RAD AI

Early Stage

Platform providing advertiser content for users to share

Analytics

Raised to Date: Raised: $1,512,585

Aggregate Commitments $

Platform

Wefunder

Start Date

01/07/2022

Close Date

04/30/2023

Min. Goal

$50,000

Max. Goal

$5,000,000

Min. Investment

$250

Security Type

Equity - Common

Funding Type

RegCF

Series

Seed

Price Per Share

$0.18

Pre-Money Valuation

$18,000,812

Rolling Commitments $

Status

Active

Reporting Date

06/25/2022

Days Remaining

309

% of Min. Goal

3,025%

% of Max. Goal

30%

Likelihood of Max
possible
Avg. Daily Raise

$8,950

Momentum
cool.svg
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Location

Santa Monica, California

Industry

Business Services, Software, & Applications

Tech Sector

AdTech

Distribution Model

B2B

Margin

Medium

Capital Intensity

High

Business Type

High Growth

RAD AI, with a valuation of $18 million, is raising funds on Wefunder. The company leverages data and analytics for fully-automated influencer marketing. The platform, RAD, is simple and effective and allows small and medium-sized businesses to drive targeted traffic and conversions. The business has a 12-month run rate of $1.2 million and expects three-times revenue growth from 2021 to 2022. Jeremy Barnett founded RAD AI in 2018. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $5,000,000. The campaign proceeds will be used for sales, marketing, brand building, and expansion of product and technology offerings.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$169,666

$671,474

COGS

$156,551

$152,307

Tax

$1,998

$102

 

 

Net Income

$-1,034,099

$-712,929

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$345,596

$4,092

Accounts Receivable

$43,944

$40,353

Total Assets

$706,498

$270,982

Short-Term Debt

$1,288,713

$472,161

Long-Term Debt

$1,437,929

$792,366

Total Liabilities

$2,726,642

$1,264,527

Financials as of: 01/07/2022
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
RAD AI 04/30/2023 Wefunder $18,000,812 $1,512,585 Equity - Common Active RegCF
Rad Intelligence 09/18/2020 Wefunder $5,000,000 $816,583 SAFE Funded RegCF
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

It’s difficult to churn out large quantities of engaging marketing copy. A marketer working for a consumer brand typically needs to write tons of Instagram captions, Facebook ad headlines, email subject lines, and more. It’s difficult to consistently produce high-quality and engaging content — especially when marketers must constantly come up with new ideas. 

This challenge has led to an explosion of startups leveraging artificial intelligence (AI) to support copywriting. These tools are remarkably capable of writing human-sounding copy and learning the key points of a brand in seconds. However, a frequent critique of AI is its habit of incorporating human biases into its output. For marketers, this could mean that AI-generated copy doesn’t resonate with key segments of a brand’s audience. 

RAD AI hopes to solve this issue with the industry’s first emotionally intelligent AI copywriter. The RAD AI platform appears to function like many other AI copywriting tools. In addition, the algorithm is focused on generating copy that resonates with a diverse array of target audiences and prioritizes authenticity, not spam. Brands like Accenture and Condé Nast already use RAD AI to optimize their marketing. 

RAD AI’s current Wefunder raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

RAD AI is offering equity at an $18 million valuation ($14.6 million valuation for early bird investors). This valuation represents a 16x multiple from the company’s $1.1 million revenue run rate. That multiple is high given typical artificial intelligence multiples. The price seems even more inflated when assessing multiples from RAD AI’s realized revenue in 2020 (the most recent audited financials available), when revenue was only $169,666. Even worse, 2020 revenues were down significantly from 2019, when revenue was close to $675,000. All in all, RAD AI seems overvalued relative to its current traction, particularly when accounting for recent revenue struggles.

