the team has developed a technology that is quite disruptive to the market and might be better than most products existing in the industry. Nimbus might be able to tap into multiple different markets over time as its technology is quite versatile. As a result, the company could grab massive market share once it begins securing customers. Considering all these factors, Nimbus is a Neutral Deal. 

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

Analysis written by Inez Sanjaya, April 12, 2022.

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