PANGEA Movement is raising via Crowd SAFE with a $6.4 million valuation cap and a 20% discount (or a $4.8 million valuation and a 25% discount for early bird investors). The company generated $515,000 in revenue in 2021, according to the raise page, and it hasn’t had many prior investment rounds. Therefore, the $6.4 million price might seem slightly too high. Its 12.8x valuation-to-revenue multiple is also higher than the industry average if investors categorize PANGEA solely as an outdoor gear company. 

On the other hand, $6.4 million is quite a fair valuation if investors take PANGEA’s  environmental impact into consideration. Despite the company being incorporated for less than three years, it has made a huge positive impact on the environment. The company has neutralized three of the dirtiest rivers in the world and is currently organizing 45 river cleanups in 11 different countries. Through these cleanups, the company’s river barriers have collected 110,000 pounds of trash. PANGEA has offset 34 tons of carbon dioxide by planting mangrove trees. All in all, the company’s environmental achievements have been tremendous, and this could justify the current round’s investment terms — particularly for impact investors. Plus, the round’s 25% early bird discount could make the deal even more attractive for investors. 

The global outdoor gear and equipment market was worth $49.3 billion in 2021 and is projected to grow at a 5.8% annual rate. Considering how saturated the market is, PANGEA Movement will likely obtain a small share. Even so, it could still be a massive obtainable market — especially considering that the company already has a global presence, with customers in 83 countries.

Consumers are becoming more socially and environmentally conscious every day, so impact-driven businesses are receiving more attention than businesses with no social or environmental mission. Impact-driven businesses not only gain more support from customers but also receive higher employee retention rates. This strong upward trend toward impact-driven businesses could boost PANGEA’s ability to navigate the market and give it a smoother market penetration. 

PANGEA Movement co-founder and CEO Marcos Bulacio got his bachelor’s degree from Colegio De La Salle. Afterward, he studied sociology, business administration, and management at the University of Buenos Aires. He also took an entrepreneurship grad course at Harvard University. He has worked in various management roles at a nursing home in Buenos Aires, Villa Juncal, for 12 years, including finance and human resources. Bulacio still acts as Villa Juncal’s vice president and advisor part-time, which means he is not completely dedicated to PANGEA.

Co-founder and COO William DiRicco got his bachelor’s degree from the University of California, Davis. He then worked in marketing at Sunrun and Evolution Commerce for less than two years, then briefly worked in product analytics development at Amplitude, a software development company. 

Both of PANGEA’s founders lack backgrounds that prove they can lead the company to success. They lack experience in the outdoor gear and equipment industry as well as strong managerial experience, and the CEO is dividing his attention with another role. Moreover, the company has a small team of six members. With this investment round, PANGEA hopes to expand its marketing and product development team. Although that might accelerate its product pipeline and market penetration, it still might not solve the team’s lack of experience in successfully building a company. Overall, it would greatly benefit PANGEA if the team could hire people experienced in the outdoor gear industry and in building impact-driven businesses. 

PANGEA Movement has a very admirable mission to clean the planet by installing river barriers that remove trash and planting mangroves to offset carbon emissions. It is a strong differentiating factor, especially since the company has made tremendous progress in both efforts — cleaning up three major rivers and planting more than 2,700 mangroves. It’s also a strong differentiator that the company recycles the plastics collected by the river barriers and uses them as the base material for its waterproof jackets. According to the founder, the company is adding QR codes to its jackets so that customers can see how much impact they have made. This is a great incentive for customers to keep supporting PANGEA’s mission. Being an impact-driven business has a strong appeal to the increasingly socially and environmentally conscious population. 

However, PANGEA’s core is still its outdoor products, including bamboo towels, bamboo water bottles, and waterproof jackets. There is a large number of brands selling similar products in the market, many of which are easily accessible through Amazon. And a lot of those competing products are much cheaper. For example, PANGEA’s standard towel costs $61.99, while one similarly sized option on Amazon is $29. Additionally, the market has many outdoor gear brands that are also environmentally friendly, including Patagonia and tentree. 

While PANGEA’s products are made with sustainable materials, that alone is not enough to set it apart from many similar and cheaper competitors. Unless PANGEA can create outdoor products that have clear advantages or lower its price point, it still might not be able to survive in the fiercely competitive market, let alone fund its environmental efforts.

While PANGEA Movement has generated just $755,000 in total revenue, the company has shown impressive growth. According to the raise page, its revenue grew around 115% from 2020 to 2021, from $240,000 to $515,000. 

PANGEA launched Kickstarter campaigns for both its bamboo towels and waterproof jackets, and both have gotten great traction. Although the company has received only around $36,000 in prior funding, PANGEA’s parent company is backed by two venture capital firms, REAPRA Ventures and Gayo Capital. The company aims to expand its distribution channel to e-commerce platforms, which would scale its sales further.

So far, the company has delivered its products to more than 40,000 customers in 83 countries. It is impressive for an early-stage company to have a global presence. The company has also shown tremendous growth in its environmental impact. PANGEA has planted more than 2,700 mangrove trees and offset 34 tons of carbon dioxide. It has also neutralized three of the world’s dirtiest rivers and organized 45 cleanups in 11 countries, removing 110,000 pounds of trash. PANGEA has great brand awareness, and it seems to have attracted positive reviews and loyal customers. Overall, PANGEA doesn’t have much revenue yet, but it is making impressive progress for an early-stage company.

