Traq365 is raising via a Crowd SAFE at a $7.5 million valuation for early bird investors or an $8.5 million valuation for investors who miss the early window. This is a high-tech company leveraging proprietary artificial intelligence (AI) to translate complex, qualitative sales data into quantitative insights. If the Traq365 product can actually deliver on that value proposition, it will be a very valuable piece of technology. However, Traq365 hasn’t generated any revenue yet. With no revenue and limited operations, an $8.5 million valuation is unjustified. Despite this factor, the valuation is in line with other early stage startups currently raising capital online. Overall, Traq365 is offering an acceptable but not particularly favorable valuation in this funding round.

Conversational artificial intelligence (AI) is a growing industry. As AI technology improves to more reliably capture speech and interpret its meaning, conversational AI has the power to revolutionize a number of industries. As such, the global market for conversational AI was valued at $4.91 billion in 2020. It’s expected to grow  22.6% annually in coming years. Such a high growth rate indicates that the market will likely have plenty of room for new companies to establish themselves.

Traq365 sits within the conversational AI industry, but the company’s buyers will regard it as a piece of sales software. Sales tools make up a growing market, too. The global sales intelligence market is expected to grow annually by 12.3% over the next four years and reach $3.8 billion by 2025. Traq365 could also capture value from adjacent markets, like those for customer relationship management, sales performance tools, and more. 

Traq365 is developing a piece of cutting-edge technology that services a large and growing market of sales professionals. The company has a strong market potential and opportunity ahead of it. 

Traq365 was founded by seasoned entrepreneur and executive Adam Rubenstein. Rubenstein holds an MBA from UPenn Wharton and has led companies to three exits. Most notably, Rubenstein co-founded website translation company MotionPoint. He served as COO for 20 years there. Sales was a large part of Rubenstein’s role at MotionPoint, which motivated his desire for a tool that could capture the more human element of sales conversations. 

Rubenstein hired Peter Rice and Chris Rice to bring his vision for Traq365 to life. CTO Peter Rice has more than 25 years of software development experience. Beyond that, his background is a mystery as his LinkedIn page doesn’t list any roles prior to Traq365. Chief Experience Officer Chris Rice’s background is equally unclear. He is apparently experienced in user experience design, but the only role listed on his LinkedIn page is Partner at Webtego (apparently a web development agency) for 20 years. 

It is difficult to fully assess the Traq365 team as so little information is available on key team members’ backgrounds. However, there’s no doubt that Rubenstein is a strong founder.. His previous role as the executive of an exited technology company offers a strong signal that he has the operational skills necessary to scale a business. 

Traq365 is not the only company building a conversational AI tool for sales. Both Chorus and Gong offer similar technology to record and analyze sales conversations, and both companies have raised hundreds of millions of dollars. The presence of these major market players is both a good and bad sign for Traq365. Clearly, sales professionals are willing to invest in a conversational AI tool. Product-market fit seems to be a given — as long as Traq365 can reliably provide a similar product quality. However, it might be difficult for Traq365 to carve out market share when these larger companies can offer a more robust product suite. 

Beyond Chorus and Gong, Traq365 has a leg up over new competitors. The company has already shipped a minimum viable product that is in beta testing with early customers, and a high-tech product like this is relatively difficult to replicate. With significant prior investment and a founder experienced in growing a technology company, Traq365 has competitive advantages over new entrants to this market. The company will need to focus on standing out against pre-existing competitors as it grows.

Traq365 is a pre-revenue company. Its burn rate has been somewhat reasonable thus far, given how technically complicated the Traq365 product is. The company posted a net loss of $618,504 last year, with the majority of expenses going toward research and development. 

Prior fundraising is a strong performance indicator for Traq365. Founder Adam Rubenstein clearly has a robust network from his prior entrepreneurial successes. He was able to raise $1.275 million in a friends and family round to fund Traq365’s development. That’s an impressive pre-seed round and could indicate that Traq365 will have reliable access to capital in the future. 

Given Traq365’s early stage, there’s not a great deal of performance data to assess. Based on the strength of the company’s fundraising activities alone, though, Traq365 seems to be on track for growth.

The main risk factor for Traq365 is financials. With zero revenue thus far, it’s still speculative whether the company can generate enough money to cover operations. Given Traq365’s pre-revenue stage, these investment terms (a high valuation paired with a Crowd SAFE) are risky for investors. There’s also a product risk. Traq365’s vision is ambitious, and its product will have to live up to the hype. However, Traq365 already has a beta product, has raised a good deal of capital, and is led by an experienced founder. These signs seem to indicate that the product will not disappoint. All in all, Traq365 is about as risky as the average crowdfunding investment opportunity. 

Traq365’s product seems capable of revolutionizing the way that salespeople analyze conversational data. In fact, it’s already clear that sales teams can benefit from conversational artificial intelligence (AI). Two large companies already provide a similar product. The presence of these well-funded, successful companies is a concern for Traq365. Both Chorus and Gong have raised hundreds of millions of dollars, have strong brands, and boast major companies as clients. It’s not clear how Traq365 intends to overcome the presence of very similar, proven products in this emerging sales conversational AI market. At the moment, Traq365 seems to lose out in terms of product quality, branding, and access to Fortune 500 clients. The company will also need to ensure that its final product lives up to the hype and promises it has made. It’s too soon to say whether Traq365 has what it takes to carve out market share alongside two major incumbents. 

Traq365’s product is compelling. It makes sense that artificial intelligence-enabled conversational analysis could dramatically improve sales outcomes. Traq365 seems like the kind of product that would be embraced by end users and decision makers alike, since sales representatives can save time on manual data entry and sales managers can appreciate greater visibility into sales conversations. 

In addition, Traq365 is led by a seasoned entrepreneur who has already scaled a company to success over the course of 20 years. Founder Adam Rubenstein’s two decades as the COO of MotionPoint may benefit Traq365 in multiple ways. He has deep sales experience, a clear benefit for the Traq365 product. He also clearly has a built-in network of investors who have contributed more than $1 million in funding thus far. This network could yield additional investors, advisors, hires, and other assets along Traq365’s journey. With the guidance of this seasoned founder and the support of his valuable network, Traq365 might well have what it takes to succeed. 

Traq365 is a sales intelligence tool that leverages conversational artificial intelligence (AI) to record and synthesize sales conversations. Sales managers can use this automated data to measure conversation sentiment, the effectiveness of each individual representative, and other key metrics to inform sales team success. Traq365 is led by a seasoned entrepreneur with prior exits, and the company already raised $1.275 million to fund development of a minimum viable product. 

On the other hand, Traq365 hasn’t generated any revenue yet. It’s concerning that there are already two major players in the sales conversational AI market, and Traq365 doesn’t share detailed go-to-market plans that address how it will contend with that competition. Given these concerns, the company is overvalued for a pre-revenue company. Therefore, Trac365 has been rated a Neutral Deal. 

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

September 24, 2021