Optelos

Early Stage

A patented data management, visualization, and AI analytics SaaS solution for industrial asset inspection

Analytics

Raised to Date:
$664,409 - RegCF
$924,409 - Total

Aggregate Commitments $

Platform

SeedInvest

Start Date

11/26/2020

Close Date

01/24/2021

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$1,000

Security Type

Convertible Note

Funding Type

RegCF / RegD 506(C)

Series

Seed

Valuation Cap

$8,000,000

Discount Rate

20%

Rolling Commitments $

Status
Funded
Reporting Date

01/31/2021

Days Remaining
Funded
% of Min. Goal

2,658%

% of Max. Goal

62%

Likelihood of Max
Funded
Avg. Daily Raise

$11,261

Momentum
Funded
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Location

Pflugerville, Texas

Industry

Energy, Power, & Natural Resources

Tech Sector

EnterpriseTech

Distribution Model

B2B

Margin

High

Capital Intensity

Low

Business Type

Growth

Optelos, with a valuation cap of $8 million, is raising crowdfunding on SeedInvest. It is a SaaS solution that uses data management, artificial intelligence, and visualization for industrial asset inspection. The platform transforms unstructured images and metadata into an information model that functions on reality modeling and automation. David Tran and David Collmann founded Optelos in 2016 and have raised $250,000 in previous rounds of financing. The proceeds of the current crowdfunding campaign, with a minimum target of $25,000 and a maximum target of $1,070,000, will be used for marketing, embedding software, and business development. Optelos is a Commercial Partner of Microsoft One and is engaged in collaborative projects with Accenture.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$363,681

$262,919

COGS

$48,733

$71,397

Tax

$0

$0

 

 

Net Income

$-318,592

$-540,948

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$113,274

$3,896

Accounts Receivable

$23,877

$80,888

Total Assets

$150,594

$106,170

Short-Term Debt

$257,185

$631,760

Long-Term Debt

$0

$0

Total Liabilities

$257,185

$631,760

Financials as of: 11/26/2020
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Analyst Report

Synopsis

Asset inspection is essential work for all manner of businesses, particularly in the construction and industrial markets. It’s the kind of work that — when performed correctly — doesn’t make headlines or draw attention to businesses. By thoroughly testing the integrity of essential structures and machinery, businesses can address potential problems before they arise, saving thousands or millions of dollars in repair costs, regulatory fees, and lost productivity over the long term. We can see the necessity of asset inspection to its fullest effect in highly public catastrophes in the oil and gas industries — which can lead not only to loss of life and productivity, but devastating PR consequences and expensive lawsuits. Inspections can also be useful to evaluate asset value before sales.

That said, inspections are dangerous and time-consuming. Asset inspectors must navigate complex areas and tight confines while actively seeking out potential hazards to human health and safety. As a result of these challenges, more and more businesses are switching to automated mechanical and drone-based inspections, wherein nonliving systems take pictures and videos of target surfaces with superior precision and mobility.

While these mechanical processes lead to safer and faster inspections, the lack of a human inspector on-site means that drones and cameras need to take far more pictures and videos to be analyzed. The resultant flood of media can overwhelm human inspectors attempting to process this content, and the challenge of processing all of this data is opening a space for automated workflow. Without comprehensive analysis of provided data, useful digital representations of physical assets are unfeasible.

Enter Optelos. This startup employs a Software-as-a-Service (SaaS) solution which — through artificial intelligence, data management, and “digital twin” visualization — streamlines analysis of media and metadata produced by drones, robotics, and machine vision. The software takes in massive quantities of media content and produces searchable and shareable digital reproductions of complex assets. The process fully operationalizes digital asset inspection and management. While the technology is innovative, its success is not theoretical. Optelos has exceeded its own projections in profit and is at the forefront of a rapidly-growing digital twin trend.

Optelos’s current SeedInvest raise has been rated a Top Deal by the KingsCrowd investment team.

Price

Optelos is offering a convertible note, accruing a 5% interest rate per annum at a pre-money valuation of $8 million with a 20% discount. Investments under $20,000 will be made under the Regulation CF type, and investments over that amount will be under the Regulation D type. Given the company’s place in the market, secure patents, and growing revenue over the past couple of years, this valuation is reasonable, if not stellar. Thus, Optelos’ price score is above average.

Market

All manner of industries require competent, thorough inspections of equipment and facilities. Optelos primarily directs its attention to the oil and gas, energy, industrial manufacturing, telecom, and construction industries. These are massive and profitable markets that, while suffering slowdowns as a result of the ongoing COVID-19 pandemic, are set up for continuous growth in the near future. The digital inspection market on a whole is competitive and growing — it’s projected to reach $28.9 billion by 2025, accounting for the effects of the pandemic.

