Scuti

Early Stage

Connecting Brands to Gamers with a Personalized Shopping Experience

Analytics

Raised to Date: Raised: $1,350

Aggregate Commitments $

Platform

WunderFund

Start Date

08/12/2020

Close Date

09/30/2020

Min. Goal

$25,000

Max. Goal

$250,000

Min. Investment

$100

Security Type

Equity - Common

Funding Type

RegCF

Series

Seed

Price Per Share

$50.00

Pre-Money Valuation

$19,750,000

Rolling Commitments $

Status
Not Funded
Reporting Date

09/30/2020

Days Remaining
Not Funded
% of Min. Goal

5%

% of Max. Goal

1%

Likelihood of Max
Not Funded
Avg. Daily Raise

$28

# of Investors

3

Momentum
Not Funded
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Location

West Palm Beach, Florida

Industry

Marketing & Advertising

Tech Sector

GamingTech

Distribution Model

B2B/B2C

Margin

Low

Capital Intensity

Low

Business Type

Growth

Scuti, with a post-money valuation of $20 million, is raising funds on Wunderfund. It is the first e-commerce marketplace through video games. The platform provides brands and vendors with a direct portal to sell to players through the games they play. The players receive personalized and curated product offerings and rewards on every purchase. Nicholas Longano founded Scuti in March 2020. The current crowdfunding campaign has a minimum goal of $25,000 and a maximum goal of $250,000. Scuti has a unique business and is first to market. It is led by a strong and experienced management team and has multiple revenue streams and ad serving retail platform.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-110,426

$-102,338

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$6,153

$979

Accounts Receivable

$0

$0

Total Assets

$0

$575,409

Short-Term Debt

$0

$0

Long-Term Debt

$0

$0

Total Liabilities

$0

$0

Financials as of: 08/12/2020
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Summary

The KingsCrowd investment team wanted to provide research on Scuti although it was not selected as a Top Deal or Deal to Watch. If you have questions regarding our deal diligence or selection methodology, please reach out to hello@kingscrowd.com.

Problem

With revenue totalling $159.3 billion, the global gaming industry is significant. It’s also continuing to grow, with revenue expected to surpass $200 billion by 2023. Yet despite this market potential, revenue opportunities for individual game makers can be hard to come by. More than 70% of revenue for both Android mobile games and iOS mobile games comes from in-app advertising that many users find unpleasant. For premium games, the primary source of revenue is the initial sale of the game. This business model limits the revenue streams for game producers and distributors as well.

Solution

One company looking to shake up the gaming industry is Scuti AI. The business calls itself a gCommerce firm (gaming commerce). By partnering up with game makers, the company hopes to connect its platform to existing game systems. When playing their games, Scuti will allow gamers to shop for goods by connecting the gaming interface with its online store. The incentive for gamers is that the system’s AI takes into consideration their preferences. It will determine which products the end user might find the most appealing. In addition, when they make a purchase through the system, they earn points that can be redeemed for other goods or for in-game credits.

The system integrates immersive game elements that include Scuti products and ads in them. This enables the company to entice gamers to take certain value-add actions. One example provided by the firm was a golf game, where players could compete for a chance to win a TaylorMade bag that’s featured on their store. Ideally, the platform would also aid different businesses in engaging in targeted marketing. This could substitute for the traditional in-app advertising so common in the space today. Naturally, fees generated from these activities will serve as a revenue source for Scuti. But it has other ways of bringing in cash for its investors too. On top of generating sales and subscription commissions, the company intends to have its own in-store ads. Coupon activation fees are also anticipated, as are on-demand stocking and product fees.

Scuti is a very early stage business. So far, the company has generated nothing in the way of sales. The firm has recognized expenses along the way though. In 2019, the company’s net loss totaled $102,338. In the first seven months of 2020, its net loss grew to $110,426. Having said that, there is some likelihood that revenue will come later this year. Management plans to take their system live during the 2020 holiday season. Through partnering with various game makers, Scuti airms to reach 100 million active players through games by November of this year. They have partnerships with no fewer than eight studios — including Cerulean Games, EGL, and Invictus. Management also hopes to engage eSports Leagues and game influencers to grow their presence.

Market

The opportunity that Scuti is targeting meets at the cross section of two large industries. According to one source, there’s an estimated 2.60 billion gamers across the globe this year. This figure is expected to grow nearly 5% to 2.725 billion in 2021. Globally, game spending works out to about $159.3 billion. By 2023, it’s expected to exceed $200 billion annually.

Though it would present Scuti little difficulty to expand internationally, the likely focus of the firm’s efforts will be the US at first. Here, there’s an estimated 214.4 million gamers. And the majority are adults — with 163.3 million (or 64%) of them playing games. Today, 41% of all active gamers are aged 35 or older. This is a big positive for a firm like Scuti since disposable income grows with age.

The other industry that Scuti operates in is ecommerce. This is, undoubtedly, one of the largest industries in the world. According to one source, global ecommerce was worth $9.09 trillion last year. This year, that figure should climb to $10.43 trillion. The expectation here is for the market to expand at a rate of 14.7% per annum through the year 2027. If this comes to fruition, it will mean that the industry will be worth $27.23 trillion by the end of our forecast period.

Team

Scuti has a rather extensive team of employees and advisors. But the three most significant players at the firm appear to be Nicholas Longano, Jamy Nigri, and Jim Veevaert. Longano is the firm’s CEO. Previously, he was employed as the President of Massive Incorporated where he built the first video game advertising network. The business was later sold to Microsoft. In the past, he also published and developed games as an employee of Vivendi Universal Games. He was also the General Manager of Universal Interactive at one point in time. 

Nigri is Scuti’s COO. He once served as the Senior Advisor to Superhero Capital. He was also the CEO and Founder of NigriConsulting.com, and prior to that he was the CEO and Managing Director of BDX Alliance. 

Veevaert serves as Scuti’s Chief Product Officer. Previously, he served as the VP of Games and Product Development for IGT. In the past, he also co-founded Sierra Studios. And at one point he served as an employee for Microsoft for eight years where he oversaw the launch of several Xbox 360 titles. He also launched both Jerry Bruckheimer Games and the Zynga Seattle Game Studio.

Rating

After a careful evaluation of Scuti, our team has rated the company a Neutral prospect. On the positive end, the company has a management team that boasts a stellar record. It operates at the intersection of two large and attractive industries. On top of that, it’s offering a service that is unique compared to other ecommerce solutions out there. The business has done well to keep its net losses fairly low each year, and the fact that it’s going to launch later this year is encouraging.

Even with these positive attributes, there are some concerns. For starters, the company’s valuation is off the charts for a firm of its type and stage of development — a $20 million post-money valuation for a pre-revenue business is a really difficult sell. The other issue to deal with involves the overall viability of the business. Management claims that Scuti’s services could replace or supplement in-game advertising. This could be true, but will it be enough to justify companies adopting it? Do gamers want to buy actual products and services while they play? Do they care enough about rewards to buy a pair of shoes from the game they’re playing rather than buying them elsewhere? It’s difficult to tell — until the business launches — whether it’s something that will be truly value-add or if it’s a solution in search of a problem.

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Scuti on Wunderfund
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Platform: WunderFund
Security Type: Equity - Common
Valuation: $19,750,000

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