CLOSEM is raising common shares at a valuation of $32 million — a high valuation, considering it is less than a year past its incorporation. The valuation is also quite high in comparison even to other tech startups pursuing funding, and the company has yet to report any revenue.  As a result, CLOSEM’s price rating is its lowest across all five metrics.

CLOSEM’s business-to-business recurring revenue model has the advantage of appealing to a wide market space. The CRM management software market in the US was valued at $42.9 billion in 2021 and is expected to grow 4.6% during this year. Much of this growth is driven by small businesses, as many companies only start using CRM software after reaching a certain size. These figures bode well for CLOSEM, and the company’s market score is above average in reflection.

CLOSEM’s attractive pitch becomes somewhat less alluring with a hard look at its leadership team. Co-founder Richard Miles claims to be working with CLOSEM full-time, but he is also consulting with other businesses through KickstartGrowth as he works on CLOSEM. He technically has attended the Stanford University Graduate School of Business, though simply completed a course rather than a degree. He does have an extensive marketing and sales background ranging from Polaroid to the American Chamber of Commerce in Tanzania.

Co-founder Laura Betterly, like Miles, is also working elsewhere while declaring herself full-time at CLOSEM, remaining as CEO of Yada Yada Marketing and as a managing partner of one of its divisions, Celebrity Cred. Betterly declares herself an MBA graduate of the “School of Hard Knocks” and has experience across marketing and branding companies. She provides little information on a company she claims to have taken public. She has also brought her son into CLOSEM as its CTO.

Overall, this team brings marketing experience which will certainly be useful to CLOSEM’s business model. However, it’s unclear if any member has the managerial skills to properly grow a business to a size that justifies a $32 million valuation. Thus, the team score for CLOSEM is low.

In a market that is full of competitors already, CLOSEM needs something to set it apart, and there isn’t much to note on the raise page. Its software enjoys no patent protection, and there isn’t much in the way of clear, demonstrable advantages to using CLOSEM over competitors like Twilio and Textmagic. TextMagic, for instance, provides mass texting services at $0.04 per text. CLOSEM’s intermediate plan comes in at $40 per month with 500 texts in that period — half as many as TextMagic provides at the same price. Granted, TextMagic is primarily focused on SMS messaging without CLOSEM’s phone and email capabilities. Given that CLOSEM itself points out that consumers prefer texts to phone calls and emails, though, that doesn’t seem to be a point for CLOSEM. Overall, there’s no evidence that the company is offering anything innovative or of higher quality than existing options. CLOSEM’s differentiators score is below average due to these factors.

At this early-stage point, there is not much to evaluate CLOSEM on. It has secured a base of 300 active users across North America, Europe, Australia, and South Africa. However, “active users” could mean monthly, daily, or even one-time users. It is unclear. Customers include insurance and real estate agents, auto dealers, and merchant card processing companies. CLOSEM has secured a partnership with a small marketing outfit based in Illinois, which promotes CLOSEM to its customers. CLOSEM is also distributed through AppSumo, a “daily deals” website for digital goods. 

Despite this early traction, the company has only been incorporated since December 2020. It has no financial records to speak of, so its monetary operations cannot be fully examined. CLOSEM’s performance score is quite low as a result.

CLOSEM has low risk potential currently. The company has not received any prior funding from venture capitalists, angel investors, or crowdfunders, which creates some funding risk. Due to its inexperience in this area, there is uncertainty in how the company will use the funds it secures in this round and in whether its crowdfunding goal is a realistic figure for its operational needs. CLOSEM also brings financial risk because it is still pre-revenue. If the company does not successfully bring its services and software to market, investors may never see a return on their investment.

Following an economically devastating pandemic in which most small businesses that survived did so by tightening their budgets, it is unclear whether they will be likely to adopt a software that is more expensive than alternatives without clear differentiators. Admittedly, CLOSEM is early in its development, and later versions could come with more better features. However, given its leaderships’ involvement with other companies, it is unclear if they will be able to expand the company’s offerings or help it achieve positive revenue. Furthermore, CLOSEM’s current software has very little defensibility, and it is targeting a market with well-established competitors. The business has also set an extremely high valuation in this round, which further lessens the likelihood of investors ever seeing a return. 

Since CLOSEM’s launch in 2020 it has secured 300 active users across a variety of markets, This suggests it has some level of value to some businesses. In addition, while competitors in the CRM market do exist, it is by no means a satiated market. Growing businesses could see a need for services like CLOSEM.

CLOSEM is automating customer relationship management for entrepreneurs and small businesses through a software system to follow up with prospects and leads. Its SaaS offering enables monthly or annual users to engage in email, text, and voice message campaigns to bolster sales in today’s attention economy. Since its launch last year, CLOSEM has secured 300 users across a variety of small business markets. CLOSEM hopes to launch new and international versions in the coming year.

While its offering sounds appealing at first, the startup is highly overvalued considering its early stage and lack of revenue. Its founders are also both still working at other companies while running CLOSEM. The company as a whole lacks notable innovations or differentiators in public-facing materials that could set it apart from a broad swathe of cheaper competitors. Even the size of its active user base is unclear, with a number that could refer to daily or monthly users. A high valuation, unimpressive founders, and an overall lack of compelling differentiation cast doubt on whether an investment at this stage could bring any returns to investors, making this an Underweight Deal. 

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

Analysis written by Benjamin Potts.