Sircles

Sircles

Early Stage

The Social Recommendations App Designed To Destroy Yelp!

The Social Recommendations App Designed To Destroy Yelp!

Overview

Raised to Date: Raised: $2,701,066

Total Commitments ($USD)

Platform

Wefunder

Start Date

02/28/2021

Close Date

04/15/2022

Min. Goal
$100,000
Max. Goal
$3,930,000
Min. Investment

$250

Security Type

SAFE

Series

Seed

SEC Filing Type

RegCF    Open SEC Filing

Early Bird Val. Cap

$17,999,800

Valuation Cap

$23,000,000

Discount

10%

Rolling Commitments ($USD)

Status
Funded
Reporting Date

04/29/2022

Days Remaining
Funded
% of Min. Goal
Funded
% of Max. Goal
Funded
Likelihood of Max
Funded
Avg. Daily Raise

$6,588

# of Investors

2,760

Momentum
Funded
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Year Founded

2019

Industry

Consumer Products, Goods & Services

Tech Sector

CommerceTech

Distribution Model

B2C

Margin

High

Capital Intensity

Low

Location

Sacramento, California

Business Type

High Growth

Sircles, with a valuation cap of $23 million, is raising funds on Wefunder. It is a social recommendation app that combines Yelp and Facebook, minus the negativity. The unique features and safeguards of the app allow it to stand out, capture a network effect, and reward good behavior. John Worthington, Todd Fiore, Danny Hinkle, and Paul Buendia founded Sircles in 2019. The current crowdfunding round has a minimum raise of $100,000 and a maximum raise of $1,070,000, and the funds will be used for research and development, influencer and social media marketing, management salaries, and legal and consulting expenses. Sircles has about 20,000 downloads since its launch and more than 500 positive reviews. The app maxed-out its beta tester program in a matter of days.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$1,468

$800

 

 

Net Income

$-473,646

$-543,830

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$1,118,425

$94,997

Accounts Receivable

$0

$0

Total Assets

$1,183,425

$159,997

Short-Term Debt

$88,441

$38,098

Long-Term Debt

$15,995

$100

Total Liabilities

$104,436

$38,198

Financials as of: 02/28/2021
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Sircles 04/18/2024 Wefunder $30,000,000 $1,811,539 SAFE Active RegCF
Sircles 04/14/2022 Wefunder $23,000,000 $2,701,066 SAFE Funded RegCF
Sircles 11/12/2020 Wefunder $11,000,000 $1,070,000 SAFE Funded RegCF
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Price per Share History

Note: Share prices shown in earlier rounds may not be indicative of any stock splits.

Valuation History

Revenue History

Note: Revenue data points reflect the latest of either the most recent fiscal year's financials, or updated revenues directly from the founder, at each raise's close date.

Employee History

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Synopsis

Online reviews are a big business. According to one source, as many as 97% of individuals will look at online reviews for a local business before visiting it. Yelp — the largest player in the space — boasts 178 million users every month, and the company has seen its users post no fewer than 184 million reviews since its launch. Having said that, there are some problems. Yelp does not offer a method for validating reviews, which can lead to false or overblown reviews being posted. Negative reviews can have a strong impact on a business, with small and medium businesses being the most vulnerable.

One small startup called Sircles believes it has the answers. Simply put, users who are interested in looking at quality places to visit can download the app. They can then make circles for each category — such as restaurants, clothing stores, etc. — they might be interested in. Users are then encouraged to invite only their closest, most trusted friends into what management calls a “Sircle.” For any Sircle, users can see all of their friends’ favorite places. Due to the platform’s focus on positive feedback, there is no need to fixate on negative business ratings. In addition, the app does not allow users to write reviews. The entire goal here is to remove the toxic atmosphere allegedly created by Yelp and other review sites. When a user favorites a business, Sircles keeps that firmly on their record so they can visit it later. It also will show users what businesses others have liked. 

In order to generate revenue, Sircles intends to launch a subscription package for businesses that will cost $19.99 per month. In exchange, businesses can offer users coupons. They can also have access to detailed user analytics. They can create their own bios and unlock the ability to add photos. They can also appear on the daily deals map offered through the app.

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

Next Section: Price

Price

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.

Next Section: Market

Market

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.

Next Section: Team

Team

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.

Next Section: Differentiators

Differentiators

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.

Next Section: Performance

Performance

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.

Next Section: Bearish Outlook

Bearish Outlook

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.

Next Section: Bullish Outlook

Bullish Outlook

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.

Next Section: Executive Summary

Executive Summary

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.

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Sircles on Wefunder
Platform: Wefunder
Security Type: SAFE
Valuation: $23,000,000

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