Relay On Demand

Early Stage

A new and better way to book truck drivers on demand

Analytics

Raised to Date: Raised: $496,212

Aggregate Commitments $

Platform

Republic

Start Date

01/20/2021

Close Date

04/21/2021

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$100

Security Type

SAFE

Funding Type

RegCF

Series

Seed

Valuation Cap

$8,000,000

Discount Rate

10%

Rolling Commitments $

Status
Funded
Reporting Date

04/30/2021

Days Remaining
Funded
% of Min. Goal

1,985%

% of Max. Goal

46%

Likelihood of Max
Funded
Avg. Daily Raise

$5,453

Momentum
Funded
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Location

Norco, California

Industry

Logistics, Delivery, & Supply Chain

Tech Sector

MarketplaceTech

Distribution Model

B2B

Margin

Medium

Capital Intensity

Low

Business Type

High Growth

Relay On Demand, with a valuation cap of $8 million, is raising funds on Republic. The company has developed an app that helps to book truck drivers on demand. It has created a flexible driver workforce with its Relay Drivershare Network that can be utilized by trucking companies to hire truck drivers on-demand. Darrell Pickens founded Relay On Demand in April 2018. The current crowdfunding round has a minimum goal of $25,000 and a maximum goal of $1,070,000, and the funds will be used to enhance the product, expand into new markets, and add more drivers and companies to the network. Relay On Demand has over 1,000 drivers and 400 carriers signed to its network and is already profitable.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$461,117

$0

COGS

$444,033

$0

Tax

$0

$0

 

 

Net Income

$-229,101

$-96,639

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$10,336

$2,783

Accounts Receivable

$0

$0

Total Assets

$179,348

$167,783

Short-Term Debt

$31,645

$2,546

Long-Term Debt

$99,643

$0

Total Liabilities

$131,288

$2,546

Financials as of: 01/20/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

A shortage of semi-truck drivers has become a major problem for the transportation industry. According to one source, there were around 3.9 million truck drivers in the US. Though this sounds like a large number, it’s not large enough. In 2018, the industry had a shortage of 60,800 drivers. By 2023 this number should grow to more than 100,000, and by 2028 it’s forecasted to grow to 160,000.

There are multiple reasons for the lack of truck drivers. High turnover is a major problem in the space, and there’s also continued growth in the industry. A 2019 report from the American Trucking Associations forecasted that the demand for drivers in the 10 years ending in 2028 will grow by 1.1 million. More than 50% of this need will come from drivers who are retiring, while 25% will be needed to cover fresh driver demand that should grow over this period.

One company dedicated to stemming these problems is Relay on Demand. At its simplest, Relay on Demand is an app and communications network that allows its clients (trucking companies) to submit a request for a driver. This request is then viewed by users of the app. These users can select whether or not to accept the gig. The app also ensures that drivers are pre-certified and rated/monitored to guarantee quality for those hiring them. Another benefit for the trucking companies is that it gives them flexibility — they can hire and pay someone only when they need them. The platform is built to be easy-to-use, giving trucking companies the ability to find, book, and dispatch multiple drivers in as little as three clicks.

There are also advantages for drivers as well. For instance, the app emphasizes a reliance on drivers, not own-operators. Thus, any CDL license-holder can qualify for jobs and, for the business, it guarantees that their own trucks, not a truck they don’t know, will be used. Using the platform also allows the drivers to work only when they want or need it. If they are looking to take short-distance trips, they can specify that. If they prefer a cross-country haul, that’s an option too.

This platform is ideal for the many small trucking companies on the market today. The goal is to help these often financially-constrained firms an alternative to traditional staffing options. In order to monetize the service, Relay on Demand has various models. One option is a fixed annual subscription fee charged to the trucking company. In addition, for every run completed by a driver, they will be charged a carrier transaction fee starting at $20 per hour. Management also boasts a freemium model. This is a pay-as-you-go approach that does not have a fixed fee but that, instead, charges a higher on-demand rate.

Relay on Demand’s current Republic raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

In order to grow Relay on Demand further, the company is seeking some capital through a SAFE. This security will convert into equity in the future, providing its holders with a 10% discount on the company’s future value. This conversion is also based on a valuation cap of $8 million. This valuation is normally high for early-stage startups, but given the company’s traction so far, it’s fairly reasonable. As such, Relay on Demand’s price score is its highest across all five metrics.

Market

The market opportunity facing Relay on Demand is large and appealing. According to one source, for instance, the global freight trucking market was worth $4.2 trillion in 2020. With a 4% annualized growth rate, it should climb to $5.5 trillion in size by 2027. The US portion of this market comes out to $1.1 trillion, with growth that is similar in size. The large number of drivers out there, combined with the (likely-growing) shortage implies high demand for a service like this. This case is further strengthened when you consider that more than 70% of all freight goods in the US are transported via truck every year. What’s more is that 84% of the industry’s carriers have between one and six trucks in their fleet. This is especially important for Relay on Demand because it’s those small, budget-constrained players, that will benefit the most from its offering. 

