Gryphon is offering preferred equity at a $25 million pre-money valuation. This amount seems high, but the price is actually reasonable given the company’s traction and historical growth. The company has more than $3 million in held assets and has seen more than $1 million in total revenue already. 

Identifying Gryphon’s market is a bit tricky. The company does offer a router, but that’s not its sole market. Gryphon is ultimately a cybersecurity play. That gives investors a significant opportunity. According to one source, the cybersecurity market was valued at $162.5 billion in 2020, and current forecasts call for it to grow to $418.3 billion by 2028 at an annual rate of 12.5%. A second source pegs the market opportunity at $167.1 billion with a 10.9% annualized growth rate, taking it to $382.4 billion by 2028. A third source sees the industry growing at that same 10.9% growth rate from $162.6 billion in 2020 to $372 billion by 2028. All of these estimates indicate that Gryphon is targeting a large and growing market, providing ample opportunity for the company to scale. In North America, the cybersecurity market was worth $51.6 billion in 2018, and it should climb to $82.5 billion by 2023 at an annualized growth rate of 9.8%. Thus, Gryphon should be able to address a substantial local market from the start. 

At the helm of Gryphon stand two co-founders. The first is John Wu, the company’s current CEO. Previously, he was employed as a vice president of advanced engineering and MiFi labs at Novatel Wireless. Prior to that, he worked at that same company as its vice president of global software. These roles demonstrate not just leadership experience, but also an emphasis on the very types of technology that Gryphon is based on. Before holding these positions, Wu was employed as a DSP manager at Motorola, where he worked on software and algorithm development for its wireless CDMA chipsets. 

Gryphon’s other co-founder is CTO Arup Bhattacharya. Bhattacharya was previously employed as a senior director of software, MiFi, machine-to-machine, and IoT at Novatel Wireless. Before that, he was a senior director of mobile software as well as a site leader at NVIDIA. He has also worked as the vice president of engineering at PortalPlayer and as a senior principal of software engineering at America Megatrends. These positions demonstrate significant technical and leadership experience that would be relevant for his current role at Gryphon.

Overall, Gryphon’s co-founders are well-qualified to lead a tech-focused startup. The only drawback is that they both lack any prior entrepreneurial experience, but this is not a massive mark against them.

One of Gryphon’s big differentiators is its Homebound app — namely, its ability to route all activity that a device sees through the cloud and subject that activity to its settings. Second, the company relies heavily on the data it collects to allow its system to teach itself. This allows Gryphon to take that information and improve the network over time, resulting in a business model that is essentially an upgraded version of many of the routers and routing services that exist today. These strong distinctions should help the company stand out against big name competitors. Management also boasts five patents and more that are pending. Those patents provide Gryphon with much-needed defensibility.

In terms of performance, Gryphon has excelled in many ways. The company already has multiple devices for sale as well as multiple services for its customers. It is actively generating revenue. According to the company’s audited financial statements, sales rose from $1.6 million in 2019 to $3.2 million in 2020. Much of these sales have occurred as a result of the company selling more than 25,000 routers. The service portion of this revenue continues to grow, climbing from 13.9% of total sales in 2019 to 16.4% last year. This is particularly positive since service-based revenue tends to be higher-margin in nature. Perhaps the only downside is Gryphon’s bottom line, with net loss rising from $1.41 million in 2019 to almost $1.55 million last year. However, its net cash outflow improved from $1.2 million in 2019 to $802,636 last year. 

Gryphon is still generating net losses and net cash outflows. However, this is to be expected given how early-stage the company is. Gryphon’s other main disadvantage is that its core offering, a router, is not unique on its own. Although the company has patents protecting it and more pending, competitors could still come out with similar service offerings. Gryphon will need to continue expanding and emphasizing its cybersecurity features and services in order to maintain distinction from competitors.

Gryphon has several patents and an entire ecosystem of products and services that it is already selling. The founding team is highly experienced, and the company’s revenue growth is excellent. The service revenue aspect of the business model is particularly promising since it allows for recurring revenue that, on its own, should generate attractive margins for the enterprise. The market the company operates in is large and growing at an attractive rate as well. Overall, Gryphon is positioned to excel.

Gryphon offers investors an attractive opportunity. The company produces a WiFi router with a protected, cloud-managed network and a long list of other smart features. The company is still generating net losses, and routers alone are not a unique proposition. However, Gryphon’s business model is differentiated from the competition, and its emphasis on growing its service revenue is appealing. The company has multiple patents and a robust management team. In all, Gryphon is a Deal to Watch.

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Analysis written by Daniel Jones.