Pinwheel

Pinwheel

Growth Stage

Smartphone Operating System Optimized For Kids & Teens

Smartphone Operating System Optimized For Kids & Teens

Overview

Raised this Round: Raised: $228,636

Total Commitments ($USD)

Platform

Wefunder

Start Date

09/17/2023

Close Date

02/04/2024

Min. Goal
$50,000
Max. Goal
$1,235,000
Min. Investment

$100

Security Type

Convertible Note

Series

Series A

SEC Filing Type

RegCF    Open SEC Filing

Early Bird Val. Cap

$23,000,000

Valuation Cap

$26,000,000

Discount

20%

Year Founded

2017

Industry

Business Services, Software, & Applications

Tech Sector

EnterpriseTech

Distribution Model

B2C

Margin

Low

Capital Intensity

High

Location

Austin, Texas

Business Type

Growth

Pinwheel, with a valuation of $26 million, is raising funds on Wefunder. It is a smartphone operating system specialized for kids and teens. Pinwheel’s technology is designed to support kids’ and teens’ growth with phone features that let them stay tech-savvy and emotionally healthy. The company has reported a 255% year-over-year growth in subscribers and has generated $8.5 million in cumulative revenue. Dane Witbeck founded Pinwheel in May 2017. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $1.24 million. The campaign proceeds will be used for marketing, product improvements, partnerships in distribution, R&D labs projects, and working capital.

Summary Profit and Loss Statement

FY 2022 FY 2021

Revenue

$4,907,961

$2,228,599

COGS

$3,216,127

$1,538,369

Tax

$0

$0

 

 

Net Income

$-1,956,996

$-1,721,391

Summary Balance Sheet

FY 2022 FY 2021

Cash

$621,638

$955,454

Accounts Receivable

$0

$0

Total Assets

$1,387,850

$1,742,785

Short-Term Debt

$596,117

$619,808

Long-Term Debt

$1,914,655

$300,000

Total Liabilities

$2,510,772

$919,808

Financials as of: 09/17/2023
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Synopsis

With the advent of smartphones, children and teens have access to a world of information and communication tools at their fingertips. However, this access comes with potential risks and challenges, including exposure to inappropriate content, cyberbullying, and excessive screen time. As a result, many parents seek ways to provide their children with the benefits of smartphone technology while ensuring their safety and well-being.

Pinwheel aims to address these concerns by offering smartphones with an operating system specifically designed for kids and teens. The system includes features that allow parents to remotely configure the phone, manage contacts, and monitor the phone’s GPS location. This ensures that children can use their phones to support their growth and development while also providing parents with peace of mind about their child’s safety and mental health. The phones are available on the Pinwheel site and Amazon.

Next Section: Price

Price

Pinwheel is offering convertible notes at a valuation of $26 million. With over 30,000 phones shipped and $11 million in total revenue, Pinwheel has demonstrated strong traction in the market. The valuation of $26 million is very reasonable given the company’s revenue multiple of 5.3. Compared to many other companies in the online private markets, Pinwheel is undervalued.

Next Section: Market

Market

Pinwheel is positioned in the niche market of specialized technology for children and teens, specifically smartphones with features that promote tech-savviness and emotional health. A key driver in this market is the growing concern for online child safety, contributing to the increased demand for solutions like Pinwheel. The rising trend of digital literacy initiatives by various organizations and schools to educate children about responsible internet usage further validates the necessity of such solutions.

The US smartphone market, which forms Pinwheel’s addressable market, will be approximately $62 billion in 2023. That said, Pinwheel targets a specific segment of this market (children and teens), and its obtainable market size is a portion of this total. This segment is estimated to be worth $10.79 billion based on population counts and percentages of children with phones, still presenting a substantial opportunity for the company.

Pinwheel appears well-positioned in a market with significant potential and a clear need for its product. Its success will likely depend on its ability to innovate and adapt to the rapidly changing digital landscape.

Next Section: Performance

Performance

Pinwheel has shown impressive growth and performance in the market. The company has shipped over 30,000 phones and generated over $11 million in revenue. Pinwheel has received positive customer feedback, with a 4.7-star rating on over 1,000 online reviews from platforms like Google, TrustPilot, and Amazon. The company has also gained recognition in major press outlets, including The Wall Street Journal, The New York Times, USA Today, NBC, CBS, and The Today Show.

Pinwheel has a solid financial position. The company has raised $5.85 million in prior funding rounds from venture firms, including Circadian Ventures and Drumbeat Ventures, demonstrating investor confidence in the business model and growth potential. Pinwheel’s annual revenue reached $4.9 million for the most recent fiscal year, with a remarkable annual revenue growth rate of 120.22%, up from $2.2 million the year prior.

Pinwheel’s performance and growth trajectory are impressive, with a solid customer base and positive market reception.

Next Section: Differentiators

Differentiators

Pinwheel is a standout player in the market for smartphone operating systems specialized for kids and teens. Pinwheel has managed to differentiate itself by offering features and benefits that are highly appealing to parents and address the specific needs of children and teens. The Pinwheel offering is unique because the company sells physical devices with software built on top of the Android operating system. There are a few direct competitors. For example, Bark offers parental control software for managing screen time, blocking websites, and tracking location built into Samsung phones for a similar price. The market is not saturated with competition, as most companies offer strictly software solutions.