Now, it should be mentioned that the digital logistics market, which is where Relay on Demand would fall into, is far smaller.  Globally, this opportunity was worth about $17.4 billion in 2020.  By 2025, it should climb to $46.5 billion, implying an annualized growth rate of 21.7%. Relay on Demand ranks comfortably above average on the basis of market opportunity. This score is due to the size and growth of the industry balanced by the smaller niche that Relay on Demand will focus on.

Team

Though Relay on Demand has an extensive number of employees on its team, the real center of the business is Darrell Pickens. Pickens is the firm’s founder, CEO, and CTO. Prior to founding Relay on Demand, Pickens was the President and Founder of 3Power Logistics Management. That firm provided technology-driven logistics solutions aimed at minimizing freight costs for refrigerated perishables. Clearly, this business has some crossover with Relay on Demand today. The technology and leadership experience would certainly be useful if applied to his current venture. Before 3Power, Pickens was the President of Kitchen Robotics and Automation Systems. That company focused on providing custom automation solutions for QSR, quick casual, and hotel kitchens. His role before that was as an Innovation Engineering Manager at Taco Bell. There, he worked on hot/cold food and beverage equipment innovations. This technical nature should also translate into valuable skills for his current post.

Because Pickens brings both technical and entrepreneurial experience to Relay on Demand, the company’s team score is above average.

Differentiators

There is no doubt that Relay on Demand is an interesting company, but it’s not wholly unique. There are multiple other players in the space. One of these is an app called Fleeting. It’s the most similar firm we identified in that it also allows companies to book a driver. However, Fleeting’s revenue model is different. Instead of a subscription fee with an hourly rate attached, Fleeting charges an inflated hourly rate to its users. It then takes between 20% and 45% of that as a platform fee. LaneAxis is another player in the space, but if anything, its business model is more complementary to what Relay on Demand is offering. LaneAxis allows for direct communication and negotiation between shippers and carriers. This essentially allows the two to avoid going through costly brokers. What makes Relay on Demand unique in comparison to these similar companies is how it is pricing its service and the flexibility it grants the carriers from that pricing perspective. 

While only having two main competitors bodes well for Relay on Demand, the lack of distinction in its service (and thus the ability for another company to replicate it) brings the company’s differentiators score is decent, but not particularly strong.

Performance

Since launching, Relay on Demand has seen some nice success. In 2018, the company generated nothing in the way of revenue. In 2019, this grew to sales of $471,242. Its loss of $96,639 in 2018 grew to a loss of $229,101 in 2019, while its cash outflows rose from $94,093 to $157,749. These losses and outflows should be expected, though, given how early-stage the company is. What’s most important is to see those sales continue to rise, and according to management that’s exactly what is happening. Full-year 2020 results have not been provided yet. However, Relay on Demand did say that gross revenue hit $2 million in annual recurring revenue before the end of 2020. The company’s goal for 2021 is $6 million. In addition, the business boasts more than 1,000 drivers and 400 carriers on its platform. All together, the performance score for Relay on Demand is encouraging.

Bearish Outlook

On the whole, Relay on Demand is an interesting business, but there are some negatives to it that investors should be aware of. Though the company’s founder has some attractive experience, he’s really the core of the business. There are no other key members to run the show if need be. This lack of staff means that the company will need to work on recruitment and hiring in the near future in order to continue growing, activities which will incur extra costs for the business.

 Another, longer term problem relates to self-driving trucks. At present, the market for the self-driving space is worth about $1 billion. But it is growing at a rate of 10.4% per year and by 2025 will be up to $1.67 billion. Eventually, this space could grow to be a threat to Relay on Demand’s offering. Additionally, there are other competitors creating very similar services to Relay on Demand’s app. There is little to prevent one of them — or an entirely new company — from replicating Relay’s pricing model, which is its main differentiator currently. The company’s service is not highly defensible, which brings unnecessary risk for prospective investors.

Bullish Outlook

On the bullish side, there are important points to consider as well. For instance, the industry the company operates in is massive. Relay on Demand’s service should help companies contend with real and significant problems in this space. The founder has some relevant experience, and the valuation on the company is quite reasonable. Throw in strong financial and customer acquisition performance since its launch, and there are a lot of good things for investors to keep in mind.

Executive Summary

Right now, Relay on Demand is solving a real problem, and it’s on a solid trajectory. Its ability to create value for its clients is undeniable, though questions remain about how large it can grow. For the most part, Relay on Demand scored well across all five metrics. However, questions of growth and defensibility bring uncertainties to this otherwise strong concept. As multiple startups attempt to solve the problem of connecting semi-truck drivers with trucking companies, it is unclear if Relay on Demand’s solution will be the winning one. Thus, the company is a Neutral Deal at this time.

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

Analysis written by Daniel Jones.

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Relay On Demand on Republic
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Platform: Republic
Security Type: SAFE
Valuation: $8,000,000

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