Market

Artificial intelligence (AI) is likely to have a major impact on the marketing industry. Given that there are many basic marketing tasks that could be automated (like social media monitoring, responding to comments, allocating ad budgets, and even writing copy), the vast majority of businesses are eligible buyers for AI marketing tools. As such, it’s no surprise that the global market for AI in marketing is estimated to surpass $107 billion by 2028, with a booming 31.6% compound annual growth rate over the next seven years. 

Frankly, RAD AI’s addressable market size is huge. Given that most every company requires some form of marketing and could benefit from AI copywriting tools, RAD AI’s potential buyer universe is nearly unlimited. Of course, that assumes that RAD AI eventually offers pricing plans for small- and medium-sized businesses. The company appears to be focused on enterprise contracts for the time being. But if RAD AI does ultimately expand to offer tools for all types of companies, it has a great deal of market potential.

Team

RAD AI was founded by Jeremy Barnett, an experienced entrepreneur who achieved an exit for his last business, Trendy Butler (a men’s fashion subscription service). Barnett’s LinkedIn doesn’t offer a complete picture of his professional experience, but RAD AI’s Wefunder page mentions that Barnett is a three-time founder with experience scaling companies from zero to more than 100 employees. 

The RAD AI executive team also includes President Bradley Silver and Chief Growth Officer Stephen Klein. Silver joined RAD AI after it acquired his startup, Atomic Reach. Silver ran Atomic Reach, which was a scoring engine to optimize marketing content, for 11 years. He clearly has valuable experience in the marketing automation and artificial intelligence industry. Klein offers traditional marketing experience to the RAD AI team. He has around four decades of expertise in senior marketing positions, most recently as the chief marketing officer for the largest law firm in the world, Dentons. Klein also holds an MBA from Harvard. 

Beyond the management team, RAD AI employs several other team members in marketing, engineering, machine learning, and data science. This team is about as well rounded and seasoned as one can expect for an early-stage startup, with a proven entrepreneur as CEO, senior executives on the management team, and a complement of additional team members to execute day-to-day priorities. Overall, RAD AI has a strong team.

Differentiators

RAD AI has a clear pitch regarding its differentiation. While other artificial intelligence (AI) copywriting tools might be able to generate on-brand copy, they’re not paying attention to authentic and inclusive language. RAD AI says it offers the only AI marketing platform with emotional intelligence, which can help brands resonate with their target audiences. These days, that’s an important differentiator. Gen Z in particular is looking for transparency and authenticity from brands. Plus, RAD AI is apparently effective: its content is 92% accurate, and its algorithm beats Google’s “Bert” AI project. It’s worth noting that these statistics aren’t well contextualized, though. For example, it’s not clear what “accuracy” really means in this case. 

RAD AI’s authenticity differentiator offers a leg up over most other AI marketing tools, but it’s worth noting that this is an extremely crowded and competitive market. AI is cheaper than ever to implement, so many entrepreneurs are building algorithms and software platforms to generate content, monitor content, and more. For copywriting alone, there are easily 50 other startups aiming to help brands write copy more efficiently. RAD AI isn’t as well-branded as most of these competitors (its website leaves a lot to be desired), and it isn’t offering do-it-yourself access to generate revenue from smaller companies. While RAD AI does seem to be distinct from most other similar companies, the company will need to improve its marketing and sales pitch to stand out. 

Performance

RAD AI brought in almost $675,000 in revenue in 2019, but revenue plummeted to just under $170,000 in 2020. Burn didn’t decrease much between those years, so low revenue in 2020 led to a significant net loss of more than $1 million. The COVID-19 pandemic likely had something to do with this revenue decline, but RAD AI doesn’t offer that or any other reason as explanation on its Wefunder page. It’s a bit troubling that the company suffered such a steep revenue decline but doesn’t mention it at all to prospective investors.

But apart from its 2020 revenue, RAD AI seems to be on track for steady growth. The company currently has a $1.1 million revenue run rate, with 310% annual revenue growth. RAD AI has signed with top-tier clients like Condé Nast and Accenture, and it has apparently closed other deals with a large travel brand and well-known social media company in recent months. Over 2021 alone, RAD AI’s technology has created more than 100 million marketing impressions (a metric used to measure the number of digital views or engagements with a piece of content).

