SwayBrand

Early Stage

Marketplace connecting brands and diverse brand ambassadors for culturally relative content and insights

Analytics

Raised to Date:
$75,994 - RegCF
$325,994 - Total

Aggregate Commitments $

Platform

SeedInvest

Start Date

03/08/2021

Close Date

04/25/2021

Min. Goal

$25,000

Max. Goal

$950,000

Min. Investment

$1,000

Security Type

Equity - Preferred

Funding Type

RegCF / RegD 506(c)

Series

Pre-Seed

Pre-Money Valuation

$6,827,953

Rolling Commitments $

Status
Funded
Reporting Date

04/30/2021

Days Remaining
Funded
% of Min. Goal

304%

% of Max. Goal

8%

Likelihood of Max
Funded
Avg. Daily Raise

$1,583

Momentum
Funded
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Location

Monee, Illinois

Industry

Marketing & Advertising

Tech Sector

MarketplaceTech

Distribution Model

B2B

Margin

High

Capital Intensity

Low

Business Type

High Growth

SwayBrand, with a pre-money valuation of $6.8 million, is raising funds on SeedInvest. The platform connects brands and brand ambassadors to collaborate for creative partnerships. The brands are usually connected to ambassadors who originated cultural trends to create more brand impact. Horace L. Flournoy and Israel Idonije founded SwayBrand in 2015 and raised over $450,000 in previous rounds of financing. The proceeds of the current crowdfunding campaign, with a minimum raise of $25,000 and a maximum raise of $950,000, will be used for product development, sales development, marketing, hiring personnel, and general and administrative expenses. SwayBrand has already signed a contract with Conagra Brands and established a partnership with Shipbob.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$23,120

$196

COGS

$0

$467

Tax

$0

$0

 

 

Net Income

$4,456

$-213,614

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$25,001

$0

Accounts Receivable

$8,000

$100

Total Assets

$33,001

$100

Short-Term Debt

$49,634

$62,831

Long-Term Debt

$0

$0

Total Liabilities

$49,634

$62,831

Financials as of: 03/08/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

The creator economy is exploding, and influencers are gaining traction on platforms like Instagram and TikTok. Accordingly, brands are spending more on influencer marketing, and for good reason: one study found that businesses earn $6.50 for each dollar spent on influencer marketing, a dramatic return-on-ad-spend that far outpaces that of traditional social media and search ads. 

Influencer marketing is so effective because more and more consumers are coming to trust content creators (some think influencers understand them better than their friends!) to provide recommendations. Up to half of the consumers depend on recommendations from influencers to decide what to buy. However, mainstream influencer marketing is overlooking a crucial audience: people of color. Black consumers, Hispanic consumers, and other consumers of color don’t often see themselves represented among leading Instagram, YouTube, and TikTok stars, and this whitewashing extends to creators’ livelihoods, too: Black women are paid dramatically less for posts than their white peers

SwayBrand is an influencer marketing marketplace focused on connecting brands with content creators of color. Brands pay a monthly subscription fee to access the SwayBrand network of diverse creators; once subscribed, companies can post product pitches to be matched with content creators. Creators can browse brands and products and select which to endorse, receiving a payout from brands when content goes live. SwayBrand makes money from brands’ subscription fees, and a percentage of per-post payouts. 

SwayBrand’s current SeedInvest raise has been rated a Neutral Deal by the KingsCrowd investment team. 

Price

SwayBrand has launched a preferred equity fundraising round at a $6,827,953 valuation. The company has a clear thesis, and is backed by notable personalities and entities ranging from former NFL player Israel Idonije to the NFL Players’ Association and NBA Legends; that gives the brand some intrinsic value. However, SwayBrand is pre-revenue, and hasn’t yet proven its business model or product. While a nearly $7 million valuation isn’t the worst price we’ve seen for a pre-revenue startup, it’s certainly steep given SwayBrand’s lack of revenue; therefore, SwayBrand’s price rating is middle-of-the-road. 

Market

SwayBrand has a very large addressable market. Virtually any consumer-oriented company could benefit from influencer marketing, and the vast majority are likely not marketing effectively to consumers of color. The influencer marketing industry was projected to hit $10 billion in value by 2020, and continues to grow rapidly as a marketing channel that many marketers feel is highly effective. Plus, SwayBrand and other influencer marketing platforms could ultimately siphon capital away from brands’ spend on social media ads, over $84 billion last year on Facebook ads alone, a large additional market opportunity for SwayBrand to tackle. 

SwayBrand’s obtainable market of brand partners is limited somewhat by its ability to woo content creators to join the platform; brands won’t see a reason to subscribe to SwayBrand if the talent network is small. However, the creator economy is booming too, so SwayBrand has an opportunity to grow its base on both sides of the market. Therefore, SwayBrand’s market score is its highest. 

