Sparrow

Early Stage

Sparrow uses A.I. to Help Athletes Improve Starting with Golf!

Analytics

Raised to Date: Raised: $714,092

Aggregate Commitments $

Platform

Wefunder

Start Date

07/23/2021

Close Date

11/25/2021

Min. Goal

$50,000

Max. Goal

$3,000,000

Min. Investment

$100

Security Type

Equity - Preferred

Funding Type

RegCF

Series

Seed

Pre-Money Valuation

$16,000,000

Rolling Commitments $

Status

Active

Reporting Date

10/27/2021

Days Remaining

29

% of Min. Goal

1,428%

% of Max. Goal

24%

Likelihood of Max
unlikely
Avg. Daily Raise

$7,438

Momentum
cool
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Location

New York, New York

Industry

Media, Entertainment & Publishing

Tech Sector

GamingTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

Low

Business Type

Growth

Sparrow, with a pre-money valuation of $16 million, is raising crowdfunding on Wefunder. The company has developed an AI-based platform to help athletes improve their performance. The platform is starting with golf and uses AI to analyze the swing, identify and show the deficiencies, and suggest tips and drills to improve. Joe Chin, Samuel Pigott, and Todd Eaglin founded Sparrow in May 2018. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $3,000,000. The raise proceeds will be used for product development, sales and marketing, and general and administrative costs. Sparrow’s beta launch saw 94% repeat users and is backed by pro golfers as investors.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-887,339

$-224,258

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$821,060

$539,137

Accounts Receivable

$0

$0

Total Assets

$821,060

$539,137

Short-Term Debt

$96,121

$37,909

Long-Term Debt

$0

$0

Total Liabilities

$96,121

$37,909

Financials as of: 07/23/2021
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Ratings

Analyst Report

Synopsis

Almost 25 million people played golf in the US in 2020, the largest net increase in almost two decades. Notably, more than six million of those golfers were classified as “new,” playing their first rounds or coming back to the game after years off. 

Almost all golfers would agree that there’s one constant in the sport: frustration. Golf is a mentally and physically intricate game with hundreds of ways to mess up a single swing. Some days, it can feel impossible to master the game. Even the pros can’t avoid the occasional shank

Sparrow is focused on helping amateur golfers improve their game, using artificial intelligence (AI) to unlock the kind of insights typically reserved for expensive golf coaching. Golfers film their swing with the Sparrow app, which instantly delivers precise feedback on many key elements of the swing and suggests drills to refine those skills. Currently in beta, Sparrow will soon launch its golf coaching app to the public and ultimately hopes to launch additional AI coaching apps for other sports. 

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

Price

Sparrow is offering equity at a $12.8 million valuation during the early bird round and a $16 million valuation after that. This price is very high for a company that hasn’t generated any revenue or proven tangibly that its product is actually in demand in the market. While Sparrow’s artificially intelligent app technology certainly bears some intrinsic value, artificial intelligence (AI) is becoming more and more widespread, so AI companies aren’t as rare as they once were. 

It’s also worth noting that Sparrow essentially admits that this price isn’t rooted in actual company performance or value. Apparently, the company merely assessed what other “tech” companies set their valuations at in other equity crowdfunding raises in 2021 and set its price around there. Unfortunately, the majority of equity crowdfunding companies are overvalued to some degree, and any of these other companies’ values should be entirely independent from Sparrow’s value. This seems like a surprisingly poor pricing strategy. Therefore, Sparrow’s price rating is quite low. 

Market

For now, Sparrow is solely focused on golf. In 2019, the National Golf Foundation in the US estimated the golf industry to be worth roughly $84 billion. That assessment is presumably the combination of various industry segments, including course fees, equipment, and more. While Sparrow is addressing this market at large, its coaching app most neatly fits into the professional golf instruction market segment. The National Golf Foundation estimates that golfers spend about $1 billion on coaching each year. 

To assess the market from another angle, Sparrow’s technology is theoretically attractive to all of the nearly 25 million golfers that played a round last year. The company values its addressable market size as a multiple of those 25 million by a $10 per month subscription fee, coming out to $3 billion. Of course, it’s completely unrealistic to assume that Sparrow can actually reach all 25 million golfers. Even reaching one million users would be a huge accomplishment. At that penetration rate, Sparrow would generate roughly $120 million per year. 

Golf is a decently sized market in the US, but it’s very difficult to predict just how many golfers would be willing to pay a monthly subscription fee for Sparrow’s coaching service. It’s unlikely that Sparrow can significantly replace the $1 billion coaching market, given that many golfers will always prefer in-person instruction. Even with generous estimates, Sparrow’s potential market is more narrow than most companies’. Thus, Sparrow’s market rating is relatively low. 

Team

Sparrow’s founding team has strong experience in entrepreneurship and product development. CEO Joe Chin is a serial entrepreneur who has raised $20 million in funding before and achieved two exits. His most recent company, Guidestar (later Searchandise Commerce), was an e-commerce search advertising business that worked with Global 2000 clients like Whirlpool and Sony. Chin also dabbled in real estate, gaming, and satellite engineering earlier in his career. He holds a master’s in engineering from Berkeley and a bachelor’s in engineering from Columbia. 

Sparrow’s COO and CTO Samuel Pigott is Chin’s longtime business partner. Chin and Pigott previously co-owned a website and product development studio called SourcePad. Through that agency, Pigott oversaw the development of more than 100 apps, reportedly including five projects that achieved an exit. Chin and Pigott co-founded SourcePad in 2008, so the pair have a long professional relationship. 