Plus, RAD AI has successfully raised capital to fund the development of its AI tool. Institutional investors include Fidelity Investments and Expert Dojo. Alongside more than $800,000 from RAD AI’s last crowdfunding round in 2020, they’ve contributed almost $3 million thus far. Overall, RAD AI has demonstrated a notably strong performance.

Risks

RAD AI is a relatively low-risk investment compared to most early-stage startups because it has a finished product that’s generating meaningful revenue in the market. Clients like Condé Nast and Accenture have signed on to use RAD AI. The main red flag for this opportunity is the significant revenue decline that RAD AI experienced between 2019 and 2020. This is made worse by the fact that RAD AI doesn’t explain that decline at all in its raise materials. It seems like a financial turnaround is already well underway, but prospective investors may still be wary due to RAD AI’s lack of transparency about these challenges.

Bearish Outlook

RAD AI operates in a lucrative, buzzy industry and offers a clear reason why its emotionally intelligent platform is superior to other basic artificial intelligence (AI) tools. However, the company doesn’t appear to be marketing itself well compared to the wide landscape of other AI copywriting startups. A better-branded version of RAD AI might resonate with brands hoping to improve their messaging for younger, more diverse audiences, but RAD AI currently doesn’t seem more suited for creating dynamic marketing content than its competitors. 

Even more concerningly, RAD AI has clearly experienced challenges in the last few years. Revenues declined by almost 80% between 2019 and 2020. Even worse, RAD AI doesn’t address that decline at all on its Wefunder page. While the COVID-19 pandemic may have been the cause of that revenue decline, the lack of transparency may lead investors to suspect that RAD AI is actually facing deeper issues. Regardless of the reason, the revenue decline caused RAD AI to post a large net loss of more than $1 million in 2020, necessitating more fundraising and a dilution of founder ownership. None of these are positive signs for an early-stage startup. 

Bullish Outlook

RAD AI is tapping into a compelling cultural narrative to differentiate its artificial intelligence (AI) marketing tool from the crowd. Consumers are growing dissatisfied with stale, spammy marketing from companies that aren’t hip or diverse enough. To have any hope of resonating with millennials and Gen Z, brands need to create authentic, emotionally intelligent marketing messages. RAD AI promises to develop that kind of content. 

Moreover, RAD AI is showing signs of product-market fit. Major corporations like Condé Nast and Accenture are already clients of RAD AI, and the company seems to have more large clients in its pipeline. RAD AI-generated content generated more than 100 million impressions in 2021. While the company’s revenues faltered in 2020, it’s back on a positive trajectory, with 310% year-over-year growth. RAD AI is also backed by credible institutional investors, which might be important as RAD AI continues to invest in the development of its proprietary algorithm. 

Executive Summary

RAD AI is a marketing content creation platform powered by artificial intelligence (AI). But unlike the scores of other AI copywriting tools, RAD AI’s algorithm is tuned to create authentic content that resonates with diverse audiences — perfect for brands that are targeting Gen Z. RAD AI is run by a well-rounded team, and it has already signed deals with impressive clients. It’s also posting more than 300% year-over-year revenue growth. 

Investors should be aware that RAD AI recently faced revenue challenges. Income declined by nearly 80% between 2019 and 2020, and to make matters worse, RAD AI doesn’t address that decline at all in its raise materials. The company seems overvalued at its current level of traction, particularly given that decline. The company could also benefit from a more sophisticated marketing approach to compete with the crowded landscape of other AI marketing tools. Therefore, RAD AI has been rated a Neutral Deal. 

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

Analysis written January 28, 2022.

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RAD AI on Wefunder 2022
$
Platform: Wefunder
Security Type: Equity - Common
Valuation: $18,000,812
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