Skycart

Early Stage

Cost-effective delivery drones

Analytics

Raised to Date: Raised: $208,065

Aggregate Commitments $

Platform

Wefunder

Start Date

07/22/2021

Close Date

11/12/2021

Min. Goal

$50,000

Max. Goal

$1,070,000

Min. Investment

$100

Security Type

SAFE

Funding Type

RegCF

Series

Pre-Seed

Valuation Cap

$19,000,000

Discount Rate

15%

Rolling Commitments $

Status

Active

Reporting Date

10/17/2021

Days Remaining

26

% of Min. Goal

416%

% of Max. Goal

19%

Likelihood of Max
unlikely
Avg. Daily Raise

$2,392

Momentum
cold
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Location

Tracy, California

Industry

Transportation, Automotive, Aviation, & Aerospace

Tech Sector

Hardwaretech

Distribution Model

B2B

Margin

Medium

Capital Intensity

High

Business Type

Growth

Skycart, with a valuation cap of $19 million, is raising crowdfunding on Wefunder. The company has cost-effective delivery drones that aim to improve the lives of people in disadvantaged communities. Currently, Skycart drones are being used to distribute vaccines, blood products, and medical supplies in developing countries. Simon Yuen founded Skycart in January 2015. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $1,070,000, and the proceeds will be used for R&D, manufacturing, maintenance, marketing, and business development. Skycart has $4 million in signed purchase orders, up from $200,000 in 2015. The company has signed a government LOI to begin COVID-19 vaccine delivery immediately.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-12,630

$-12,659

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$733

$1,060

Accounts Receivable

$0

$0

Total Assets

$98,794

$76,932

Short-Term Debt

$146,746

$146,619

Long-Term Debt

$86,658

$52,297

Total Liabilities

$233,404

$198,916

Financials as of: 07/22/2021
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Analyst Report

Synopsis

Drones may seem like something out of a science fiction movie, but unmanned aerial systems are closer to widespread adoption than some might realize. Drones have many key use cases, from remote emergency response to weather forecasting to waste management to last-mile delivery for the exploding e-commerce industry. E-commerce penetration in the US witnessed 10 years of growth in the span of three months during the COVID-19 pandemic. From lifesaving missions to lucrative business applications, drones will have a huge impact in coming years. 

Skycart hopes to be at the forefront of drone technology for both humanitarian and delivery applications. The company has spent six years developing drone technology, pivoting in 2018 to its current objective: distributing lifesaving medical products to remote areas in Africa. Skycart’s drones can carry much more payload than most other drones and can make multiple deliveries on one mission. Its technology is ideal for medical deliveries in Africa, particularly for COVID-19 vaccine distribution. Skycart obtained a signed letter of intent to begin distributing medical supplies in Kenya within the next several months. 

Skycart’s current Wefunder raise has been rated a Neutral Deal by the Kingscrowd investment team. 

Price

Skycart is raising a Crowd SAFE at an $19 million valuation cap ($18 million for early-bird investors). This price is simply too high for Skycart’s current stage of traction. While the company supposedly generated $200,000 in revenue between 2015 and 2018 under a different business model, it generated zero revenue in 2019 and 2020. Thus, Skycart is functionally a pre-revenue business with a new mission. Skycart does hold two patents on its drone technology. Still, with minimal research and development expenses over the last two years, it’s dubious just how technologically advanced these drones are relative to competitors. For these reasons, Skycart’s price rating is very low.

Market

The market for drone package delivery is growing very rapidly. While the worldwide market size was just $530 million in 2019, it is expected to expand to more than $6 billion by 2026 at a growth rate of 42%. McKinsey notes that automated vehicles are the future of last-mile delivery, given the increasing volume of deliveries, negative environmental impact, and labor shortages that are making traditional delivery methods unsustainable. 

However, prospective investors should note that generalized last-mile delivery is not Skycart’s current focus. Instead, the company will begin operating with medical deliveries in Kenya and other under-resourced countries where transporting vaccines, blood products, and other lifesaving supplies is extremely difficult. Therefore, it’s more relevant to assess the market for medical drones, which is expected to reach roughly $950 million by 2027. That’s a much more narrow market, with established startup competitors and major corporations both vying for a share. 

