ThisWay Global is raising funds through preferred stock at a $40.5 million valuation. The company has revenue of $980,662, giving it a valuation-to-revenue multiple of 41x. This valuation is highly inflated, making the investment terms less attractive for investors. Even though the software-as-a-service industry has the highest average valuation revenue multiple, ThisWay Global’s current round is well above the industry average.

The North American recruitment software market was worth $613.4 million in 2017. The global market has a growth rate of 7.4%. While the market is flourishing — with venture capitalists pouring nearly $30 billion into it over the last five years — it’s still quite small. ThisWay Global’s main focus is the US market, which is even smaller. The market is also growing at a merely decent pace. It might be because of the large number of established players in the industry, such as traditional recruitment agencies. Enterprises of any size might already have their own recruiting processes in place and feel hesitant to adopt a new method. It is crucial for ThisWay Global to find an innovative way to accelerate market adoption so that it can grab a major portion of the market. Otherwise, it has limited market potential.

ThisWay Global is led by founder and CEO Angela Hood. Hood received her bachelor’s degree in architecture, construction, and development from Texas A&M University. She also went through an incubation program at University of Cambridge called ideaSpace. Aligning with her formal education, she spent her first decade of work experience in the construction and development industry. She started her own consulting company in South Carolina in 1998. A decade later, she founded a company that designed and manufactured licensed products for various sports organizations. Both experiences helped her develop essential management and leadership skills. From 1992 to 2015, Hood worked as an NMFA Delegate for the US Marine Corps. There, she was in charge of the development of a job platform that transformed military experience into civilian credentials. This was the start of ThisWay Global. This extensive development period is a positive sign for investors that the ThisWay Global product is mature. And with her long years of experience in the industry, Hood likely has the right network to accelerate the company’s growth. 

ThisWay Global currently has a diverse and well-rounded team of 12. One notable team member is CTO Alex Shmelev. He has a long track record of leading the technology of multiple companies. Shmelev was the vice president of drugstore.com, which was acquired by Walgreens. His past experiences could greatly benefit ThisWay Global’s product development. Overall, the company has a strong supporting team alongside an experienced and dedicated founder.

ThisWay Global uses artificial intelligence and natural language processing to automatically eliminate subtle biases in job descriptions and to better match employers and job candidates. The company claims to provide ranked applicants according to the best fit in seconds. Unlike mainstream solutions like Indeed and LinkedIn, where candidates are matched to specific job descriptions, ThisWay Global matches all candidates to all existing positions. ThisWay Global both directly and indirectly competes with companies in multiple sectors, such as candidate screening and vetting companies, job boards, college and graduate hiring organizations, and even recruiting agencies. The market is very competitive, considering that the majority of these companies provide solutions to overlapping problems. Although it shows that there is a huge demand for this type of solution, it also makes it difficult for ThisWay Global to grab a major market share. The company would need to either develop a highly unique approach or gain an enormous user base quickly, both of which are quite difficult to achieve. 

One direct competitor of ThisWay Global is pymetrics. Like ThisWay Global, pymetrics matches all candidates to all jobs using artificial intelligence and eliminates bias in the recruitment process. But pymetrics is far more established than ThisWay Global. Though both companies were founded in the early 2010s, Pymetrics has raised a total of $56.6 million in funding – far more than ThisWay Global’s $7 million in prior funding. With little differentiation and pymetrics’ early success, ThisWay Global faces an uphill battle to stay competitive in the market. The speed of the job matching process and the pricing level could become key advantages for ThisWay Global. Unfortunately, there is not enough information regarding these data points to compare both companies. Furthermore, ThisWay Global does not hold any patent that could create some level of defensibility.

ThisWay Global has a huge amount of debt. Its short-term debt increased from $1 million to $1.1 million between 2019 and 2020, and its long-term debt increased from $2.2 million to $4.1 million. However, aside from its debt, ThisWay Global has an impressive track record. The company was able to increase its revenue by 370% from $208,412 in 2019 to $980,662 in 2020. ThisWay Global onboarded more than 500 customers in 2021 and booked 4,500 customers that will be onboarded in 2022. It also has a large profit margin of 93%. The company claims to have booked revenue exceeding $4 million, and projected revenue for 2023 is $18 million. The company also claims to have $29 million in anticipated sales and has several massive companies as clients. The company also claims it is backed by Amazon. Although the company offers no further evidence to prove these claims, if they prove true, it would make ThisWay Global an attractive investment opportunity. ThisWay Global has received $7 million in prior investment rounds, including its last raise in 2020, which was sold out. It has also gone through the Google Startup Accelerator program — a big point in its favor given that the program is highly competitive.

