Deal to Watch: Saved By The Battery

Key Stats:

Summary

At the time of publication, 7/3/19, CHRGR had raised $72,308

The CHRGR team has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology please reach out to hello@kingscrowd.com.

Problem

We’ve all been there. Your out with friends and getting ready to go to the next bar when you realize that your phone is about to die. That feeling of knowing your way of hailing a ride (aka Uber or Lyft) home or finding your friends at the next venue is no longer possible.

Or when you are traveling for work and running through security only to realize your phone has died leaving you without your boarding pass or a way to call home to let your family know you will be home late.

With our daily lives ever more integrated with our phones, whether we like it or not, keeping that small device in our pocket charged is essential to keeping our life up and running.

It’s the reason why mobile charging stations have become a relatively large industry, but the problem with these charging stations is that they are inherently immobile. This means wherever you find a station to charge, you will be left hanging out waiting until the device is charged.

What’s needed is a mobile phone charger that you can bring on the go. While this has been developed, few people actually own one and carry it around with them. That is where CHRGR comes into play.

The Solution / Business Model

CHRGR has partnered with over 10,000 venues including hotels, bars, clubs, music festivals, ride shares, gyms and resorts to bring free disposable battery chargers to consumers. These batteries have the capability of charging both IPhones and Androids up to 80% in battery life .

These batteries are free for customers because of advertising partnerships with major companies including Lyft, Heineken, Fanatics, CLIF, Red Bull, Instagram, American Express, Nike, Audi, and First Republic Bank.

These firms advertise their brands on these CHRGR batteries, which is a valuable source of advertisement since it literally puts their brand in the hands of consumers. Better yet, it gives the advertiser a chance to be a hero for the night.

Imagine running out of juice on your phone the night of your friends 21st birthday, only to be gifted a free battery charger by Instagram to keep capturing the nights memories? That is a memorable ad that won’t quickly be forgotten.

CHRGR’s profit margins are extremely attractive. At 10,000 units purchased, CHRGR makes a 63% margin and with plans of expansion to order 100,000 units, their margins increase to 72% as seen below.

As CHRGR continues to expand, their manufacturing costs will continue to decrease while their profit margins increase.

Market Opportunity

CHRGR aims to expand their network to enhance their advertising experience and reach more markets. They have already connected advertisers with over 10,000 venues and are positioned to expand further with proof points to show the success of the program.

Advertising partners are satisfied with their partnerships as 70% of customers have come back to place more orders and on average, re-orders were 40% larger than initial orders.

In addition, CHRGR has experienced tremendous revenue growth and have tripled their revenue in the fiscal year of 2018. As seen below, CHRGR is estimating continued rapid growth.

While revenue estimates are aggressive looking out to 2022, even with expectations halved for 2022 to $15M, at a 3 to 5X multiple on acquisition this would represent a 5X+ return for investors from the current valuation cap.

Looking ahead, CHRGR aims to bring in new streams of revenue through the addition of NFC and RFID technology to the CHRGR battery. This would allow CHRGR to be utilized as a pass to ski resorts, a hotel key card and more. And with more capability, CHRGR can track more data on users, which over time can be utilized for further ad revenue streams.

CHRGR is also going to add features to the next-gen of CHRGR batteries, which would automatically display custom, engaging advertiser content when plugged into the phone. This provides one more opportunity to monetize the platform through advertising.

Founder Experience

Founder and CEO John Mullin has an impressive background working in technology and media agencies including R/GA, Kinetic Worldwide, and Twitter. In addition, he has also worked for Rocawear and Rocafella Records where he supported the marketing strategy for the Kanye West debut album College Dropout.

More recently he was a member of the launch team for Beats Music, which was later acquired by Apple in 2014. As the executive producer at R/GA, he worked on projects for Nike Basketball, Samsung, Mastercard, L’Oreal, and many other clients. Mullin’s extensive experience in creative, social, and digital projects has provided him with the skill set to expand CHRGR and its network.

CFO Evan Madden-Peister has professional experience working as a consultant, business strategist, and project manager with over 10 years of experience driving organizational success through the strategic leadership of innovative, progressive projects.

His expertise spans over marketing, business development/sales, product development, and business model design across diverse market settings.

In addition, he has had repeated success serving as an integral member on cross-functional startup teams which positions him to ensure that CHRGR remains profitable and will work on adding new sources of revenue.

Competitive Advantage / Product Differentiators

CHRGR is the first to distribute free batteries for customers to keep. Unlike the competition, there\’s no app required or other barriers of entry to charge a customer’s device. This easy and simple way appeals to consumers, which makes these batteries a valuable source of advertisement.

For advertisers, its a chance to save the day or night with a free power up solution!

Their competitive advantage stems from their established network and locked deals with distribution partners. CHRGR has created strong relationships with satisfied brand sponsors such as Lyft. Lyft spent $90,000 on a media campaign with CHRGR and their estimated return on investment was $1.2M in new sales, according to management.

The team has also built out a vast network of bars, restaurants, venues, etc. that now distribute these batteries to their patrons as a freebie giveaway.

Rating

CHRGR is a Deal To Watch. Led by a team with decades of experience in advertising technology, innovation, and marketing, CHRGR is poised to build off their significant traction and continue to build revenue momentum.

This product tackles an everyday issue (low battery life) and has a strong business model. Since these batteries are free for both venues and customers, it is likely that expansion into more venues will likely not be a heavy lift. With a larger number of venues in their network, CHRGR will appeal to even more to major brands like Google, Lyft, Heineken, and American Express, who have all already partnered with CHRGR.

The concern for CHRGR lies in the fact that the business is not exceedingly novel or sophisticated. Building something similar to CHRGR, while challenging is not overly complicated. It’s simply a modem for more advertising and it is more than possible for advertising agencies to contract out a phone battery manufacturer and do something of similar nature. The product or service they provide is not innately differentiated over the long term.

While they are an early entrant, it is a space that could become commoditized over time or be affected by a broader trend of phone batteries improving, though that seems less likely.

CHRGR will need to over the long term become more intimately aware of the customers who utilize their product and become a data driven marketing tool. If they can build a data advantage by knowing who the customer is then it is possible for the team to build long term differentiation into the business.

Regardless, CHRGR could become an intriguing acquisition target for large marketing agencies or phone carriers looking to expand more into support services such as Samsung or Apple.

CHRGR’s traction, executive board, and their feasible plans for expansion are impressive. The team seems poised to build a stable and growing business even if it doesn’t become a multi-hundred million dollar top line type of business. At the current $8M valuation cap, it appears that this is a good entry point for interested investors.