Prep To Your Door

Early Stage

Organic, plant-based, zero waste meal delivery

Analytics

Raised to Date: Raised: $206,963

Aggregate Commitments $

Platform

Republic

Start Date

06/18/2021

Close Date

10/01/2021

Min. Goal

$25,000

Max. Goal

$1,000,000

Min. Investment

$200

Security Type

SAFE

Funding Type

RegCF

Series

Seed

Valuation Cap

$5,000,000

Discount Rate

20%

Rolling Commitments $

Status

Active

Reporting Date

09/19/2021

Days Remaining

12

% of Min. Goal

828%

% of Max. Goal

21%

Likelihood of Max
unlikely
Avg. Daily Raise

$2,225

Momentum
warm
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Location

Austin, Texas

Industry

Logistics, Delivery, & Supply Chain

Tech Sector

EnterpriseTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

Low

Business Type

Growth

Prep To Your Door, with a $5 million valuation cap, is raising funds on Republic. It is an organic and plant-based prepared meal delivery service. The company believes in zero waste and delivers meals in reusable jars that are picked back and sanitized every week. Faiez Rana and Heather Emerson founded Prep To Your Door in February 2018. The current crowdfunding campaign has a minimum raise of $25,000 and a maximum raise of $1,000,000, and the funds will be used for customer acquisition, marketing, culinary R&D, process automation, and development of website and app. Prep To Your Door generated over $1 million in revenue TTM and has reported a 125% CAGR growth since 2018.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$898,535

$416,029

COGS

$303,647

$127,762

Tax

$0

$0

 

 

Net Income

$-86,352

$-14,694

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$41,528

$16,262

Accounts Receivable

$0

$0

Total Assets

$112,211

$34,223

Short-Term Debt

$138,834

$32,629

Long-Term Debt

$106,007

$15,031

Total Liabilities

$244,841

$47,660

Financials as of: 06/18/2021
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Ratings

Analyst Report

Synopsis

Nearly 60% of the average American diet is composed of processed foods. All the added sugar and fat in these foods are causing record high rates of obesity and heart disease. So a growing number of Americans are turning to meal kit services to bring healthier ingredients into their homes. 

Unfortunately, meal kit subscriptions often come with tons of plastic packaging. These plastics emit greenhouse gases throughout their life cycle and are huge contributors to both land and ocean pollution. So many consumers have to choose between eating healthy meals and fighting climate change.

But what if a meal kit brand was good for both people and the planet? That’s the promise of Prep To Your Door, a meal kit service in Austin and Houston, Texas delivering healthy, plant-based meals in reusable glass jars. With Prep To Your Door, customers receive a weekly delivery of customizable meals in glass jars, then return the jars to be reused for future deliveries (just like the traditional milkman model).  

Prep To Your Door’s current Republic raise has been rated a Deal to Watch by the KingsCrowd investment team. 

Price

Prep To Your Door is raising a Crowd SAFE at a $5 million valuation with 20% discount. That’s a very fair price given Prep To Your Door’s proven traction. The company generated roughly $900,000 in revenue last year, 90% of which was generated from reliable subscription fees. Prep To Your Door’s revenue multiple is roughly 5.5 times, which seems reasonable in light of Prep To Your Door’s established logistics system and budding tech platform. Investors have the chance to get into a growing business early at a low valuation with a reasonable discount. Therefore, Prep To Your Door’s price rating is its highest.

Market

Prep To Your Door is operating in a large and growing market and straddles two segments: meal kit services and grocery delivery (as customers can also order basic groceries like milk, cheese, juice, etc. alongside their meals). The US meal kit delivery market was valued at roughly $4.6 billion in 2020 (North America’s share of the global $10.26 billion market). The global market is expected to grow at a 13% compound annual growth rate over the next seven years. Online grocery ordering is booming and could make up over a fifth of the total US grocery market by 2025, hitting $250 billion. 

At the moment, Prep To Your Door is only serving customers in Austin and Houston, Texas, with plans to expand to the West Coast in the near future. As a result, the company’s obtainable market size for the next several years is only a tiny fraction of the total national meal kit and grocery delivery markets. And some analysts are bearish on the meal kit market. Overall, though, Prep To Your Door is operating in markets that are growing steadily, and nationwide expansion has good potential. The company also benefits from the tailwinds of a shift to healthier eating and greater concern for environmental impact. That’s why Prep To Your Door’s market rating is relatively high.

Team

Prep To Your Door was founded by Faiez Rana and Heather Emerson, a couple with a passion for environmental sustainability and healthy eating. Rana, CEO, studied at the University of Colorado Boulder and Harvard University (though he didn’t earn a degree from either). He subsequently founded DreamLab, an education company based in Dubai, and worked on that venture for two years before founding Prep To Your Door. 

Emerson, listed simply as a founder of Prep To Your Door, holds a BS from the University of Texas at Austin and later earned a master’s in journalism from Harvard’s extension studies program. She spent several years in sales roles before founding a small resume preparation company. 