Overall, ThisWay Global is not a risky investment. The company’s valuation is inflated as the valuation-to-revenue ratio is a lot higher than the industry average. This results in some risk, as investors might not get as much return on investment as they might with a more reasonable valuation. ThisWay Global also bears some financial risk because of its large debt. The company is also pre-profit and doesn’t have a lot of cash on hand, so investors may have concerns about whether the company will be able to pay off its debts.

Prior to this round, ThisWay Global raised via convertible note in October 2020. KingsCrowd rated that raise a Deal to Watch. In that round, ThisWay Global was valued at $25 million and had revenue of $201,535. Currently, the company is valued at $40.5 million, and its latest revenue is $980,662. Although the valuation-to-revenue ratio is lower in the current round, ThisWay Global hasn’t progressed enough to justify doubling its valuation when these raises are only about one year apart.

The increase in revenue is stellar, but it’s crucial that investors pay attention to the company’s original projections. In the last round, ThisWay Global projected $15 million in revenue by the end of 2022, which is far from its actual revenue number. Even though the company is highly unlikely to meet this projection, it increased its revenue projection in the current round to an even steeper $28 million for the end of 2022, which seems too ambitious considering its current revenue numbers. There is no further information about how many companies in its sales pipeline converted into customers. Since the previous round, ThisWay Global has increased its total amount of prior investment by $4 million. The company has also expanded its team from eight members to 12 members, which is a good sign. But overall, ThisWay Global’s limited progress, increased valuation, lack of significant increase in revenue multiple, failure to meet projections, and lack of details about current plans led to its downgrade to a Neutral Deal.

Even after experiencing stellar growth in 2020, ThisWay Global has unimpressive revenue numbers, considering the company has been incorporated since 2014. With this revenue, the current valuation is inflated, as its revenue multiple is well above the industry average. The recruitment software market is a decent size, but is only growing at a moderate pace. ThisWay Global also might have trouble grabbing a sizable market share as it competes with a plethora of companies that are in multiple sub-markets, such as job boards, candidate vetting, and recruitment agencies. While the price and the speed of its job matching could be ThisWay Global’s key advantages, there is not enough information to accurately create a competitive comparison. 

In its last raise in 2020, ThisWay Global projected to have $15 million in revenue by the end of 2022. However, based on its current revenue, the company will not be able to meet that expectation. Even so, the company increased its projection to $28 million. The company offers no details that can support this projection. So as it stands, ThisWay Global appears to be setting up unrealistic expectations it’s unlikely to meet.

ThisWay Global is led by an experienced founder. She has honed her managerial skills at her own consulting company and has been in the industry for more than 20 years. Her experience and network could hugely benefit ThisWay Global’s growth. She also has a strong supporting team. The company’s CTO worked at a company that was acquired by Walgreens. With such a strong team, ThisWay Global has the potential to build a product that stands out even in a small and crowded market. 

ThisWay Global’s performance so far has validated the team’s capability. The company increased its revenue by 370% in 2020. It has received $7 million in prior investment funding. And if the company’s sales projections come true, it could be game-changing, as the company would have a huge customer base as well as an exponential increase in revenue in the near future. Moreover, ThisWay Global is not a risky investment opportunity. It is a mature company that has poured a lot of time and capital into product development.

ThisWay Global is a job-matching platform that uses artificial intelligence to match all applicants to all jobs while automatically eliminating biases in job descriptions. The company’s current valuation-to-revenue multiple is well above the industry average. Although there is strong demand for unbiased recruitment practices, the recruitment software market is quite small and growing at just a moderate rate. The market is very competitive, as ThisWay Global competes with countless companies from multiple sub-markets. So it may be difficult for ThisWay Global to stand out and grab a sizable market share, especially when its product is not differentiated or defensible. Moreover, the company seems unlikely to hit its revenue projections from its last raise and even increased its projection in this raise. This feels overly ambitious, and the company gives investors little information to support this claim. 

However, the founder of ThisWay Global is experienced, and the company has a strong supporting team. The team’s capability shows in the company’s performance in the past few years. ThisWay Global grew its revenue by 370% in 2020 and has raised $7 million in prior investments. If what the company claims about its sales pipeline is true, the company could scale its customer base and revenue quickly in the near future. All in all, ThisWay Global is a Neutral Deal. 

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Analysis written by Inez Sanjaya, January 6, 2022.