Sparrow’s third co-founder, Todd Eaglin, is the company’s director of engineering. Eaglin holds a PhD in computer science from UNC Charlotte and worked for five years as a software engineer and data scientist before joining the Sparrow team. 

The Sparrow team is uniquely well-suited for scaling a mobile app business. Each co-founder has meaningful experience and credentials in their fields, and two co-founders have worked together extensively for more than a decade. Plus, each of the three founders have serious athletic experience — Samuel Pigott is even a state champion golfer. As a result, Sparrow’s team score is very high.

Differentiators

It’s difficult to fully assess the quality of Sparrow’s product without a full test drive of its artificial intelligence (AI) coaching capabilities. However, the Sparrow app seems to be well-designed and rich in functionality that would be genuinely useful to golfers. It’s also a major advantage that Sparrow has three professional golfers signed on as investors and brand ambassadors. Martin Laird, Harold Varner III, and Brittany Lincicome, all with many professional golf accolades, are hearty supporters of Sparrow. Those endorsements will likely be major selling points upon Sparrow’s consumer launch. 

However, Sparrow does face significant competition from other AI golf coaches on the market. Most importantly, 18Birdies launched an AI swing analyzer in 2020. 18Birdies is the leading golf scorekeeping and round booking app on the market, with more than 1.7 million users as of 2019. Sparrow’s AI swing coaching will need to be significantly better than 18Birdies’ offering to compete. Before a consumer launch, it’s impossible to assess which app users will prefer. Therefore, Sparrow’s differentiation rating is only slightly above average. 

Performance

Sparrow is a pre-launch, pre-revenue company, so there’s no proof of product-market fit yet. With zero income, Sparrow is obviously posting net losses each year. The company lost almost $225,000 in 2019 and $887,000 net loss in 2020. 

Financial performance is understandably lackluster at this stage, but Sparrow has made good progress in other areas. The company has already raised $1.8 million in outside funding from a number of reputable sources, including professional golfers, Fortune 500 executives, and angel networks. Three of these investors from professional golf (Martin Laird, Harold Varner III, and Brittany Lincicome) are brand ambassadors for Sparrow, offering compelling endorsements of the app’s value to amateur golfers. Plus, Sparrow’s beta testing seems to have gone well. According to the raise page, eight out of 10 testers recommended Sparrow. Thanks to all of this success, Sparrow’s performance rating is above average despite mediocre financials.

Risks

Sparrow is a relatively low-risk investment when compared to other equity crowdfunding opportunities. Due to the company’s prior funding, strong team, and well-designed product, Sparrow seems stable. Minor risk comes from Sparrow’s lack of revenue and the app, which is still pre-launch and lacking commercial viability. However, Sparrow is headed toward consumer launch, which will soon provide much more data for investors to evaluate.

Bearish Outlook

The Sparrow team is experienced, the product looks high-quality, and many high-profile investors have already chipped in. However, it’s simply too soon to know for sure whether Sparrow has the potential to make a splash in the golf market. It’s not a good sign that 18Birdies, already a very popular golf app, recently launched similar artificial intelligence (AI) swing analysis functionality. This raises the question of whether Sparrow can successfully convince users to download another app when 18Birdies already provides much of the same value and is likely already used by many golfers.

The results of Sparrow’s app launch will determine the future of the company, including whether or not Sparrow can expand to offer AI coaching for other sports. Golf seems to be the best sport to start with, given the relative simplicity of analyzing a golf swing and golf’s nature as an independent sport that most people don’t have a coach for. The prospect of additional sports seems riskier. Some sports involve more complex movements, and team sports members may prefer feedback from their team instead of an app. These are important concerns that may pose challenges for Sparrow’s future success. 

Bullish Outlook

Sparrow hasn’t launched yet, so it’s too soon to tell whether consumers will find the product useful and worth paying for. Outside of that key question, though, Sparrow does offer a number of positive signals. The company was founded by an experienced team. The founders have significant expertise in entrepreneurship and building consumer products. Plus, at least two of the three co-founders have spent more than a decade working together. The strength of this team is undoubtedly a major reason why Sparrow has successfully raised $1.8 million in outside funding from well-credentialed investors, including Fortune 500 executives and professional athletes. Vocal endorsements from three professional golfers, who have both invested and agreed to appear as brand ambassadors, is also a very good sign and a huge asset for Sparrow’s consumer launch.

There are major questions as to Sparrow’s ability to successfully launch its golf app, gain a large user base, and ultimately expand into coaching for other sports. If post-launch traction continues along the same trajectory, though, Sparrow could be a promising investment opportunity.

Executive Summary

Sparrow offers a golf coaching app that leverages artificial intelligence to help golfers decipher and improve their golf swings. The company is backed by three professional golfers and a number of other well-credentialed investors and is led by a deeply experienced team. If consumers agree that Sparrow’s technology is as revolutionary as it seems, Sparrow could redefine how 25 million American golfers work on their game. 

On the other hand, Sparrow is raising at an extremely high valuation that doesn’t seem well justified. Before launch, it’s too soon to say whether Sparrow’s product will actually be compelling enough for consumers to pay for. It’s also worrisome that a well-established golf app, 18Birdies, launched a very similar swing coaching feature last year. Therefore, Sparrow 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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Sparrow on Wefunder 2021
$
Platform: Wefunder
Security Type: Equity - Preferred
Valuation: $16,000,000

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