Prep To Your Door has 14 full-time employees but few senior leaders. Neither Rana nor Emerson have significant business experience. But both have founded ventures before. And while no one on the Prep To Your Door team is deeply experienced in building consumer brands or operating in the meal kit delivery space, the team has garnered impressive traction so far. Therefore, the company’s team score is slightly above average.

Differentiators

Prep To Your Door’s key value propositions — environmentally sustainable and health-focused meal kit delivery — set the company apart in a crowded market. Most meal kit delivery services generate significant amounts of plastic, cardboard and other waste. Prep To Your Door’s distinct focus on building a closed loop system that promotes local produce and responsible consumption is likely very appealing to a core demographic of millennials. 

However, Prep To Your Door is not the first company to develop a delivery service with reusable containers. Trashless, which recently raised on StartEngine, is another Austin-based company delivering healthy groceries in mason jars. Another much larger company, Loop, has partnered with Walgreens and Kroger to deliver their products in containers made from metal, glass, and other reusable materials. Prep To Your Door is not a first mover, and its service is not particularly defensible. Thus, the company’s differentiation rating is just slightly above average.

Performance

Prep To Your Door is growing steadily. The company generated $416,029 in revenue in 2019. Last year, despite the challenges of the COVID-19 pandemic, Prep To Your Door grew revenue by more than 100% year-over-year to $898,535. In addition, Prep To Your Door reports trailing 12 months revenue of more than $1 million when taking the first few months of 2021 into account. And the company delivered 77,000 meals last year alone. 

However, signals aren’t all positive. Prep To Your Door posted a net loss of more than $86,000 last year. The company also hasn’t raised outside capital before, which introduces some degree of financial risk. It’s also worth noting that Prep To Your Door has been around since late 2016, at least per the founders’ LinkedIn profiles. Nearing the five-year mark, Prep To Your Door doesn’t seem to have taken off yet. All in all, Prep To Your Door is showing signs of success but isn’t a breakout star yet. That’s why the company’s performance rating is moderate.

Risks

Prep To Your Door isn’t a very risky investment within any particular category. Most areas of concern are financial. Prep To Your Door isn’t generating massive revenue, and with no outside funding history, there’s a chance that it doesn’t have the capital needed to sustain its aggressive expansion plans over the next few years. Beyond these fairly run-of-the-mill uncertainties, though, Prep To Your Door is about as risky as an average startup investment.

Bearish Outlook

Prep To Your Door isn’t a wildly successful business. Across many key areas, its history thus far seems relatively unremarkable. Total revenues are still relatively low, and cash burn jumped up in 2020. The company’s founders appear inexperienced. Other companies are operating in this space, including both a national and local competitor. In addition, the recent performance of the meal kit delivery market doesn’t exactly inspire confidence. Blue Apron’s ongoing struggles are a cautionary tale for investors. There are certainly reasons to doubt that Prep To Your Door can grow into a large player in this competitive space.

Bullish Outlook

At first glance, Prep To Your Door might not seem like a superb investment opportunity. With an inexperienced founding team, nonexistent fundraising history, and other negative signals, prospective investors might not immediately see value in this business. However, Prep To Your Door does have strong fundamentals and is worth a second look. 

Prep To Your Door’s gross profit margins of 67% year-to-date are higher than might be expected for a business that requires hands-on delivery and container sanitization. Prep To Your Door’s customer retention rate through 2020 is 61%, also a strong sign. This high retention is likely due to the fact that Prep To Your Door’s customers are acquired organically, with no paid media spend thus far. Though Prep To Your Door plans to begin experimenting with paid ads soon, it has thus far avoided the classic meal kit delivery trap of offering attractive customer acquisition offers just to see subscriptions canceled soon after the first delivery. 

Prospective investors should also note that Prep To Your Door’s valuation is quite reasonable given current traction, and the company owns a proprietary tech platform for generating new orders. Particularly with the 20% discount rate, investors have the chance to gain an outsized stake in a business that seems to be growing steadily.

Executive Summary

Prep To Your Door is a closed-loop meal kit delivery service providing healthy, plant-based meals in reusable glass jars to customers in Austin and Houston, Texas. Prep To Your Door is playing to several growing trends, including the rise of meal kit and grocery delivery, a renewed interest in healthy eating, and a growing concern about the environmental impact of single-use plastics. The company posted more than 100% year-over-year revenue growth in 2020 and continues to welcome new customers from purely organic marketing channels. 

Prep To Your Door isn’t a perfect investment opportunity. The company’s founding team doesn’t have experience with high-growth startups, and there is ample competition in the meal kit delivery space (including a very similar competitor also operating in Austin). However, Prep To Your Door has solid revenue for its limited delivery area and has also prioritized strong margins and retention rates over the past years of growth. Therefore, Prep To Your Door has been rated a Deal to Watch. 

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

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