Virtuix

Virtuix

Growth Stage

Creator of Omni, an omni-directional treadmill allowing users to walk and run inside popular games and virtual worlds

Creator of Omni, an omni-directional treadmill allowing users to walk and run inside popular games and virtual worlds

Overview

Raised this Round: Raised: $13,908,786

Total Commitments ($USD)

Platform

SeedInvest

Start Date

10/08/2020

Close Date

04/25/2021

Min. Goal
$1,000,000
Max. Goal
$15,000,000
Min. Investment

$998

Security Type

Equity - Preferred

Series

Series A

SEC Filing Type

RegA+    Open SEC Filing

Price Per Share

$3.00

Pre-Money Valuation

$65,000,000

Year Founded

2013

Industry

Media, Entertainment & Publishing

Tech Sector

GamingTech

Distribution Model

B2B/B2C

Margin

Medium

Capital Intensity

High

Location

Austin, Texas

Business Type

Growth

Virtuix, with a pre-money valuation of $65 million, is raising crowdfunding on SeedInvest through Reg A+ crowdfunding. The company is the creator of Omni, an omnidirectional treadmill that allows users to walk and run inside virtual worlds. Omni is a first-of-its-kind motion platform that enables players to walk and run in 360 degrees. Virtuix is led by Jan Goetgeluk and David Allan and has raised over $20 million in previous rounds of financing. The proceeds of the current crowdfunding round, with a minimum raise of $1,000,000 and a maximum raise of $10,000,000, will be used for sales and marketing, general and administrative expenses, and research and development. Virtuix doubled its revenues in FY ’20 and has shipped over 3,500 commercial Omni systems to 45 countries.

Balance Sheet

Cash and Cash Equivalents

$152,376

Investment Securities

$0

Accounts and Notes Receivable

$236,741

Property, Plant and Equipment (PP&E)

$352,944

Total Assets

$2,224,715

Accounts Payable & Accrued Liabilities

$1,238,383

Long Term Debt

$243,213

Total Liabilities

$5,599,103

Total Stockholders' Equity

$-3,374,388

Total Liabilities and Equity

$2,224,715

Statement of Comprehensive Income Information

Total Revenues

$3,855,193

Costs & Expenses Applicable to Rev

$2,949,851

Depreciation and Amortization

$184,510

Net Income

$-3,580,222

Earnings Per Share - Basic

$-0.65

Earnings Per Share - Diluted

$-0.65

Auditor: Artesian CPA, LLC
Financials as of: 10/08/2020
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Virtuix 09/05/2023 Dealmaker Securities $170,629,157 $3,871,559 Equity - Preferred Funded RegCF / RegD 506(c)
Virtuix 03/16/2023 StartEngine $180,000,000 $1,116,207 SAFE Funded RegCF
Virtuix 04/24/2021 SeedInvest $65,000,000 $13,908,786 Equity - Preferred Funded RegA+
Virtuix 07/30/2016 SeedInvest $35,000,000 - Equity - Preferred Funded RegA+
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Revenue History

Note: Revenue data points reflect the latest of either the most recent fiscal year's financials, or updated revenues directly from the founder, at each raise's close date.

Valuation History

Price per Share History

Note: Share prices shown in earlier rounds may not be indicative of any stock splits.

Employee History

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Analyst Report Analyst Report Methodology Article

Synopsis

The advancement of virtual reality (VR) technology was meant to drastically expand opportunities for entertainment. However, many technologists and analysts believe that VR has overpromised and underdelivered. VR devices are clunky, and systems are expensive. Only a tiny sliver of entertainment content is available in virtual reality. It seems that very few people are actually incorporating VR into their day-to-day lives. 

Virtuix is hoping to redefine our expectations of virtual reality, starting with video games. The company’s Omni treadmills create an immersive virtual reality experience that allows participants to walk, run, jump, and crouch to experience games with full immersion in virtual worlds. Omni treadmills look futuristic. Participants strap into a harness or waist restraint, don a virtual reality headset, and begin moving through virtual worlds while contained on the small Omni footprint. 

