Perfitly’s seed raise has a valuation cap set at $15 million,with no discount. Considering the company’s early stage, and its failure to turn a profit as of the end of the last fiscal year, this valuation is remarkably high. Thus, Perfitly’s price rating is quite low.

The apparel market is a massive one, and ecommerce makes up a significant percentage of it — 38.6% in 2019, and that number has grown as a result of the ongoing pandemic. Accounting for garments that Perfitly does not cover, the company’s TAM is approximately $130 billion, across the United States and Europe. Perfitly plans to expand its focus into European markets by the 2nd quarter of 2021. However, it’s important to note that Perfitly’s business model is based on clothing retailers partnering with it. Those retailers would then be able to offer Perfitly’s service to their customers. This business model could limit Perfitly’s ability to capture a significant portion of the market. As a result, the company’s market score is low.

Perfitly is led by co-founders Dave Sharma and Kash Vyas. Sharma, CEO, holds an MBA from the Illinois Institute of Technology. He is also chairman and founder of TTA systems, a manufacturer of railcars. Sharma has decades of leadership experience, but it cannot be said that he has much in the way of relevant industry experience. Sharma has successfully founded and divested iRail.com, an end-to-end IT platform for government contracting.

Vyas, CTO, has more experience working in business development with Amazon Web Services and Comcast. He seems well-suited to guide the company’s presentation on the technical side.

Although Sharma does have a successful exit under his belt, the lack of apparel and ecommerce experience between Sharm and Vyas is not encouraging. Balancing these factors together, Perfitly’s team score is middle of the road. 

While Perfitly has pending patents for its service, it remains to be seen how successful such applications could be. Its application appears to rely on various open-source technologies, which could be readily duplicated by competitors. Furthermore, the nature of its technology means that Perfitly and its competitors must appeal to retailers, not consumers. Perfitly seems to have crossed that threshold with several retailers, including one of the “big 5” clothing brands. Still, a completed patent application — considering the high number of rivals and potential rivals — would be a comfort to potential investors. Perfitly’s differentiators score is its highest across all five metrics primarily because its pending patent would provide key defensibility to the company.

As of the company’s latest filing at the end of 2019, Perfitly was at a pre-revenue stage, so there was nothing to report on that front. The company has sufficient burn rate to reach the end of the year and expects to see rapid growth in 2021. It’s worth noting that Perfitly has secured six commercial deployments, and overall has seen slow but steady growth since its founding. Due to its lack of revenue and slow customer growth, the company’s performance score is low.

While eCommerce is exploding, Perfitly’s future success is dependent on a number of factors — none of which are guaranteed. Perfitly is gambling that clothing retailers will seek to employ innovative visualization technology to address ongoing return problems, that retailers will be drawn to Perfitly’s particular program, and that customers will use the service in sufficiently high numbers to generate a profit (Perfitly earns 9.5¢ every time a customer clicks the “try it on” button on their browser). If any of these factors fail to line up — or if any of the company’s many rivals develops a superior system and draws the attention of retailers — Perfitly could find its years of net losses being for naught.

In some ways, the COVID-19 pandemic has been a once-in-a-lifetime blessing for Perfitly’s business prospects. The global explosion in ecommerce is a phenomenon that may not be entirely-reversed once the pandemic ends. After all, online sales of all manner of goods were already going up, at a rate of 14.9% last year as consumers opt for the convenience of online shopping over the hassle of brick-and-mortar. If the company can secure patents, exceed expectations in the two ongoing and any future trials, and gain ground with a large number of the thirty-plus retailers with which they are engaged in discussions, they can ride the surge of interest in online shopping to prosperity and a possible acquisition. Such an acquisition is certainly achievable — one of Perfitly’s strongest competitors, Body Labs, was acquired by Amazon itself in 2017.

Perfitly is a technology company that provides a “try-before-you-buy” digital service for apparel shopping websites. Potential consumers can employ Perfitly’s digital dressing room to re-create their own avatar and see how clothes fit on them, changing colours and adjusting fit as necessary to accurately assess garments before purchase. The program is intended to reduce expensive customer returns and enhance conversion, which it has done so in its deployments so far.

However, Perfitly is competing for a narrow sliver of an incredibly competitive and tumultuous market and faces competition from a number of similar companies. While it has patents pending, its program’s reliance on open source software leaves its defensibility in question. In addition, the company has yet to see any surges in growth, a trend it hopes to change with its current raise. For all these reasons, Perfitly, LLC has been rated a Neutral Deal.

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Analysis written by Benjamin Potts.