Team

SwayBrand was founded by Horace Flournoy, who has over 15 years of experience in a diverse array of business-related fields from patent examination to venture capital and digital marketing. Flournoy holds an MBA from the Wharton School at the University of Pennsylvania. Before launching SwayBrand, Flournoy most recently served for less than a year as an Associate Director of Strategy & Architecture for a digital marketing agency. 

Flournoy has a co-founder, Israel Idonije, who seems to serve as more of a part-time advisor to the business than a day-to-day operator. In this case, that involvement is still meaningful, because Idonije is a former NFL player who spent 12 years as a Defensive End for the Bears and Lions. Idonije now runs several other business ventures, but his star power attached to SwayBrand is likely beneficial for the company’s presence among Black content creators. 

SwayBrand CEO Horace Flournoy has solid business credentials, and his co-founder Israel Idonije lends credibility to a business focused on Black influencers. However, Flournoy has not operated a company before, and has limited experience in marketing and brand partnerships; therefore, SwayBrand’s team score is moderately high. 

Differentiators

SwayBrand’s core functionality as a two-sided marketplace matching brands and content creators is not particularly unique. Many other companies are facilitating similar relationships; some offer more sophisticated technical functionality, like video editing and intelligent matching between brands and influencers. These days, content creators are inundated by new companies trying to help them grow their following and monetize their audience. Moreover, SwayBrand’s product is not defensible at this time, since the platform is pre-revenue and has not yet proven any particular competitive advantage over similar tools. 

That being said, SwayBrand is focused specifically on Black and Hispanic influencers, with the goal of introducing brands authentically to a large audience of Black and Hispanic consumers. These markets are undoubtedly underserved, and not being addressed specifically by other content creation marketplaces. While it’s too soon to tell whether SwayBrand can effectively curate a network of creators of color and match them effectively with brands, the company’s future potential to carve out that niche boosts its competitiveness in this space. Altogether, SwayBrand’s differentiation score is middle-of-the-road. 

Performance

SwayBrand has been in existence for several years, and is still functionally pre-revenue. The company has generated nominal income, up to $23,000 in 2019, but 2020 revenues were just $3,000 (it seems as though the company may have pivoted from a previous concept that was making some money in 2019, but that’s not addressed in raise materials). The company’s expenses are relatively high compared to nonexistent revenue; burn at the end of 2020 ranged between $20,000 and $50,000 per month. In 2020, SwayBrand posted a net loss of over $275,000. 

There is currently very little data for investors to evaluate in terms of SwayBrand’s performance, so the company’s rating in that area is middle-of-the-road. 

Bearish Outlook

A bearish outlook on SwayBrand is rooted largely in the company’s youth and lack of operating history. While SwayBrand does seem to be opening an important space for brands to connect with Black and Hispanic creators to reach new audiences, SwayBrand doesn’t seem to have facilitated any content creation yet, so it’s difficult to verify product-market fit. 

It’s also somewhat concerning that SwayBrand has existed for several years, and was beginning to generate some revenue in 2019 (over $20,000 that year), but seems to have pivoted from an original concept and is starting from scratch with this new marketplace. There aren’t a lot of details about the company’s history in raise materials, so it’s possible that SwayBrand is having trouble building its marketplace or creating a strong network of brands and creators. All of these factors combined with SwayBrand’s rather steep valuation means that investors might not reap a quality return from this business. 

Bullish Outlook

While SwayBrand is still pre-revenue and has a long way to go in proving the value of its marketplace, there are some early signals that the company could achieve success. First off, one of SwayBrand’s co-founders has significant star power and credibility in the realm of Black influencers; Israel Idonije is a former NFL player, and while he doesn’t seem to be involved day-to-day in running SwayBrand, it seems that his connections have already led SwayBrand to forge a partnership with the NFL Players’ Association and other sports organizations like NBA Legends. 

In addition, SwayBrand has inked a deal with Conagra Brands, which will supposedly create engagement opportunities with 70 brands in the corporation’s portfolio. This deal seems to be a big milestone in establishing an audience for influencer marketing partnerships; if those brands can effectively create content with an initial set of content creators, SwayBrand could have some immediate credibility that may create more traction on both sides of the marketplace. Even though investors don’t have compelling financial figures to get behind, SwayBrand has already built relationships that help to mitigate risk. 

Executive Summary

SwayBrand is a two-sided marketplace connecting consumer brands with Black and Hispanic influencers, who create sponsored posts advertising products to audiences of color. SwayBrand has inked several meaningful partnerships, including with Conagra, the NFL Players’ Association, and more. It also sits in a large and growing market, with good potential to own an important niche within the influencer marketing industry. 

On the other hand, SwayBrand is still pre-revenue, so there’s a good deal of risk inherent to this investment. SwayBrand is competing against a number of other similar content creation marketplaces, some with more advanced technical functionality; it’s too soon to say whether SwayBrand’s focus on Black and Hispanic audiences will be enough to distinguish it from a crowded landscape. Therefore, SwayBrand 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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SwayBrand on SeedInvest
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Platform: SeedInvest
Security Type: Equity - Preferred
Valuation: $6,827,953

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