Virtuix is a well-established company, with over $10 million in Omni equipment sold. The company’s traction thus far has come from commercial sales of the Omni system to entertainment venues like Dave & Busters. Corporate entities can purchase single Omni treadmills or a large bank of multiple devices — called Omni Arena — for multiplayer interactions. In 2021, Virtuix plans to launch the Omni One, an at-home virtual reality treadmill meant for everyday gaming. The unit will retail for just under $2,000. 

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

Next Section: Price

Price

Virtuix is raising a Series A-2 round, selling preferred equity at a pre-money valuation of $65,000,000. That price is very high among typical equity crowdfunding offerings — but not without reason. Virtuix has raised over $20 million in capital so far from investors like Mark Cuban, Scout Ventures, and Maveron. It also holds 14 issued patents (with six more pending) for proprietary technology that has taken years to develop. This valuation seems a bit high for the company’s current revenues — but is not unreasonable given its funding history and extent of intellectual property.

Next Section: Market

Market

Virtuix has conducted internal primary research to determine its market size. The company estimates that 14 million households in the U.S. compose its serviceable market, defined as households with annual incomes of at least $50,000 who own a gaming device already and would consider purchasing a $2,000 Omni. This data doesn’t seem entirely unreasonable, but perhaps skews a bit optimistic. Virtuix believes that households with total annual incomes of $50,000-to-$70,000 might consider an Omni purchase, but a $2,000 spend on brand-new, discretionary technology might not be top priority for the average American family, particularly given the lasting impact of the COVID recession. 

That being said, the market for virtual reality video games is growing rapidly. The global “virtual reality in gaming” market was projected to hit $11.56 billion in 2019, with an estimated CAGR of 30.2% between 2020 and 2027. That’s a significant growth rate, in line with consumers’ continued high expectations about the futuristic potential of VR gaming. Omni treadmills only appeal to a narrow sliver of that market, though, given the products’ high price point. Likely only a few million people in the U.S. are willing to purchase this product for many years to come, so Virtuix’ market size is relatively small. 

Next Section: Team

Team

Virtuix was founded by Jan Goegeluk, a finance professional who built the Omni prototype around his day job as an investment banker at J.P. Morgan. Jan has been running the company ever since, for almost eight years. He holds B.S. and M.S. degrees in mechanical engineering from the University of Ghent in Belgium and an MBA from Rice University. 

Virtuix’ President and COO David Allan is a long-time business executive with 25 years of experience at engineering and manufacturing companies. Allan speaks fluent Mandarin and splits his time between Taiwan and China. Allan has helped Virtuix secure its supply chain in China, a significant cost advantage that contributes to the companies’ strong margins. 

Overall, the Virtuix team is deeply experienced and offers a wide range of skill sets in engineering, gaming, business, and international manufacturing.

Next Section: Differentiators

Differentiators

Virtuix is building groundbreaking technology and has developed a significant competitive moat with 14 issued patents and six more pending. The company has already generated buzz ahead of the launch of its Omni One at-home treadmills, with a recent article in The Verge and unprecedented interest in its pre-offering on SeedInvest. 

Virtuix is not the only company building VR gaming treadmills, though. Cyberith, KatWalk, and several other companies offer similar products, though the Omni seems to win out among most technologists’ reviews. Other competitors do not seem to have achieved such widespread distribution as Virtuix either. Omnis have been shipped to 45 countries, and Virtuix has already been generating significant revenue from commercial sales in advance of its consumer product launch.

Virtuix Omni products seem to outrank competitors, and the treadmills’ proprietary tech is patented several times over. Virtuix has also established sales channels nationwide for commercial products and has generated buzz ahead of its consumer launch. All told, Virtuix is well differentiated from less prominent competitors.