While Skycart’s ultimate market opportunity is large, its immediate focus on the medical delivery space is less lucrative. As a result, the company’s market rating is relatively low.

Team

Skycart was founded by Simon Yuen, a longtime engineer with some expertise in the unmanned aerial systems (UAS) industry. Yuen started his career as a software engineer in the late 1990s and worked his way up through various engineering and technical roles at hardware companies. Yuen’s first introduction to drones seems to have come in 2013, when he was involved with a project called “Drones for Good” that used UAS to conserve wildlife in Africa. Yuen then founded a previous drone company before launching Skycart in 2015. 

Beyond Yuen, the Skycart team includes a number of additional engineers, operations managers, and business development and marketing professionals. Notably, the company’s (part-time) director of software has software engineering experience at IBM, Fidelity, and Workday. Other team members have graduate-level education in aerospace technology or hardware engineering experience from companies like Intel and Qualcomm. 

Overall, the Skycart team is well-balanced. Founder Simon Yuen is an experienced engineer with prior exposure to the drone industry and has already spent six years building Skycart. As a result, Skycart’s team score is its highest.

Differentiators

Drone delivery offers many benefits over traditional delivery methods. Drones are much more environmentally sustainable. They can travel more quickly than other forms of transport, usually by taking the shortest route between point A and B rather than relying on inefficient road routes. Plus, drones don’t rely on human delivery staffers, making it much easier for businesses to scale up delivery programs. 

Given all these benefits and more, many other companies are hustling to offer the same drone services as Skycart. There are several established competitors in the drone delivery space. Even in the medical drones segment specifically, companies like Zipline have already conducted large-scale delivery missions in Ghana. Matternet and UPS are collaborating on a drone delivery network in US hospitals that could ultimately expand internationally. Despite this competition, Skycart does appear to have certain advantages over other drone operators. Skycart drones can carry more than seven times the payload of Zipline drones and can make multiple deliveries within one flight. Skycart holds a patent on this multiple delivery technology, in addition to another for autonomous delivery pickup. 

While there is strong competition in the drone industry, Skycart seems to have found key ways to improve upon competitors’ offerings and carve out a niche in large multi-delivery flights. Plus, with two patents, Skycart is building a moat of defensibility. Therefore, the company’s differentiation rating is far above average.

Performance

Skycart’s financial journey is somewhat difficult to understand. The company was founded in 2015 and seems to have initially focused on high-speed last mile delivery via drone. In the three years between 2015 and 2018, Skycart apparently generated roughly $200,000 in revenue from this business model. But that model must not have been sustainable, because Skycart pivoted to focus on medical deliveries in Africa (with the potential of last-mile delivery down the road). 

Since the pivot, Skycart hasn’t generated any revenue for the last two years. Mysteriously, Skycart has spent hardly any money in the last two years, with around $25,000 in cumulative expenses for both 2019 and 2020. If this period was supposedly focused on research and development for a new business model, it’s unclear why expenses were so low. 

Though Skycart’s financial picture is a bit confusing, traction in other areas is more reassuring. Skycart reports $4 million in purchase orders for its drones once they are production-ready in fall 2021. If those purchase orders pan out, Skycart could quickly catapult into a very successful business. Skycart has also raised more than $200,000 over the last five years, including a commitment from a managing director for UPS’ emerging markets division. Skycart has also been successful in business development, generating a delivery partnership with SwissPost during the first phase of the business several years ago. More recently, Skycart signed a letter of intent with a county government in Kenya to deliver medical supplies. 

Overall, Skycart shows some signs of traction, but is functionally a pre-revenue business that has been in existence for six years. That isn’t traditionally a good sign for investors. Skycart’s financials over the last two years raise serious questions. Though the company is showing other signs of success — including fundraising, business development, and purchase orders — Skycart’s performance rating is below average.

