Talla is raising via common equity at a price of $0.17 per share with a pre-money valuation of $19,790,896. The company is taking in significant revenue at this point, totaling $404,511 last year. While the revenue multiple isn’t as steep as we might expect, this valuation is still relatively high for the stage. Thus, Talla’s price score is below average.

Talla’s addressable market can be considered part of what’s called the Robotic Process Automation (RPA) market. This market was valued globally at $1.4 billion in 2019, with North American markets accounting for 37% of that value. That may not seem like a huge market size, but the market is expected to grow at a CAGR of 40.6% through 2027, at that point reaching a predicted size of $20 billion. Advances in AI are driving this growth — advances that are in no small part enabling Talla’s product.

Investors should note that RPA encompasses more than just customer support, though that is a large segment. Additionally, this space is absolutely filled with competitors — such as Taiwanese giant FPT Software — that provide similar services at similar price points. However, in terms of pure market potential, Talla has a very attractive niche in front of it. The company’s market score is above average as a result. 

Talla is led by Chairman and CEO Frank Speiser. Ducking in and out of university as business opportunities ebbed and flowed, Speiser worked capitalizing on the dot-com boom from 1997 to 2006, when he took his first stab at co-founding a website with Populister. He continued to migrate to various advisory and leadership roles with various media websites, most prominently as co-founder of SocialFlow, a social media optimization platform. While he doesn’t have direct experience in RPA customer support software platforms, he has been working in adjacent spaces for most of his career.

CTO and co-founder Byron Galbraith has a Ph.D. in Cognitive and Neural Systems from Boston University — an ideal qualification for leading a company focused on cognitive interactions between customers and company agents. Galbraith completed his Ph.D. work at Boston in 2015. Prior to that, he worked part-time as a software developer at Table XI Partners in Chicago. While his full-time industry experience prior to Talla has been limited, he has extensive subject matter expertise from his technical roles in academia.

Overall, Talla’s team is strong and checks all the requisite experience boxes for the respective industry, though there are no notable exits among the team. The team score for Talla is high in reflection of these qualifications.

Sadly, Talla doesn’t have much to recommend itself to investors when it comes to differentiation. Margins in RPA are high enough and barriers to entry are low enough that there are plenty of players in this space helping companies automate customer service interactions. Indeed, any large organization probably already has some form of existing RPA. It can at least be said that no single company has been far-and-away superior to the others technologically. Talla has no form of patent protection for its program, nor does it seem likely to acquire any in the near future.

What does set Talla apart to a degree is its program’s support for in-house teams. While the product can and is used to respond to customer queries — to generally high-level results — it can also be used to automate information exchange internally, accessing information new hires wouldn’t be able to pick up on yet and informing existing team members on information gaps so Talla can answer a question more accurately the next time around. As training new hires is a definite pain point for any business, this application definitely solves a real issue. However, it’s not clear that this distinction will be enough to set Talla apart from the many competitors it faces. Thus, Talla’s differentiators score is low.

Talla has been reporting significant revenue year-over-year. The team had $404,511 in revenues last year — up from $315,304 the year before. At this time, the company has raised $5.6 million in prior funding. In addition, the company has had to take on huge amounts of long-term debt over time, and currently has $1,191,313 in total long-term debt (this number was more than five times higher a year before). However, positive revenue is encouraging, and the company’s prior fundraising successes lessen the risk of it running out of capital in the future. As a result, Talla’s performance score is its strongest across all five metrics.

Given that the product has been fully developed and Talla has been taking in revenue consistently, overall risk is low. The valuation is high, which will make investors’ returns less significant — but Talla is certainly not alone among startups in being over-valued.

The biggest risk is timing. Investors don’t need to wait for the product to be developed — it has been, and Talla has been taking on clients. However, given how massive prior fundraising has been and how little growth that fundraising has engendered, there is concern that Talla will continue to grow at a painfully slow rate.

When it comes to Talla, the question is not so much about risk as it is about potential. This startup has had five years and significant funds to start making inroads into the RPA industry, but the numbers haven’t been as high as we would like to see given those levels of investment on the front end. The company’s slow growth is concerning and casts some doubt on whether Talla will be able to break into a crowded space to a significant enough degree to provide decent returns for investors. It’s perhaps not surprising that Talla is struggling in a crowded space, but it does make it seem as though the company’s room to really grow its customer base is limited.

It’s not a huge concern, but investors should also keep in mind the company’s enormous debts. While Talla has significantly cut down those numbers, it hasn’t managed to eliminate the debt entirely, and those debts will continue to be a weight for the next several years at least.

The COVID-19 pandemic has seen companies accelerate their adoption of RPA. The benefits of automated processes over human staff are more evident now than ever. As workers struggle to coordinate through messaging services like Slack and work from home rather than face-to-face, businesses could find Talla’s ability to facilitate internal information exchange to be invaluable.

The company does have a trend of growing revenue as well, which shouldn’t be dismissed. Investors can at least be confident that their investments into Talla aren’t likely to disappear, even if they don’t see significant returns.

One among many companies enabling the adoption of Robotic Process Automation, Talla is offering an AI-powered chat platform to provide automated customer support using smart access and machine learning. Through using the platform, clients can see 90% of customer questions automated, an increase in the amount of resolutions by agents, and cuts to call support time by up to 10%. 

There is, however, already significant competition in this space with more prominent brands. Despite raising significant funds, Talla is still pre-profit and has had to take on significant long-term debt to reach a point of slow, steady growth. A discouragingly-high valuation is slightly mitigated by the fact that the company is solving genuine problems with team dynamics and information sharing. Therefore, Talla is a Neutral Deal.

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

Analysis written by Benjamin Potts.