Next Section: Performance

Performance

Over the last seven years, Virtuix has sold over $10 million worth of products in 45 countries. In 2019, the company generated $1.6 million in revenue. Revenue increased by over 100% to almost $3.9 million in its fiscal year ending March 2020. Virtuix’ product margins are strong. In its most recent fiscal year, $3.9 million in revenue was matched with $2.95 million in expenses for almost $1 million in gross profit. 

The company is operating at a net loss, one that increased between 2019 and 2020. In ‘19 the company lost $2.67 million, up to $3.58 million in 2020. Higher net losses for the fiscal year ending March 2020 were due to increased general and administrative expenses — not product development expenses, which is somewhat surprising given that Virtuix is on the verge of launching a major new consumer product. 

Overall, Virtuix’ performance is strong and shows high growth potential upon the launch of the company’s in-demand consumer VR treadmill. Gross margins are particularly promising, though increased G&A expenses last year are a caution for prospective investors.

Next Section: Other

Bearish Outlook

While a certain group of early adopters and VR enthusiasts are undoubtedly going to purchase the Omni consumer product — and probably rate it highly given the popularity of Virtuix’s existing commercial treadmills — the real question lies in Virtuix’s mass-market appeal. Virtuix stakes a claim that households nationwide will shell out $2,000 to buy the Omni treadmill. While that might be true, it seems unlikely. 

The company further speculates that its business model will be as sticky as Peloton’s, with initial revenue from the physical product plus higher-margin recurring revenue from game subscriptions and one-off purchases. This uncovers a major question: are Virtuix games as high-quality as games sold for other gaming systems? If games aren’t that interesting, the Omni treadmill threatens to become a very large waste of space. Virtuix develops games in-house, but almost definitely does not boast the game development talent of major gaming competitors creating for PlayStation and Xbox. 

Ultimately, Virtuix could be a big boom or a big bust. If the company’s consumer VR treadmill launch underperforms, it may struggle to earn its high valuation and generate returns for investors. There are also significant question marks about how consumers will respond to both the physical product and Virtuix games.

Next Section: Bullish Outlook

Bullish Outlook

Again, Virtuix could be a big boom or a big bust. In a big boom scenario, early adopters absolutely love the product and evangelize it strongly in popular media, creating an insatiable consumer demand for Virtuix. The company does have the potential to achieve Peloton heights: at one time it seemed ridiculous for consumers to buy a $2,000 spin bike, but now Peloton is one of the most successful consumer brands in recent memory. Virtuix promises much more innovative tech, albeit to a smaller market. 

Assuming Virtuix can make a splash with its at-home consumer product, the company has undeniably prepared to build a successful empire. Its depth of intellectual property is a strong differentiator, and its manufacturing operation in China (spearheaded by its accomplished Mandarin-speaking President and COO) gives it an advantage in quick, low-cost production. And remember, Virtuix still operates a thriving B2B business whether or not its consumer product is successful. That business has shown strong revenue growth in recent years and will likely grow even more by feeding off buzz from the Omni at-home launch. 

Frankly, the Virtuix Omni One product is simply very cool. It’s the kind of product that can mesmerize anyone for a moment, and Virtuix has strong potential to build a highly loyal network of gamers. If the product is as functional as it is futuristic, it could be a huge success. 

Next Section: Executive Summary

Executive Summary

Virtuix has been producing futuristic virtual reality treadmills for seven years, with strong success providing commercial gaming products for entertainment venues. Now the company is poised to launch Omni One, a revolutionary at-home VR gaming treadmill allowing players to truly immerse themselves in games.

In short, Virtuix has the potential to fall flat — or be a huge success. It’s simply too soon to tell whether the Omni One will generate the consumer buzz of a Peloton bike, or whether it appeals to a limited market of people willing to buy $2,000 for a video game system. The company offers strong signals, including an experienced team, solid margins, and a portfolio of patents, but net income decreased in 2020 and investors will buy in at a high valuation. Therefore, Virtuix 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

Analysis written by Katy Dolan. 

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Virtuix on SeedInvest
Platform: SeedInvest
Security Type: Equity - Preferred
Valuation: $65,000,000
Price per Share: $3.00

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