The Pinwheel offering has received positive customer feedback, with a 4.7-star rating on over 1,000 online reviews on platforms like Google, TrustPilot, and Amazon. This feedback indicates that it has effectively carved out a niche in the market. The company’s disruptive nature is evident in its ability to capture a significant share of the US smartphones for children market and achieve substantial year-over-year growth in subscribers and revenue.

Pinwheel’s unique value proposition, strong traction, and commitment to supporting the growth and well-being of children and teens differentiate it from competitors and position it as a leader in the specialized smartphone operating system market.

Next Section: Team

Team

Pinwheel is led by CEO Dane Witbeck. Witbeck previously founded Meshify, an IoT company acquired in 2016 by a German Fortune 500 corporation, MunichRE. He continued to lead the team for two years after the acquisition. Witbeck brings deep entrepreneurial and industry expertise to Pinwheel. He has proven himself as an entrepreneur.

Pinwheel’s team consists of 12 members dedicated to the company’s mission of providing technology designed to support the growth of kids and teens. CMO Leslie Tyler has over a decade of experience in marketing and sales. Her skills perfectly complement Witbeck’s background in technology.

Overall, Pinwheel’s team, led by experienced CEO Dane Witbeck, is well-positioned to continue driving the company’s growth and delivering technology solutions that support the healthy development of children and teenagers.

Next Section: Risks

Risks

Pinwheel presents a relatively low-risk investment opportunity. However, there are a few risks to consider. Pinwheel faces competition from other players in the market, such as Bark. Financially, Pinwheel has a history of generating revenue and has achieved a solid annual revenue growth rate. However, the company has been operating at a net loss in recent fiscal years, which could impact its ability to become profitable in the near term. Pinwheel has a relatively high burn rate, which could pressure its cash reserves.

While Pinwheel faces some competition and financial challenges, its innovative product offering and strong market acceptance position it as a promising investment opportunity.

Next Section: Bullish Outlook

Bullish Outlook

Pinwheel has positioned itself as a leader in the market for smartphone operating systems tailored specifically for kids and teens. The company’s technology focuses on supporting the growth and well-being of young users, offering features that foster tech-savviness and emotional health. With more than $11 million in total revenue, Pinwheel has demonstrated its ability to attract a substantial user base.

Pinwheel’s growth potential is significant, given the widespread adoption of smartphones among children and the increasing concern for their digital well-being. By providing parents with remote configuration capabilities, GPS monitoring, and contact management features, Pinwheel addresses parents’ concerns and offers peace of mind. Based on recurring subscriptions and transactional hardware sales, the company’s revenue model provides a diversified income stream.

The capital raised in prior rounds and the current crowdfunding campaign will support Pinwheel’s strategic initiatives, including marketing efforts, product improvements, distribution partnerships, and research and development projects. With a valuation of $26 million and notable investors such as Central Texas Angel Network, Circadian Ventures, and Drumbeat Ventures, Pinwheel has attracted attention and support from the investment community but remains reasonably valued.

Pinwheel’s innovative smartphone operating system for kids and teens, strong growth trajectory, and impressive backing position the company for continued success in capturing a significant market share. With its focus on supporting children’s growth and well-being in the digital age, Pinwheel is well-positioned to capitalize on the increasing demand for technology designed specifically for young users.

Next Section: Bearish Outlook

Bearish Outlook

Pinwheel has a few direct competitors, including Bark, which has a similar established product at a comparable price. Pinwheel also operates at a net loss and carries $1.9 million in long-term debt. That said, Pinwheel has demonstrated impressive traction thus far and a clear path to profitability.

Finally, there are a few risks tied to the market. For example, as tech censorship solutions become more sophisticated, those intent on circumventing them, such as tech-savvy children, may also become more adept at bypassing censorship measures, creating a constant cat-and-mouse game. There are also ethical questions surrounding how much children should be censored online. Striking the right balance between protection and freedom of expression can be challenging. The digital landscape constantly evolves with new platforms, apps, and communication methods. Keeping up with these changes and adapting censorship solutions can be difficult.

While the company’s product offering and solution appear promising, investors should carefully consider the company’s financials and market risks before making any investment decisions.

Next Section: Executive Summary

Executive Summary

Pinwheel is a smartphone company with an operating system for kids and teens. The company aims to provide a healthy and safe digital environment for young users while keeping parents in control. The system allows parents to remotely configure the phone, monitor GPS location, and manage contacts, among other features. Pinwheel’s offering is timely, considering the growing concern among parents and authorities about child safety online and the increasing demand for effective tech censorship solutions.

The company has demonstrated impressive traction, with over 30,000 phones shipped and over $11 million in total revenue. It has also received a high rating of 4.7 stars based on over 1,000 online reviews on platforms like Google, TrustPilot, and Amazon. However, the company has yet to profit, as it reported a net loss of nearly $2 million in the most recent fiscal year.

The company’s valuation of $26 million appears justified, considering its growth potential in the expanding market of child-safe digital solutions. The funds raised in the current crowdfunding campaign will be directed toward marketing, product improvements, distribution partnerships, and R&D projects, which are crucial for the company’s continued growth.

Pinwheel’s unique value proposition, strong market traction, and growth potential make it an intriguing prospect for investors.

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Pinwheel on Wefunder 2023
Platform: Wefunder
Security Type: Convertible Note
Valuation: $26,000,000

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