HelloWoofy is currently offering a convertible note at a $9.5 million valuation cap with a 15% discount. This valuation hasn’t increased since the company’s last round, which is reasonable given its overall slow traction. But HelloWoofy generated more than $130,000 in revenue in 2020, which is a drastic increase over 2019’s revenue. And the 15% discount further sweetens the deal for investors. Overall, the company has a fair valuation and receives an above-average price rating.

HelloWoofy operates in the diverse and growing social media advertising market. In 2020, more than $40 billion was spent on paid advertising on various social networks. And this spending will likely increase, as an estimated 90% of US companies will be using social media for marketing purposes in the future. 

But overall, HelloWoofy’s addressable market is limited given its niche in serving small- and medium-sized businesses. In 2021, the social media advertising market for small- and medium-sized businesses is estimated to be $2 billion, which is a small market compared to the entire social media advertising market. US social media advertising for this market is expected to grow by an average of 7.6% per year. Overall, the small market niche gives HelloWoofy a below-average market rating.

HelloWoofy CEO Arjun Rai founded the company in 2016. Rai has an extensive background in data, smart marketing, and technology as a serial entrepreneur. He founded four other companies, two of which are data-focused and part of HelloWoofy and one of which was a social media agency. His experience is critical for both expanding HelloWoofy’s product offerings and leading brand adoption. Rai is well-versed in startups through his education at the New York Institute of Technology and Draper University. 

The rest of the HelloWoofy team is 15 people strong. It is composed of data scientists, engineers, marketing experts, designers, and content creators. The team boasts complementary skill sets and diverse backgrounds. Diversity is often a sign of the positive culture that a company needs for growth. Overall, HelloWoofy has a very high team rating.

The market for small- and medium-sized social media advertising assistance is crowded, and it can be difficult to determine the precise factors that distinguish one service from another. Generally, HelloWoofy focuses on convenience and technological insight.  

HelloWoofy’s most obvious competitors are scheduling assistant platforms like CoSchedule, Airtable, Planable, and Post Planner. HelloWoofy is more user-friendly, customizable, and technologically advanced than its competition. HelloWoofy allows businesses to schedule posts in advance across multiple platforms, as its competitors do. But it also offers a content library of top trending topics, articles, royalty-free images, and blogs for inspiration when users are creating content. Competitors might tackle scheduling, but they don’t cut down on the countless hours spent thinking of the right content to post. HelloWoofy has patent-pending technology that allows customers to autocomplete posts with not only words but also emojis and hashtags in real time. HelloWoofy also allows businesses to add multiple team members to collaborate on a post and link up to 100 social media platforms. Finally, its supportive Facebook community of small- and medium-sized businesses navigating digital marketing efforts helps the company stand out from its competitors. 

HelloWoofy’s price point is also flexible and makes it more appealing than other scheduling platforms. At $49 per year (its cheapest tier), it is much cheaper than other solutions like Keap offering packages for $199 per month. Compared to other digital marketing tools, HelloWoofy appears to offer more features and better functionality for a lower subscription fee. But investors should keep in mind that HelloWoofy’s advantages are not necessarily defensible, as competitors could lower their prices or add more features to compete with HelloWoofy. Overall, HelloWoofy receives an above-average differentiator rating.

HelloWoofy boasts improved performance since its last raise. First, its revenue increased by nearly 70 times from $1,902 in 2019 to $132,987 in 2020. While its 2020 revenue is not overly impressive, such drastic growth is a positive indicator for HelloWoofy’s future in the small- and medium-sized business marketing sector. The company’s monthly burn rate is relatively low, which is a direct result of running a lean team. With prior fundraising of more than $1.3 million, HelloWoofy is able to move quickly and expand more rapidly than other startups in this space. 

HelloWoofy also benefits from strategic partnerships with players like Amazon. Businesses will be able to reach customers through Amazon Alexa while benefiting from HelloWoofy’s social media guidance. HelloWoofy is also fully integrated with Hootsuite, one of the largest social media management platforms in the industry. Overall, HelloWoofy receives a high performance rating.

HelloWoofy’s risk level is moderate. The company has a time risk due to the nature of its sales cycle. The company uses a business-to-business (B2B) model, offering its platform to small- and medium-sized businesses on a subscription basis. B2B transactions often take longer to complete than direct sales. As a result, it could take HelloWoofy a long time to acquire new customers as it scales and expands. 

HelloWoofy was founded in 2016, but it has only recently gained financial traction. Being in the technology and marketing space, this raises questions about future financial growth. HelloWoofy is currently in a pre-profit phase and will need to scale its product offering quickly to ensure future profitability and financial growth for investors.

HelloWoofy’s biggest concern is defensibility and traction. It operates in a crowded market. The company has patent-pending technology, but this may not guarantee its defensibility when its service is already similar to competitors’. To avoid being one of many, HelloWoofy will need to further differentiate itself moving forward. 

Concerning financial traction, the company has little revenue to date and has experienced slow growth since its previous raise. Despite the company’s claims that it experienced 21,900% growth, there is no user or other traction statistics to support this. Further, possible partnerships have the potential to fall through or be less fruitful than the HelloWoofy team is anticipating. If HelloWoofy’s price point increases or competitors offer significantly cheaper options, the company could lose its competitive price point.

HelloWoofy is gaining financial traction, continuously onboarding more companies, and diversifying its offerings. The company’s projected revenue is $320,000 this year. It secured $130,000 from lead investor Tim Draper and has already raised more than $1.3 million in funding. 

HelloWoofy’s team is driven, experienced, and growing. The education and past entrepreneurial experiences of its founder is a positive indicator of future success. 

The competition in the social media marketing space is fierce, but it is not a winner-take-all industry. Additionally, the market for small- and medium-sized business social media marketing has many niches for HelloWoofy to expand into with its growing customer base. The company’s highly affordable price range makes it more competitive and appealing to new businesses looking to improve their marketing efforts.

HelloWoofy is a software-as-a-service company providing digital marketing assistance to small- and medium-sized businesses. HelloWoofy saw tremendous revenue growth from 2019 to 2020 and has a growing customer base. It has goals to secure additional partnerships and product offerings. Its CEO is an experienced entrepreneur who has built out a comprehensive team of engineers and designers to support the growing company. All things considered, the current raise’s valuation is a fair deal for investors.

Despite this growth, there are some concerns for investors. Although HelloWoofy has patent-pending technology and boasts more features than its competitors, it still has defensibility concerns because it offers similar services to competitors. And operating within such a crowded market with limited financial traction leaves HelloWoofy particularly vulnerable. Therefore, HelloWoofy has been rated a Neutral deal by the KingsCrowd investment team. 

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

Analysis written by Carolyn Price, October 18, 2021.