Boxable is raising funds by offering preferred equity for $0.71 per share at a pre-money valuation of $226,259,347. This is an extremely high valuation for any startup, even one expecting to reach the industrial scale Boxabl aspires to. However, the company has generated significant interest, including 2,000 paid deposits. Multiplying these deposits by a price tag of $50,000 per house comes out to an eventual $100 million in revenue, which helps to justify Boxabl’s valuation. This is quite different from having $100 million in actual, concrete revenue, however, so Boxabl receives a poor price rating.

While Boxabl does plan to eventually reach markets across the world through partnership programs, it must prove its business model a success in the US first through its accessory dwelling unit (ACU) Casita product. The US had 128.45 million households in 2020, a slight decrease from 2019. Multiplying the total number of households by the Casita price of $50,000 results in a potential market of $6.4 trillion. It should be noted that California, the location of Boxabl’s first factory, holds the nation’s largest housing market with more than a fifth of the total housing value in the US. However, the housing market is expected to grow quite slowly, and there are many established competitors which Boxabl will be facing off against. There is very little chance that Boxabl will secure the entire housing market, so the company’s actual addressable market will be somewhat smaller than $6.4 trillion. That still leaves plenty of room for growth and expansion, though. Thus, the market score for Boxable is strong.

Boxabl is led by a pair of founders with complementary and significant experience in the startup arena. CEO Paolo Tiramani is also CEO and founder of 500 Group Inc., an intellectual property, investment, and development firm that holds Boxabl under its umbrella. Paolo has served with 500 Group for the past three decades, generating significant revenue through corporate licensing and sales. During that time, he has accumulated 155 patent filings (60 active patents across the US and Europe) in mechanical engineering and industrial design. Paolo’s other current interest under 500 Group is Supercar System, a startup automaker planning to bring affordable supercars to market.

Paolo Tiramani’s partner in this venture is co-founder and Director Galiano Tiramani, an entrepreneur in cryptocurrency and ATMs through his previous startup, CoinHub. CoinHub isn’t a cryptocurrency producer. It enables users to navigate the complex realm of cryptocurrency trade and manage their portfolios. Galiano holds a Bachelor of Business Administration in international business from Sacred Heart University.

COO Greg Ehlers is a former Wall Street executive, who holds an MDR (law degree) from Pepperdine Caruso Law. Ehlers has experience building businesses across a number of investment banks, including UBS Investment Bank, and his financial experience is a useful asset to a startup tackling a truly enormous challenge.

While the team’s varied experiences complement each other, there is a notable lack of experience in the manufacturing industry among the management-level executive team. However, Boxabl’s team score is still above average in reflection of its co-founders’ extensive entrepreneurial experience.

At least in its initial offerings, Boxabl is emerging into the trendy “tiny home” market as well as existing backyard and foldable homes markets. Compared to existing offerings, Boxabl’s most significant differentiation is its price marker. Competitor BluHomes offers its accessory dwelling unit (ACU), the Cabana 600, starting at $195,000. Boxabl’s Casita comes in at a fourth of that price despite being more than half the size. The company’s manufacturing process is also protected through a network of 17 patents. While competition across these markets is significant, the market is not overly crowded, and there is definitely room for growth.

One of Boxabl’s biggest advantages is its scalable factory model, which could enable it to scale up for larger offerings as it grows and eventually license its model to partner startups. Designing a factory system from the ground up is not an easy feat, which further strengthens the defensive moat which Boxabl has developed for itself. Due to its competitive price point, multiple patents, and unique factory approach, the differentiators score for Boxabl is its highest across all five metrics.

Boxabl is still in the pre-profit stage. It has taken 2,000 paid deposits for Casita units which could translate to huge revenue down the line. These deposits contribute to $60,000 in 2019 revenue and $90,000 in 2020 revenue. The company has established significant traction among consumers, securing 20,000 product reservations. The federal government has also ordered 156 homes, although the nature of these contracts is unclear. In prior fundraising, including through Wefunder, Boxabl raised nearly $6 million. Thus far, Boxabl seems to have executed well with the capital it’s received, and it has begun to see revenue. Therefore, it scores highly in the performance metric. 

For the purposes of this raise, Boxabl’s most notable risks are of a financial nature. At Boxabl’s ambitious valuation, the company will need to perform very well for investors to see significant returns on these terms. Such returns are unlikely to occur for several years, during which the housing market is likely to remain in flux. There is a risk that home buyers might prefer to spend a little more for significantly larger houses rather than save on tiny Casita units. Tiny homes are increasingly popular but not overwhelmingly so.

In the short term, Boxabl’s traction and ambitious roadmap have come with a hefty price tag. The company holds more than $3.4 million in short-term debt. As significant profits are likely years down the road, Boxabl will need to continue raising funds at a rapid rate to support its growth. The company could conceivably fold if its early traction does not lead to further consumer engagement that justifies the massive up-front investment of the factory model. In addition to these risks, the market itself presents significant obstacles. Lumber prices remain very high, regulation is at its highest levels ever, and scaling the product at a level necessary to lower and recoup costs is a significant challenge.

Looking at an investment in Boxabl, the biggest question yet to be answered is about its home assembly model. While a huge competitive advantage over existing home manufacturers, the process has yet to be tested. The factory hasn’t been built yet. It is not unusual for startups to be premised on unproven concepts. In this case, however, a lack of manufacturing experience among senior leadership gives some reason to doubt the model’s execution. In addition — given the startup’s significant risk — some reflection of that risk should be expected in the pre-money valuation but does not seem to be there.

While its process is unproven and returns for investors are years away, Boxabl has the potential to entirely disrupt the housing construction market. Factory assembly could be a game-changer for an industry that has for years remained steadily reliant on onsite human workers. Assuming the production process works as expected, Boxabl could use its early traction and high levels of interest in affordable housing options to grow to one of the alternative housing market’s most prominent players. It might even lower the price of available housing for the majority of consumers.

Boxabl is committed to lowering the cost of home ownership for everyone. It plans to turn homebuilding from an onsite, worker-intensive slog to a factory-streamlined process. Modules are custom-assembled and shipped to their intended destinations, where they are easily and quickly “unpacked” and made ready for human habitation. Through factory mass production, costs are cut significantly, addressing national and global housing crises. Its first model, the Casita, has more than 20,000 reservations. Boxabl is launching its first factory to produce Casitas for its first client: the US federal government.

Boxabl is addressing an urgent housing market shortage with a cheaper product than its competitors and has extensively patent-protected its assembly process. However, that process has yet to be proven to work. At a huge pre-money valuation, investors will need to see absolutely massive traction to achieve reasonable returns. A lack of manufacturing experience in the leadership team also casts doubt on the model’s viability, and high short-term debts present significant financial risks. Despite challenges and questions about both supply and process, Boxabl’s model could disrupt the alternative housing market and make housing more affordable for all. With this in mind, Boxabl is a Neutral Deal.

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Analysis written by Benjamin Potts.