TransitNet is currently pre-revenue and engaging in beta testing. Having said that, the platform’s valuation seems reasonably attractive. Early investors in the firm received the opportunity to invest in a SAFE with a $5 million valuation cap and a 20% discount upon future conversion. Current investors, meanwhile, can invest subject to a $6 million valuation cap and a 10% discount. Due to this low valuation, TransitNet’s price score is above average.

The overall market for cryptocurrency and blockchain is hot. The value of bitcoin alone is about $920 billion, and the value for all cryptocurrencies on the market is approaching $1.5 trillion. The number of cryptocurrency wallets across the globe today total 66.3 million. That’s up 43.5% from the 46.2 million seen just one year earlier. Never mind that this ignores all of the other applications for blockchain that exist today. The global blockchain application market in 2020 was worth about $3 billion. With an anticipated annualized growth rate of 67.3%, it should rise to $39.7 billion by 2025.

A closer fit to what TransitNet is working on is the identity verification market. The management team at the firm believes that this represents a roughly $5 billion market opportunity. But our research indicates it’s likely larger. According to one source, the industry should have been worth about $7.6 billion last year. With an annualized growth rate of 15.6%, it should climb to $15.8 billion by 2025. A second source takes the market opportunity from $7 billion last year to $18.1 billion by 2027. This implies an annualized growth rate of 14.6%. A third source estimates that in 2019 the industry was worth $6 billion. With an annual growth rate of 16%, it should rise to $12.8 billion by 2024.

TransitNet operates in a small market niche overall. However, that limited potential is somewhat offset by the rapid rate at which it should grow. Balancing these factors together, TransitNet’s market score is slightly below average.

A quality management team is always a big plus for investors to see. And that is precisely what TransitNet boasts. At the helm of the company is Eric Jackson, the company’s co-founder and CEO. At present, he is also co-founder and CEO of CapLinked. That business provides services that make it easier for companies to share information with outside parties. The B2B nature of CapLinked gives Jackson significant insight into how its potential clients view new and innovative technologies. His role there also shows leadership experience. Additionally, Jackson is also currently a member of FES LLC, a firm that makes investments in and provides consulting to technology companies. Prior to these roles, he was a Board Member for CritiqueIt, a cloud-based collaboration software company. His role before that was as the CEO and co-founder of World Ahead Media, a non-fiction and world affairs media business. The first major role he had at a firm, though, was at PayPal, where he worked as the company’s Senior Director of Marketing for the US. All of these show leadership experience and his interest in cutting-edge technology applications.

The other key member on TransitNet’s team is Christopher Grey. Grey is the other co-founder of the business, and he serves as its COO. Other roles he has had over the years include as co-founder and COO of CapLinked and as a Managing Partner at Third Wave Partners. At the latter, he focused on undervalued real estate and distressed transactions. Before that, he was a Managing Director for Emigrant Bank, and before that he worked as a Managing Partner at Crestridge Investments. At the latter, he helped to oversee more than $600 million worth of financial transactions. None of these positions relate directly to TransitNet’s current operations. But they are proof of leadership experience and the ability to plan ahead operationally.

It is also worth mentioning that there are other parties involved with this operation. These parties include Peter Thiel, Founders Fund, 500 Startups, and more. Given these relationships and the high quality of TransitNet’s co-founders, the company’s team score is very high.

Differentiation is a sticky topic at first glance. If we are talking about blockchain title operations broadly, TransitNet is far from the only player in the space. The governments in Georgia (the country) and Zambia have started using blockchain for land titles. The UK has begun experimenting with this idea as well. Individual companies also operate in this space too — such as Ubitquity and TitleToken. These, however, seem to focus largely on title insurance and real estate operations. TransitNet, meanwhile, is focused on cryptocurrency wallets. This is where the business does stand apart from the competition. By concentrating on cryptocurrency wallets, TransitNet is setting itself up to offer validation services at a time when many institutional investors are becoming more and more involved with bitcoin. Due to the highly technical nature of this work, the company also has some defensibility for its platform. As a result, TransitNet’s differentiators score is one of its highest.

In most areas we have seen, TransitNet has been rated above average. One place it is weak, though, is performance. On the plus side, the company is in its beta testing phase, and it has partners it is working with to validate its technology. The company also has a solid plan for the future, but besides developing its Asset Collision Identifier, it has nothing else really to show currently. The company’s balance sheet is indicative of a business that has just started up. And it has no income statements or cash flow statements. Revenue is certainly nothing, and the business is very probably generating significant net losses. But we can’t see what those are. Due to the lack of financial data and the company’s early development stage, TransitNet’s performance score is its lowest across all five metrics.

At present, there are some bearish things for investors to consider when thinking about investing in TransitNet. First and foremost is the small industry the company operates in. This really does limit its upside potential. The firm also has limited traction besides the creation of its platform as it is today. Although the company’s concept is solid, it remains to be seen if it can properly execute and monetize its product. This uncertainty creates risks for early investors.

At the bullish side of the argument, there are some things investors should be cognizant of. For starters, TransitNet’s team appears to be top-notch. While the industry is small, it is growing at a rapid pace. The pricing of the business is quite reasonable, and there’s enough in the way of differentiation to keep prospective investors interested. Throw in the partners it has arranged and the support it has behind its back, and the business does make for an interesting prospect.

On the whole, TransitNet is an interesting prospect. Cryptocurrency, blockchain, and identity verification are all growing markets. There’s also the fact that many institutions across the world either would require the services it’s offering or would benefit from them as they consider transitioning to blockchain/cryptocurrency. There are, naturally, some negatives here. TransitNet still has to prove that it can deliver on its ambitious goals. And it will need to stay ahead of the competition in order to claim a significant niche in the market. TransitNet’s rating as a Neutral Deal reflects our view of the upside potential of the company, but also of the risks involved with it.

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

Analysis written by Daniel Jones.