Sircles is raising funds via a SAFE that will convert into equity, subject to a 10% discount upon the company’s future equity value. The valuation set for this round is $23 million. This price is rather high, both in comparison to other startups currently seeking funding and based on Sircles’ financial performance thus far. Therefore, the company’s price score is below average.

As was already mentioned, online reviews are significant. Most consumers look at them before visiting a place of business or paying for a particular service. As such, it could be argued that the market opportunity for a company in the review space would be significant. However, it’s important to note that the main way which review platforms make money is through payments from businesses that want to list themselves on the platform. In essence, this is a form of digital advertisement. The retail digital advertising market was expected to exceed $23 billion last year. While that is a massive market, the niche for review platforms is a very small aspect of it. Yelp itself only generated revenue of $1.01 billion in 2019, only to see this fall to $872.9 million in 2020 as a result of the COVID-19 pandemic.

Seeing as Sircles plans to charge individual businesses a monthly fee to join its platform, estimating the market size really boils down to the number of businesses that are interested. More likely than not, large businesses will not pay for the service as they may feel that their name brand recognition makes using review platforms unnecessary. Because of this, we are focusing more on small and medium businesses. Based on estimates, there are around 30 million small businesses across the US today. At $19.99 per month, this works out to nearly $7.20 billion in revenue per year with full market saturation. Given that Yelp has operations throughout the world, it’s not unthinkable that Sircles could as well. If the company ever does expand internationally, that could grow its market size considerably. According to our estimates, there are around 400 million small and medium businesses in the world. Using the same methodology, this works out to annual revenue of $95.95 billion. 

Given the large potential market that Sircles could tap into, its market score is strong.

The team behind Sircles appears to be robust and well-diversified in skillsets. At the helm of the company is John Worthington, its co-founder and CEO. In the past, he co-founded and served as the CEO of FireUp Esports Lounge. Before running that, he co-founded and served as CEO of Tech 2U, a computer repair service company. Worthington grew Tech 2U from nothing to generating $10 million in annual recurring revenue. These experiences clearly demonstrate quality leadership. They also show someone who is capable of not just starting a company, but also of scaling it up. 

The second co-founder at Sircles is Todd Fiore. Fiore served as the other co-founder of Tech 2U, and he was the company’s CIO. Before that, he worked as a technical services analyst at Grubb & Ellis, a commercial real estate services firm. His time there clearly would have taught him a lot about the real estate market, and it would definitely qualify him to serve as the president of a startup like Sircles.

Next, Danny Hinkle is the third co-founder of Sircles as well as its COO. He worked with the other two co-founders at Tech 2U, where he served as that company’s vice president of digital marketing and as an operations manager. Hinkle’s role before that was as a marketing director for Hanford Sand & Gravel. His experience in marketing can prove valuable for a business, particularly at this early stage, but his operations experience is likely to be more useful given his current position. 

Last, Paul Buendia is the fourth co-founder of Sircles and its CTO. In the past, he worked as a software engineer at Cambia Health Solutions. Before that, Beundia was a senior software engineer for DealerPeak and at CrowdTorch. The former of these was a CRM for car dealerships, and the latter was a mobile app ticketing system for events. He has also served as a software engineer for Envisions, Inc., where he provided solutions for higher education, enterprise reporting, payment processing, and more. Buendia also worked as a software engineer at HealthPlan CRM. These technical positions should have prepared him to handle the technology side of a company like Sircles.

On the whole, the team operating Sircles is quite impressive. As a result, the team score for the company is above average.

Review sites and apps are a dime a dozen. There is nothing special about just offering reviews, but there is something unique about Sircles. For starters, there’s the fact that users can’t even write a review on the platform or rate companies from good to stellar. All they can do is list, favorite, and share the ones they like. It is also interesting that the company is based on emphasizing what friends and other trusted individuals like rather than random people on the internet. This more intimate experience, as well as the emphasis on positivity over negativity, makes this a unique concept in the review space — at least as unique as a review platform can be. Additionally, other review sites and apps do not use this mode of favoriting businesses and only accessing friends’ favorites. Sircles is currently distinguishing itself from the many other review platforms that already exist. However, it does not hold any patents, and its concept is not difficult to replicate. Balancing these factors together, Sircles’ differentiators score is slightly above average.

In some ways, the performance achieved by Sircles is impressive. In other ways, it is lacking severely. After launching a beta test where it maxed out its 3,000 users, the company has grown to have more than 20,000 downloads. That may not sound impressive, but when you consider that it launched on February 1st of this year (2021), that is stellar growth. On the downside, though, from 2018 through 2020, the company generated nothing in the way of revenue. Aggregate net losses over that timeframe exceed $1.1 million, and aggregate operating cash outflows exceed $900,000. Because of how early stage the company is, there is also no real understanding as to how much revenue investors should expect in the foreseeable future. This creates some degree of uncertainty moving forward. Even so, the company’s early traction has resulted in Sircles scoring close to average on the basis of performance.

Right now, there are some bearish considerations for investors to keep in mind. For instance, the valuation that management is asking for is very high. The market opportunity is on the small end, which will only limit the company’s upside potential. Perhaps more crucially, it remains to be seen what kind of revenue the firm might be capable of generating over time. While the product is differentiated from its peers, there are so many review sites and apps on the market today. Truly, it remains to be seen whether there is enough appetite for another.

Sircles has some factors working in its favor. For instance, the traction the company has achieved in a very short amount of time is stellar. The management team is robust, and the product is very much differentiated. This is a market people will gravitate toward because of the perceived usefulness of reviews. If Sircles can continue to grow its user base, businesses may grow more likely to list themselves on the app in order to gain consumer attention.

Sircles is a positivity-based review platform designed to counter supposedly toxic alternatives. Based on all of the data provided, it appears as though Sircles is an intriguing, though risky, prospect. Until we see real revenue, it remains to be seen whether the company has a product that can be monetized, but early signs are encouraging. If management can continue to relay the fact that its solution is better than the traditional programs like Yelp, then Sircles may very well take off. However, there is much uncertainty in that proposition given how briefly the Sircles app has been available. Thus, Sircles 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.