The price Camp365 is asking investors to accept looks lofty. This figure is set on a pre-money basis at $20.695 million. Given all of the traction the company has seen, this price does not look outrageous. However, it is somewhat high compared to the current set of startups raising capital. Balancing these factors together, Camp365’s price score is middle of the road.

The RV market has seen decreasing demand until recently. For instance, back in 2017, the number of RVs sold in North America peaked at 504,600. Until 2020, this figure declined annually, down to just 430,412 last year. However, the COVID-19 pandemic seems to have reawakened the industry. Despite a rough start to the year, sales toward the middle and end of the year were coming in strong. For instance, in July 2020, sales of 43,035 units were 53.5% higher than the 28,044 units seen in the same month a year earlier. 

According to the RV Industry Association, there has been a 170% increase in first time buyers. Up from 46 million in the prior survey, 61 million Americans are planning to go camping with an RV sometime in the next 12 months. As a result, the expectations for the near future are attractive. This year, the RV Industry Association believes the industry will sell 533,356 units, 23.9% higher than in 2020. In any given month, the figures can change, but somewhere around 90% of all of these sold are towable RVs. 

In monetary terms, the size of the industry is not insignificant. One source suggests that the market was worth $51 billion in 2019 and that a 6% annualized growth rate will take it to $77 billion by the end of 2026. A second source sees the industry growing from $42 billion in 2020 to $58.9 billion in 2025 with an implied annual growth rate of 7%. The lion’s share of this industry does reside in North America. In 2020, the North American market was valued at $26.7 billion. With a 5% annualized growth rate expected through 2026, it should expand to $35.7 billion.

The industry is expected to grow, and the size of it as a whole is not insignificant by any means. Still, there are some problems investors should note. There is a risk the market analysts are merely extrapolating recent growth — the long-term trend might actually be toward a shrinking space. Second, this is not known to be a high margin industry, and it is highly competitive. Due to these factors, the market score for Camp365 is middling.

At the helm of Camp365 are two key individuals. The first is Kevin McGregor, the company’s co-founder and CEO. Prior to founding Camp365, he had only one significant career on record as the vice president of One Tech Engineering, where he worked from 1999 until June 2019. Naturally, any sort of engineering position would be valuable, but in his case what is important is the leadership experience. One Tech Engineering had a focus on engineering recruiting services for companies primarily in the power and energy industry. While not directly related, the leadership experience he picked up there would have been meaningful. 

The other co-founder of Camp365 is Cedar Vandergon. Prior to working on this project, he founded a company called Beyond Adaptive. That business seemed to focus on things like key guards and other small products. Before that, he served as a project manager at AccuStream. There, he focused on waterjet cutting machines and related parts. His role before that was as a mechanical engineer at PaR Systems, a company focused on material handling, automation technology, and robotics solutions. Combined, these positions don’t just demonstrate leadership experience, but also technical knowledge that is valuable for the building of Camp365’s current product.

Overall, this team looks rather solid in terms of leadership and technical expertise. Thus, Camp365 scored well in the team metric.

While it is true that Camp365 is very similar to the competition in that it produces a generally commoditized product like an RV, its patents do set it apart from its peers. In its own analysis, management tries to compare the product to other types of products on the market today. For instance, it does illustrate that like larger RVs, Camp365’s products are insulated and climate-controlled. Like teardrop models, they are small, storable, and have a fast set-up time. However, the company makes the case that teardrop models are not insulated and climate controlled. They also do not have the same kind of headroom that Camp365 boasts. In our analysis, we found that these statements are generally accurate with an exception.. At least one company, Colorado Teardrops, has insulated and climate-controlled small towable RVs. Based on our findings, we do believe though that the product is fairly differentiated from the bulk of the competition out there. Because of that, Camp365’s differentiators score is above average.

The strongest case for why an investor might want to dive into Camp365 relates to performance. In 2018, the company generated revenue of only $88,487. This surged to $502,499 in 2019. Admittedly, the firm’s net loss grew from $784,640 in 2018 to $1.7 million in 2019, and it’s operating cash outflow grew from $854,269 to $1.64 million. Official financial figures have not been provided for 2020, but management did say that revenue was around $850,000 for the year. It also claims to have an order for 300 units from a dealer in California that it will deliver over the next year. If this alone comes to fruition, it would amount to revenue between $6 million and $7 million. Beyond financial traction, the company has already broken ground on the construction of its third production facility. This one is in Iowa and measures 20,000 square feet. The company has also operated in Canada since December 2019 and has signed contracts with 13 dealer locations there. Given this strong record of growing revenue and multiple locations, Camp365’s performance score is its highest across all five metrics.

Generally speaking, a lot of the risk categories show a low-to-moderate reading for Camp365. However, there are two areas that are elevated. The first is financial risk. The company’s bottom line does not look great. Revenue growth is impressive, and that could help the bottom line if current trends persist. However, generating significant net losses and significant cash outflows is never a good thing. Though expected for most startups, it does mean that there is a higher risk of the company failing. There is also an elevated risk of the firm needing to dilute shareholders in the future. 

The other elevated area is market risk. There is no certainty that growth will continue, and it may even shrink in the years to come. Add in the commoditized nature of RVs and the low margins they tend to offer, and it should not be surprising for this to be a particularly risky area. Because of all of this, Camp365 scores slightly above average for overall risk.

On the bearish side of the equation, there are areas that warrant consideration but aren’t particularly risky at this time. For instance, the valuation looks awfully high, and this can create sub-optimal returns — or even losses — for investors in the long run. Though the company does have patents protecting it, there’s no guarantee that competitors won’t find a better solution than this firm has. There’s also some risk associated with the overall business model of selling to dealers as opposed to handling distribution itself. Namely, Camp365 then becomes reliant on the willingness of others to sell its product.

Just as there are bearish considerations for investors to be aware of, there are bullish ones as well. For instance, the company’s general performance has been impressive. Its team looks solid, and the product is fairly differentiated from the competition. Some risk categories are low, and the market is sizable in nature and presently growing. Though its distribution model has some risks, it also has benefits. As an example, the company benefits from the ability to grow more rapidly. Not only that, but it does so without having to spend the money to create its own factory-to-consumer distribution channel.

In all, Camp365 seems to have done a great job getting the company from the initial concept to where the business is today. Assuming the company can continue to grow, it could have a bright future ahead for it as well as for shareholders. There are some problems with the firm, and investors would be wise to consider these before investing. However, these challenges seem to be balanced by the opportunity the company presents. Because of this, Camp365 is a Neutral Deal at this time.      

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

Analysis written by Daniel Jones.