Rebuff Reality is raising capital via a Crowd SAFE (specifically a SWIFT, which stands for simple weighted incentive for time) at a $25 million valuation. That price is surprisingly reasonable for a company raising in the buzzy virtual reality industry. Rebuff also generated $4.8 million in revenue in 2021. Therefore, Rebuff’s revenue-to-valuation multiple for this round is 5.2x, which is very fair for a company with both hardware and software offerings in an emerging market. Even more favorably, Rebuff has operated profitably for the last two years. As a revenue-generating, profitable business, Rebuff Reality offers the opportunity to invest at a fair valuation.

The virtual reality (VR) market is, for now, quite small. The global market for virtual reality in 2022 is valued at around $9.2 billion. However, the industry is growing rapidly. Analysts expect the VR market to expand at a 44.8% compound annual growth rate, reaching $84 billion by 2028. These are still the early days of virtual reality, but the market will likely become much larger. 

That being said, a great deal of VR’s expected growth is due to expanded commercial and military use cases. Expectations for consumer growth in VR are more lukewarm. Many consumers report that they’re simply uninterested in VR. The relatively high cost of purchasing a VR headset – matched with looming fears of a recession that will slow consumer spending – dims the outlook for consumer VR growth in the short term. Given that less than 23% of Americans own a VR headset, Rebuff Reality’s actual customer pool is limited. Additionally, Rebuff has to compete with companies offering competing VR accessories, including Logitech G and WalkOVR. While the high-level market outlook for virtual reality is strong, Rebuff’s specific addressable market will be much more limited for the near future.

Rebuff Reality is led by a team of three executives. Rebuff founder and CEO Joe Sciacchetano has a little more than a decade of professional experience. He started his career in finance, launching his own commodities trading platform out of college and then working as a Merrill Lynch financial advisor. After a short stint in venture capital, Sciacchetano spent three years in the gaming industry, working in business development. Those experiences were the springboard for launching Rebuff, which Sciacchetano has now led for six years. 

The Rebuff leadership team also includes Creative Director Yin Wang. Although his LinkedIn profile is fairly sparse in detail, Rebuff’s raise page mentions that he has a bachelor’s degree in graphic design from Queen’s College. Wang has more than 15 years of experience as an art and creative director at C42D Creative and Shed Studio, and he’s done design work with major companies like Facebook and Google. He leads all of Rebuff’s design and brand activities. 

Lastly, Aaron Waplington is Rebuff’s COO. Waplington earned his Bachelor of Engineering in electronic systems engineering from Edith Cowan University. He has almost 20 years of varied operations expertise. His roles range from acting as CEO for a loudspeaker factory in Australia to working in business development and operations for The Audio of Things, an audio manufacturer in China. Waplington is currently based in China for his work with Rebuff, managing manufacturing, supply chain, and logistics. 

The Rebuff Reality leadership team lacks both significant professional experience and breadth across key business disciplines. The company does not have senior leadership in hardware or software engineering, areas that are critical for Rebuff’s success. They are also relatively unspecialized in virtual reality. It would be preferable to employ executives who have worked specifically in virtual reality gaming or other metaverse experiences before. While this team has clearly led Rebuff to decent success thus far, investments in additional executives will likely be essential for the company to grow beyond its current stage.   

Rebuff Reality is not a particularly innovative company. With regard to hardware, Rebuff is one of many other companies offering accessories for virtual reality (VR) headsets. Rebuff has been recognized by numerous press outlets for selling high-quality accessories, but the company is often mentioned alongside several other competitors, such as Logitech G. New entrants are rushing into the buzzy VR market to offer new solutions, so it seems very difficult for Rebuff to win on the basis of hardware alone. 

On the software side, Rebuff offers a slightly more unusual product in its virtual reality store for purchasing accessories. This storefront is a clear step toward a true metaverse, where virtual reality experiences are fully featured, immersive, and can translate into the physical world. However, it’s simply not clear whether this storefront concept is actually compelling or valuable enough to build a company around. Do consumers really want a way to check out VR accessories in the metaverse? Some might prefer to simply visit a regular website and purchase their piece of technology. 

In sum, Rebuff Reality doesn’t have any patents or specific pieces of intellectual property that offer concrete competitive advantages. While the company has introduced an innovative virtual storefront, it’s not clear that this differentiator is actually useful as Rebuff competes in a crowded VR accessories market. Therefore, Rebuff is not impressively equipped to handle the intense competition in this industry.

Rebuff Reality has generated a great deal of revenue and has achieved profitability for the last two years. In 2020, Rebuff brought in $3.2 million in revenue and turned a profit of $548,101. In 2021, the company generated $4.8 million in revenue, with a slimmer net income of $244,649. This impressive revenue growth and profitability is a positive signal for Rebuff. 