While Optelos’ share of the market is limited to media processing — it does not provide the drones and machinery required for the inspections themselves — it has established solid partnerships with companies like DroneDeploy with promising early results. Because the company’s market potential is somewhat dependent on the performance of other companies, Optelos’ market score is middle of the road.

Team

Optelos is led by a team with an assortment of relevant industry experience, making the company as a whole-well positioned to expand their current customer base. David Tran is the company’s current CEO, CTO, and a Co-founder. He holds an MBA in Business Development from Southern Methodist University. Tran has sixteen years of business management and marketing experience with Fluke Networks, and extensive experience in the telecom industry, one of Optelos’ main target industries.

David Collmann, a company co-founder and chairman, serves as the CEO of TesCom USA, a company that manufactures test equipment for telecom companies as well as offering calibration and repair services. Collmann is a long-time member of TesCom, having worked his way up from a Sales Rep position, and his decades of experience make him a valuable partner for Optelos. Kevin McKeand serves as a current vice-chairman and previous CEO, and brings years of experience working for and with AT&T telecommunications. VP of Operations Neil Inman brings his experience as the CEO of a drone services company, NuAge Aerial Solutions. Finally, CRO Ed Sztuka brings his own experience working to promote technology-based businesses, including Autotether, Inc.

The team brings an impressive amount of relevant industry experience to the company. These experiences also provide valuable network connections which will likely aid Optelos as it grows. As a result, the team score for Optelos’ is very high and is its highest score across all five metrics.

Differentiators

In such a competitive market, Optelos stands out with its proven solution to a highly difficult challenge. It holds a geo-visual data patent for correlation of applicable data to transform huge amounts of photo and video media into indexed digital databases. This technology enables customers to determine the condition of their assets and how those conditions are changing over time much more easily and quickly. Many competitors focus on a limited part of the asset inspection process, such as Talon Aerolytics (which provides drone-lineman pairs working together to gather inspection materials), PrecisionHawk (which offers both drone services and an analytics platform), and Kespry (which uses machine learning to better organize data captured by drone inspections). None of these competitors appear to be using digital twin technology, which is another advantage for Optelos. 

However, it is worth noting that the asset inspection market is highly competitive. Digital solutions — like what Optelos offers — are going to rapidly become the industry standard. While Optelos is an early mover in this industry shift, it will also continue to face stiff competition as it grows. The risk of another competitor developing better or cheaper technology is definitely a concern for the company. Thus, Optelos’ differentiator score is slightly above average.

Performance

Optelos has seen its revenue rise year-over-year, from $262,919 in 2018 to $363,681 in 2019. As a result of these increases, the company’s net losses have decreased as well, from $541,126 in 2018 to $309,962 last year. However, its high revenue has yet to make up for extremely high research and development costs. At the time of filing, the company has 8 months of runway. 

Additionally, Optelos has secured some impressive early customers — including AT&T as well as Accenture and Georgia-Pacific. The combination of growing revenue and strong early traction has yielded the company a high performance score.

Bearish Outlook

At the present time, it seems unlikely that Optelos will fail to meet its goals. It must be noted that the company’s losses will likely continue in the near future as it ramps up its R&D and marketing, attempting to expand its access to a growing market. Optelos’s SaaS setup is also potentially vulnerable to cyberattack. The company does have some competitors, such as Pix4Dmapper and Skycatch, but these brands don’t seem to be meeting with much success. Should a strong competitor with competing software and strong marketing game emerge in the near future and steal potential customers away, Optelos could see its aggressive efforts fall short of the revenue required to make up for its overall losses. The company’s patent protection and early traction makes this eventuality unlikely.

Bullish Outlook

As markets bounce back following the COVID-19 struggles and the benefits of drone technology become ever-more obvious to businesses, Optelos’s strong partnerships with drone manufacturers and other automated inspection providers makes it ideally positioned to expand into the growing market. As Optelos continues to refine its software and spread the word among industry leaders, its customer base could dramatically expand in the near future.

The advent of 5G technology in particular will require massive investments in telecom infrastructure in the near future. The team’s experience with telecom offers them advantages in securing large portions of that market, which could reach a global size of $667.9 billion by 2026.

Executive Summary

Optelos is a SaaS company that provides its patent-protected, AI-based system to analyze metadata and media from automated asset inspection systems. It then transforms these disparate data into a “Digital Inspection Twin,” fully searchable and shareable. The company has a strong leadership team in place and has enjoyed growing revenue in recent years.

The company holds strong partnerships and is well-positioned to take advantage of construction and industrial manufacturing markets that are hungry for applications of digital twin technology. The company has exceeded its own projections for growth, and seems well-positioned to succeed further. For these reasons, the KingsCrowd investment team gave Optelos a Top Deal rating.

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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