Risks

Skycart is an extremely high-risk investment relative to other crowdfunding opportunities. High-tech hardware companies that haven’t yet brought products to market are inherently high-risk, as there are many hurdles to overcome before they can generate real revenue. Skycart might require a good deal more funding and time to scale into a sustainable business. Investors should also note risks around Skycart’s financials and investment terms, given that a $19 million valuation is much too high for this pre-revenue business. Skycart’s team is mostly part-time, which also raises concerns that they will not be able to devote enough time and attention to the company in order for it to be successful. The company also faces strong competition in the rapidly expanding drone delivery market. Even Skycart describes its vision as a moonshot, so prospective investors should take note. Like any moonshot idea, this company has both a high risk of failure and a chance at achieving strong success.

Bearish Outlook

Though Skycart has been in existence for six years, the company doesn’t have much to show for it. While Skycart was bringing in meager revenue between 2015 and 2018, it generated zero revenue in 2019 and 2020. Skycart seems to have a long way to go before fully realizing its vision of generating an income from medical deliveries in Africa. Whether Skycart ultimately focuses on that customer segment or the more traditional last-mile drone delivery opportunity, the company faces significant legal hurdles and logistical challenges to scale a complex hardware and software network. 

These operational challenges aren’t very reassuring for investors, and neither are the questions raised by the lack of detail in Skycart’s fundraise materials. Skycart hardly touches on the software component of its drone product, though the apps and tech required to actually route drones properly should be a major component of Skycart’s strategy. It’s a bit unclear where Skycart’s $4 million in purchase orders come from. They may be holdovers from Skycart’s initial business model in 2015-2018, but it’s not clear how those customers fit in with Skycart’s new objective to dominate medical delivery in Africa. Lastly, and perhaps most confusingly, Skycart has essentially paused operations for the last two years. Zero revenue, while not ideal, would make sense given Skycart’s pivot. But if Skycart has been spending this time redeveloping products aimed at last-mile delivery in Africa, it doesn’t make sense that the company spent only $25,000 in two years. 

Overall, Skycart is a very operationally complex business that must advance across multiple areas (government partnerships, hardware effectiveness, software effectiveness, legal compliance, etc.) to succeed. The fact that Skycart’s raise page lacks key detail doesn’t offer confidence that the company has what it takes to navigate these hurdles.

Bullish Outlook

Skycart doesn’t yet have proof that its grand vision of revolutionizing medical delivery in Africa can be realized. However, there are positive signs in that direction. Skycart is clearly connected in Africa, with a part-time team member on the ground in Kenya forging relationships and a signed letter of intent with a county government to deliver medical supplies in the next several months. Skycart’s drones do seem well-suited for the task, with much larger payload capacity than competitive drones and the ability to make multiple deliveries in one flight without a complex “droneport” infrastructure. 

Plus, even if Skycart isn’t successful in its mission in Africa, the company still has the infrastructure needed to pivot back into last-mile delivery for businesses in the US and beyond. Skycart apparently has $4 million in purchase orders for its drones, presumably from commercial buyers. Skycart has also proven its ability to forge commercial partnerships. A relationship with SwissPort seems to have provided early validation for Skycart’s drones. Skycart’s commercial line of business could provide the capital needed for the company to continue scaling up in Africa. 

All in all, Skycart is an ambitious concept aiming to redefine medical care in the most impoverished areas of the world. That’s a compelling humanitarian mission that could have tangible human outcomes, in addition to strong business outcomes. It’s not at all guaranteed that Skycart will achieve its goals, but both investors and society stand to benefit if it does.

Executive Summary

Skycart is a drone delivery company that has developed drones capable of transporting large payloads with multiple deliveries on one flight. This technology seems to be competitive within the crowded drone technology industry and is well-suited to tackle Skycart’s goal of revolutionizing medical delivery in Africa. With high-volume drones, both governments and commercial businesses can transport goods efficiently. Partnerships with a Kenyan county government and Swissport prove Skycart’s ability to address both markets. 

Investors should also note that Skycart hasn’t generated any revenue in two years and doesn’t give an adequate explanation of its activities over this period. The precise details of Skycart’s expansion plan are also unclear, which is concerning given the significant regulatory challenges that Skycart will face in transporting medical products internationally. While investors might support Skycart’s humanitarian mission, a $19 million valuation is very high for a business with this little traction. Therefore, Skycart has been rated a Neutral Deal. 

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

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Skycart on Wefunder 2021
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Platform: Wefunder
Security Type: SAFE
Valuation: $19,000,000

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