Additionally, Rebuff hasn’t raised any outside funding before. That’s both a positive and negative signal. On one hand, it’s impressive that Rebuff has been able to generate solid revenues without the accelerant of funding. However, Rebuff’s founder hasn’t had experience raising institutional capital before, which adds risk that the company could run out of money (particularly given the looming threat of an economic downturn, which will likely hurt consumer spending on things like virtual reality accessories). 

Prospective investors should also note that Rebuff is currently carrying a good deal of debt on its balance sheet. The company has a good deal of accounts payable ($446,704), with total liabilities of more than $1.1 million. These liabilities might signal why Rebuff is currently pursuing a new capital infusion, despite its recent profitability. 

Rebuff has a strategic partnership with VIVE, a large virtual reality hardware provider. One of Rebuff’s products, its TrackStrap, has already been licensed by VIVE. Through a number of online sellers — including Amazon, Walmart, and its own website — Rebuff has sold more than 100,000 units across more than 70 countries. Its products have earned generally positive reviews on sites like Adorama and Best Buy. Additionally, Rebuff has earned some press attention from publications including “Forbes,” “The Verge,” and “Rolling Stone.” Overall, Rebuff’s debts might concern investors. But it has had undeniably impressive financial achievements, and its global sales are a positive signal for customer traction.

Rebuff Reality is a relatively risky investment, despite the company’s solid level of traction. For one, the Rebuff founding team is relatively inexperienced. In addition, the company hasn’t successfully raised institutional financing before. Rebuff risks running out of money if necessary funding can’t be raised in the future. This risk is particularly concerning given the relatively high amount of debt on Rebuff’s balance sheet, which totals at more than $1.1 million. Lastly, Rebuff Reality is probably very susceptible to a recession. If consumers tighten their purse strings, discretionary spending on virtual reality accessories could be easily eliminated.

While Rebuff Reality has generated a good deal of revenue, there aren’t enough structural reasons to believe that this is a long-lasting, lucrative investment opportunity. Most importantly, Rebuff Reality’s products (both hardware and software) simply aren’t innovative enough to stand out in the crowded landscape of virtual reality (VR) technology. Rebuff’s hardware has positive reviews but doesn’t offer any clear advantages over name brand competitors’ tech. From a software perspective, Rebuff hasn’t yet proven that a virtual storefront is an unbeatable competitive advantage or an offering that will cement the company as a leader in VR. 

Other concerns include a relatively unimpressive leadership team and a concerning amount of debt on the balance sheet (totaling more than $1.1 million). These operational risks may be particular disadvantages if Rebuff is forced to navigate an intense recession. Consumer demand, and therefore revenue, could slow significantly. The founding team could struggle to balance the company’s finances and pay off debts in the face of decreased sales.

Virtual reality (VR) is a trending space with significant growth potential. More and more investment is being poured into creating a metaverse. Mark Zuckerberg claims Meta alone will invest $10 billion into the space. Users will require high-quality, comfortable VR headsets and accessories to participate in that future. Rebuff Reality’s products have been positively rated on tech outlets like Best Buy and Adorama. Rebuff’s global lifetime sales of more than 100,000 units indicate that many consumers are interested in upgrading their VR experience with better battery life, improved full body tracking, and more. 

To that point, Rebuff Reality’s revenue is impressive. The company had strong year-over-year growth between 2020 and 2021, going from $3.2 million to $4.8 million. Moreover, Rebuff Reality has achieved profitability for the last two years, with $548,101 in 2020 and $244,649 in 2021. These are impressive financials for such a young business in a competitive market. It’s not clear whether Rebuff will be able to sustain this growth through a potential economic downturn  – but if it can, the company will continue to validate its fair valuation.

Rebuff Reality is a virtual reality (VR) accessories company offering devices like headset battery packs, headset-compatible headphones, full-body motion tracking sensors, and more. Rebuff is an early mover in the metaverse by offering a virtual storefront for consumers to explore these products. The company’s hardware accessories are well regarded by VR media, and strong lifetime sales validate product-market fit. Most impressively, Rebuff has achieved strong revenue growth and profitability over the past two years. With revenue of $4.8 million and net income of $244,649 in 2021, its $25 million valuation is a good deal for investors.

However, Rebuff faces stiff competition from other companies offering accessories and virtual experiences, and the company doesn’t have concrete competitive advantages (such as patents) to excel in the race for market share. Rebuff’s team isn’t experienced in key areas like hardware and software engineering, and the company seems highly susceptible to revenue loss during a recession. Therefore, Rebuff Reality 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.