Management is asking investors to accept a pre-money valuation of $49.9 million. Given the traction the company has achieved, this valuation looks unreasonably high. Therefore, our proprietary system rated it at the low end of its one-to-five scale.

Management claims that Blendid’s total market — the global quick service restaurant industry — is worth more than $300 billion. While the company does play in that space, its prospects are probably far more limited. According to one source, the global interactive kiosk market is worth around $26.6 billion today. It is expected to grow at an annual rate of 6.9% to reach $45.3 billion by 2028.

That said, management claims to have identified more than 70,000 potential locations for these kiosks, including universities, retail outlets, and anywhere else with high foot traffic. According to the revenue per location that management forecasts, the company would generate between $14 billion and $28 billion in annual revenue. But the company seems more interested in collecting fees from third-party operators than in running its own units. At a 20% rate, this would generate between $2.8 billion and $5.6 billion in annual revenue. In addition, the $100,000 sales price per unit would result in one-time revenue or, spread out over years, $7 billion. Providing other services and products aimed at fixing damaged units or keeping them up to date could add additional upside. Altogether, this fairly small market size and only reasonable growth rate has led our system to rate the company well below average on the basis of market opportunity.

Blendid co-founder and CEO Vipin Jain has a long and impressive history. Prior to starting the business, he was a vice president of sales, customer care, and partnerships at the NOOK Media subsidiary of Barnes & Noble. Prior to that, he worked at Barnes & Noble as its vice president of product management, cloud, and commerce, all relevant to Jain’s work at Blendid. Jain was also the co-founder and CEO of Retrevo Inc., a machine learning and big data analytics company. Before that, he was a vice president and general manager of wireless business at Extreme Networks, a computer networking company. Prior to this, he was a co-founder and vice president of engineering at Telseon IP Services, a broadband service provider.

Another important member of the Blendid team is co-founder and Chief Technology Officer Venki Ayalur. Prior to founding Blendid, Ayalur served as a senior director and director of engineering at NOOK Media. Before working there, he served as a director of engineering at Motorola Mobility, where he also worked as a senior engineering manager. Lastly, he was a software engineer at Interim Technology, where he focused on operating systems and other software aimed at the magazine industry. 

The last key individual at Blendid is Vijay Dodd, its third co-founder and vice president of engineering. Previously, Dodd worked as a senior director of engineering at NOOK Media. Before that, he served as a director at Palm, the company that became famous for the creation of personal digital assistants. Before that, he was a director of Cambridge Technology Partners, where his emphasis was on product delivery. He was also a senior manager at AT&T, where he worked on software architecture, design, and development.

Based on leadership’s highly relevant experiences, our system rated the team at the high end of its one-to-five scale.

These days, an interactive kiosk isn’t a novel concept. There are many players in the space. But none of them operate quite like Blendid. Many kiosks focus on areas outside of fresh food preparation, and even those that do are materially different. One example is Chowbotics, which uses vending machine-like units to dispense bowls of fresh food. However, there is no customization based on a consumer’s historical preferences, and its emphasis is not on providing smoothies. 

Other smoothie providers, such as Smoothie King, operate as traditional smoothie stands, not kiosks. Jamba Juice is another smoothie provider, but Blendid has smartly joined forces with this would-be competitor. Jamba Juice recently struck a deal with Blendid that resulted in a co-branding relationship in a Walmart in Dixon, California in November 2020. Blendid also holds four patents (with six pending) and two trademarks. In all, Blendid is incredibly differentiated from its competitors. As such, our proprietary system rated this category at the high end of the scale.

In some respects, Blendid has performed incredibly well. It has several patents and two trademarks, a co-branding relationship with Jamba Juice, and a couple of locations in Walmart stores. The device is already built, and the technology appears to work. Now the company must grow. 

However, revenue at the company has been very weak, falling from $83,346 in 2019 to $64,119 in 2020. The COVID-19 pandemic probably drastically reduced demand for its technology, but that’s not the only culprit. In 2019, the company generated a net loss of nearly $4.1 million, and in 2020, its net loss grew to almost $4.9 million. Operating cash outflows in 2019 came out to over $3.3 million, and in 2020, the figure grew to almost $4.9 million. The company also has $4.5 million in gross debt. The large amount of debt combined with large net losses and cash outflows is not a good sign. But because Blendid has a complete product and strong partnerships, our system rated the company near the high end of the scale.

Blendid has fairly high financial risk because of its combination of low and falling revenue and significant net losses and cash outflows. The elevated debt is also a concern. Another risk relates to timing. There is an appeal to this particular business model over traditional food service providers, but launching and scaling a company like this during a pandemic is far from ideal. Finally, the funding side of the equation is also a modestly elevated risk. This boils down to Blendid’s high valuation. If the company is unable to sufficiently grow between now and the next time it raises money, it could find itself in a down round. That would be particularly painful for the shareholders buying in today.

Blendid’s valuation is very high, and the market opportunity is not great. The company’s financial performance is quite poor as well. These risks play a big role in the company’s prospects.

Blendid has a strong team with significant experience in engineering, software and product management. It also has a very differentiated product relative to its competition. On the non-financial performance side, the business has a lot going for it. The product is already developed and employed. Blendid’s partnerships, including one with Jamba Juice, also strengthen its prospects. Add in the patents and trademarks, and the company looks promising.

Blendid has an opportunity to grow and make a difference. Its technology is patent-protected and significantly different from the competition. The company also has a strong team and partnerships to help lead it toward success. That said, investors should also consider the excessive valuation and poor financial performance. Overall, the positives arguably outweigh the negatives for this raise. Because of this, our team has decided to rate Blendid a Deal to Watch.

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

Analysis written by Daniel Jones.