Solutions Vending International to the next level, the management team at the firm is seeking to raise up to $5 million through a Regulation A+ raise. The valuation for the company is $26.3 million on a pre-money basis. This does appear lofty at first glance. However, given the company’s latest traction and growth, it may not be wholly unreasonable. 

Management points to a $4 trillion market opportunity, but this refers exclusively to the regulated retail space. There is no market data that we could find that affirms this, but if you take the four major segments the company pointed out, the figure does get close. At present, the global cannabis market is valued at about $27.1 billion according to one source. By 2027, it should climb to $73.6 billion for an implied annual increase of 18.1%. A second source puts the figure at $24.9 billion with an annualized growth rate of 32.9% taking it to $97.35 billion by 2026. Alcohol, meanwhile, is worth about $1.56 trillion. A 2% annual growth rate should take it to $1.68 billion by 2025. Tobacco should grow at about 3.1% per annum, rising from $902.5 billion this year to $1.08 trillion by 2027. And the pharmaceutical delivery market should grow by 7.1% per annum from $1.53 trillion to $2.02 trillion by 2025. For this year, these four combined markets are worth about $4.02 trillion. 

This represents the opportunity for companies in regulated markets to sell their goods through kiosks. The opportunity for Solutions Vending, though, is far smaller. The best-case scenario would be the revenue-share opportunity the company is exploring. But it’s impossible to know how much of the market for these goods will move to the kiosk space. The rest of its business model is confined to the interactive kiosk market. One source pegs that opportunity at $28.5 billion for 2021. With an annualized growth rate of 6.9%, it should climb to $42.5 billion by the end of 2028. A second source pegged the market this year at $23 billion, with growth of 12.5% per annum taking it to $46.25 billion by 2027. 

Overall, the market opportunity for Solutions Vending — though not as massive as the company claims — is still significant. If it can secure a healthy market portion for itself, it will have ample room to provide investors with a return.

Though Solutions Vending has an extensive team, the only founder of the business is Dawn Dickson. She also serves as the company’s CEO and Director. Dickson has extensive entrepreneurial experience. She previously founded Flat Out Of Heels, a company dedicated to producing a better ballet flat. She was also the founder and Managing Partner of D1 Consulting Group. That company provided event management, fundraising, and marketing consulting services to its clients. She has also served as a Marketing and Business Development Coordinator of HBCU Connect. That organization served as an online community for alumni, students, and other stakeholders involved in Historically Black Colleges and Universities. Prior to that, she was co-founder and CEO of TheUrbanStarr.com, an event and opportunities promotion company in Columbus, Ohio. 

Though not a founder, the only other key member of the operational team is Dan Rockwell. Rockwell serves as Solutions Vending’s CTO. He is also the CEO and co-founder of Big Kitty Labs, a software development company. He has also served as a Board Member for RedBull Software. That company’s focus is on production-based greenhouse management systems. On the advisor side, one noteworthy individual at the business is Jeff Hoffman. Readers might know him as the founder of Priceline.com. That is a significant catch for the business and it adds a lot of credibility to what they are doing. 

A thorough search of competitors found a number of kiosk manufacturers. All of these firms had varying degrees of functionality, but none seemed to focus on the regulated retail space. And few had any real software side that does what Solutions Vending’s technology purports to do. The closest we found was Advanced Kiosks. That firm provides hardware and software, including white-label software. Most of its functionality appears to involve interactive marketing and security management. Other companies include I&E Company with The Specter Kiosk, and Acrelec. Overall, though, Solutions Vending does appear to be the most unique in its space. It remains to be seen if these differences will be enough to truly set it apart from the competition.

Performance for Solutions Vending has been mixed. In 2018 and 2019, the company generated nothing in the way of revenue. In 2018, the company generated a loss of $739,708, while its operating cash outflow totaled $473,168. In 2019, its loss grew to $932,510, while its cash outflows more than doubled to $1.06 million. No data was provided for 2020, but management did say that during that period they completed two pilots with customers. These pilots have resulted in full purchase contracts, but details have not been offered as to how large these are. The company also announced that it is working with a top three global wine producer. This is a business with distribution in over 90 countries and sales in excess of $5 billion annually. Another partnership seems to involve Cremers, as a premier cannabis retailer in The Hague, Netherlands. An absence of details is discouraging in and of itself. But if even one of these relationships turns out to be significant, the upside for the company could be large.

There are some important items that investors need to focus on before deciding whether or not to invest in Solutions Vending. On the bearish side, you have the significant net losses and cash outflows the company has generated. The absence of revenue is problematic. This is especially true when you consider its large pre-money valuation, though the deals it recently struck could offset this. Although Dickson is an experienced founder, her past endeavors do not include anything comparable to this space. It still remains to be seen if Solutions Vending can deliver on its promises and if this is the right team to take the company forward.

On the bullish side of the equation, there’s plenty for investors to like as well. For starters, the industry the firm plays in is fairly sizable and it’s growing at a nice clip. The company’s overall team (including advisor Hoffman) looks solid. One big plus is that the business is playing a particular niche in this space, and it’s a niche that’s underserved. Solutions Vending’s previous capital raises are encouraging, as is the fact that it has two purchase contracts and other partnership opportunities on the horizon. 

On the whole, Solutions Vending is most definitely an interesting business. However, it’s not a clear winner at this stage. For that to be the case, we need to see real traction regarding sales and the company’s bottom line. It does have plenty of strong points, though, and so long as management continues to push forward, the business seems to have a chance of success. Due to the current uncertainties facing the business, though, Solutions Vending International is a Neutral Deal at this time.

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

Analysis written by Daniel Jones.