BAOBAB is raising a Crowd SAFE at an $8 million valuation with 20% discount. This price is reasonable, particularly given the company’s revenue projections of $5 million in 2021. Therefore, BAOBAB’s price rating is moderate. 

The menswear market is undoubtedly expanding. The global market was valued at $483 billion as of 2018, with a projected CAGR of 6.3% until 2025. Researchers note that this expansion can be attributed to millennial mens’ increasing interest in quality fashion. While it is difficult to precisely estimate the size of the polo shirt specifically, polo shirts are a basic staple in many men’s closets, and BAOBAB’s obtainable market will only expand as the company offers additional menswear items and expands into women’s clothing. The company’s conservative obtainable market in the polo-only future is likely close to $50 million, which is reasonable for a company’s first line of products. Therefore, BAOBAB’s market rating is moderately high.

BAOBAB was founded by longtime friends and previous co-founder duo Marcellus Alexander and Brandon Davenport. Both men are proud graduates of historically black colleges (Hampton University and Morgan State University, respectively). Alexander’s background is in business development and sales, particularly in digital media and advertising. Davenport also began his career in sales, but shifted to focus on product marketing. He recently served as the Head of Product Marketing for a division of PwC. Alexander and Davenport previously co-founded Vesta Mobile Solutions, a mobile technology company that was acquired by Aegis Mobile in 2010. 

BAOBAB’s founders have solid business backgrounds and are certainly advantaged by the length of their working relationship and their previous startup acquisition. However, neither has a background in building DTC brands. Therefore, BAOBAB’s team score is middle-of-the-road. 

BAOBAB’s raise materials devote significant discussion to differentiators and the company’s focus on building uniquely customer-focused products and customer service experiences. BAOBAB’s polo shirts are thoughtfully designed and do seem to offer better features at a lower price than many competitive offerings. However, the competition among polo shirt manufacturers is fierce. Virtually every major clothing retailer offers a men’s polo shirt, and many consumers may feel as though the item is a commodity. Even BAOBAB’s focus on in-house distribution and customer service may not be noticeable by the average consumer, who is increasingly used to fast, easy shipping among DTC brands. Therefore, BAOBAB’s differentiation rating is its lowest.

BAOBAB generated $247,586 in 2019, and impressively operated at a net profit of almost $30,000. The company is projecting $780,000 in revenue this year, with a significant jump to $5 million in revenue in 2021. While BAOBAB turned a profit last year, the company does not mention profitability in its fundraising materials. Therefore, investors might speculate that the company plans to increase marketing spend to acquire new customers moving forward, and cannot be expected to turn a profit this year. 

While BAOBAB’s financial projections are merely projections, the company seems to believe that future revenue performance will be significant for an early-stage company. Whether future revenues (and perhaps profits) are large or not, the company’s current operating history is solid and capital-efficient. Therefore, BAOBAB’s performance rating is its highest. 

BAOBAB has built a business that prioritizes the customer, with a narrow focus on key flagship products and insistence upon redefining consumers’ relationship with DTC clothing manufacturers. However, BAOBAB’s niche focus represents a niche market that is already crowded with competitors. While there is certainly a market for higher-end men’s polo shirts, most consumers are probably relatively satisfied with current options from major retailers. BAOBAB’s future growth is dependent on the company’s ability to successfully market to these consumers and convince them to pay $90 for a polo. 

While BAOBAB’s performance numbers are relatively strong, they are not explosive (particularly given that the company appeared on Shark Tank, which is known to cause significant revenue bumps from exposure to the show’s viewer base). Therefore, prospective investors may wonder whether BAOBAB has the potential to grow beyond yet another niche DTC brand.

BAOBAB has very high reviews from existing customers, with a 35% customer repurchase rate and 87% rate of multiple product purchase. While the company’s growth has not been explosive, revenue numbers have steadily increased over the last several years, and BAOBAB’s founders have reason to believe that the company can achieve $5 million in revenue next year. 

BAOBAB’s revenue potential will increase significantly upon the launch of additional products. BAOBAB needs to successfully convert existing loyal buyers into long-term, lucrative customers of a full line of BAOBAB clothing while still maintaining an obsessive focus on innovative product design and distinctive customer experience. If the company is successful at that, it could become a leading menswear brand (and perhaps a leading men’s and women’s clothing brand as product lines expand). 

BAOBAB is a DTC brand selling high-end men’s polo shirts, with eventual plans to expand into additional menswear items and even women’s clothing. The company’s focus on innovative product design driven by customer needs has secured a loyal customer base with high product ratings and repurchase rates. 

On the other hand, BAOBAB is operating in a highly competitive market, and the company’s founders do not have experience building a DTC brand. Therefore, BAOBAB 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.