PANGEA Movement bears moderately low risk. This impact-driven business sets aside its funds to create river barriers to catch trash. Although being impact driven is beneficial to the company in the long run, it might delay the company’s growth. If its revenue were utilized elsewhere, such as to finance its business operations and product development, PANGEA could boost its scaling ability. This creates some funding and financial risk. 

Delaying growth means PANGEA would have to keep raising capital in the near future to sustain its own operations, and this could further dilute early investors’ equity. Moreover, PANGEA apparently plans to create a Kickstarter campaign for each of its outdoor products. These campaigns are designed to market its initial product launch as well as reduce risk by covering manufacturing costs. While it makes sense from a capital efficiency standpoint, these campaigns tend to take a long time to complete, and it costs quite a bit to market the campaign. This process could hinder the company’s scalability, as it means the product life cycle takes longer. 

Additionally, PANGEA is in the process of moving its holding company, or parent company, from Singapore to the United States. According to PANGEA COO William DiRicco, this is necessary to ease the process of eventually selling the company. The founders believe that the market for buying and selling companies is in the United States. He also mentioned that the legal fee is around $5,000 to $10,000. While this process seems like a smart move, it could take capital away from where it’s needed the most, such as the company’s product development, team expansion, and marketing efforts. 

PANGEA Movement’s products, including its bamboo towels and waterproof jackets, are made using sustainable materials. While this is an admirable approach, there are numerous competing sustainable brands that offer similar products and with similar functionality. PANGEA’s high price point and lack of product differentiation may explain why the company has been able to generate only $755,000 in total revenue despite being incorporated since 2020. 

PANGEA has an ambitious environmental mission to clean up the planet by installing trash-catching barriers in rivers all over the world. But it is difficult to fund this mission by selling undifferentiated products. On its raise page, PANGEA explains that its brand funds the company’s mission, and its mission serves as a marketing strategy that attracts customers to the brand. Although this is a great business model for a company that has a lot of cash on hand, it might not work as well for an early-stage company like PANGEA. 

The company bears funding and financial risks, as it needs to keep raising funds to develop a new product, pay manufacturing costs upfront, and partially fund its environmental efforts at the same time. Raising more funds through multiple campaigns dilutes investors’ equity. It also takes a lot of time and capital to market these campaigns, which delays the company’s ability to generate sufficient revenue and reach profitability. As a result, the company could struggle to sustain its operations. Furthermore, this business model also hinders PANGEA’s scalability — both for its product development and its mission. Product development requires capital investment, but a lot of PANGEA’s funds go to its environmental mission. Finally, PANGEA will need to find more volunteers or hire more employees in order to scale its river cleanup efforts. The company’s need for helpers may limit its environmental impact.

PANGEA Movement introduced its products in 2020, but in just two years it has already gained impressive traction. The company started successful Kickstarter campaigns for its bamboo towel and waterproof jacket products to validate product demand. Not only do the campaigns pay upfront manufacturing costs, but they also help promote the company’s environmental mission. As a result, PANGEA has now sold more than 40,000 products and shipped them to customers in 83 countries. The company has attracted a loyal customer base that provides positive product reviews. 

PANGEA is raising at a fair valuation considering its amazing growth. Its revenue more than doubled from $240,000 in 2020 to $515,000 in 2021. The company has also proven to its stakeholders that it is serious about its mission by cleaning up multiple rivers using its trash barriers and planting more than 2,700 mangrove trees to offset carbon emissions. Solely because of the impact it has made, PANGEA could widen its customer base as more people support the company’s cause, attract promising hires, and lure more impact-driven investors. PANGEA has also shown that it can be capital efficient while making an impact. The company spends only about $0.2 for every pound of trash collected, while The Ocean Cleanup spends $150. PANGEA also seems positioned to grab a significant market share, as its massive industry is not a winner-take-all market.

PANGEA Movement is an outdoor gear company with a mission to clean the planet. The company installs river barriers that catch plastics and other trash and plants mangroves that offset carbon emissions. The company currently sells bamboo towels, waterproof jackets made from recycled plastics, and more. These products do not have a clear advantage over PANGEA’s many sustainability-focused competitors. Being an impact-driven company might delay the company’s ability to scale and generate sufficient revenue to sustain its own operations. And if PANGEA continues raising multiple rounds in the future, it might dilute investors’ equity. Additionally, PANGEA’s team lacks background in the industry as well as experience building a company. 

But for impact investors, PANGEA could be a compelling investment. PANGEA has a very admirable mission that could attract a wide variety of stakeholders. The company has proven its ability to make a huge impact on the environment, having cleaned up three major rivers and planted more than 2,700 mangroves. PANGEA successfully built Kickstarter campaigns that promote the company’s brand awareness. It has a global presence, which is rare for an early stage startup. The company is playing in a large enough market that it could grab significant market share, especially since it isn’t a winner-take-all market. Finally, the current round is priced fairly considering the traction PANGEA has achieved thus far. Overall, PANGEA Movement is a Neutral Deal. 

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Analysis written by Inez Sanjaya, June 7, 2022.