To drive product development further towards market readiness, Driven is raising funds through a convertible note at a $3.3 million valuation cap with a 20% conversion discount rate. Both in comparison to other startups and as a reflection of its current pre-product development stage, this is a very reasonable valuation. Driven Technologies scores quite highly on the price metric.

At first glance, the market for Driven might seem alarmingly small, but there are some mitigating factors to be discussed in the differentiation section. Yes, drivechains account for a very small share of a moderately-sized market. The global bicycle market was valued at $54.44 billion in 2020 and is expected to grow at a CAGR of 7.0% through 2028. Of that market, drivetrains themselves account for a small $2 billion — as niche a market as there can be. As a result, the market score for Driven Technologies is its lowest across all five metrics.

Driven’s team remains small as the entity reshapes itself as separate from CeramicSpeed. It is led by CeramicSpeed’s former CTO and Driven’s current CEO, Jason Smith. Smith holds a mechanical engineering degree from Penn State. He started Friction Facts in 2012, an independent lab for drivetrain efficiency testing. Friction Facts invented the optimised race chain, a development that paid off when the company was acquired by CeramicSpeed in 2016. Thereafter, his American team took the lead on various so-called “skunkworks” projects. His previous exits bode well for his capacity to lead a startup to success.

Alex Rosenberry works with Driven as its lead mechanical engineer, though he’s officially with CeramicSpeed as Driven spins off. Rosenberry is a recent graduate of the University of Colorado Boulder with a bachelor’s degree in mechanical engineering and was behind the original development of the initial Driven mechanism. Cameron Frazer is Driven’s senior project manager and holds a Master of Engineering from the University of Auckland. He served with the New Zealand Defence Force as a composite manufacturing engineer before joining up with GTP Services in Colorado as an engineer. GTP is a software developed for construction procurement and logistics. After a brief one year diversion to Redpoint Positioning corporation, another engineering role, Frazer is again committed to GTP.

Overall, the experience of CEO Jason Smith is a huge boon for Driven Technologies. He has ample experience in drivetrain design, and he has a successful exit under his belt. As a result, Driven Technologies’ team score is quite strong.

Product differentiation is what makes Driven such a tempting prospect. Drivetrain manufacturing is essentially a captive market, with 10 or so general manufacturers here in the US. All existing competitors in this space rely on the old chain-based drivetrain, and all developments in this space are basically safe-for-business variations on a theme. Thanks to its patent protection, high product quality, and its reimagining of the drivetrain, Driven is in a coveted “first mover” status where it could secure a decisive advantage as it moves from the development stage to the production stage. The differentiators score for the company is near perfect in reflection of these factors.

Measuring Driven’s performance at this point is a bit misleading as the company has just formed out of its parent company specifically for the purpose of raising funds for Driven development. As such, it has no revenue or user traction. However, it has drawn interest in biking-centric media and won awards for its innovative approach to the drivetrain, such as the 2018 Eurobike Innovation Award. Therefore, the company’s performance score is below average.

While Driven Technologies has shown some good progress on the tech so far, there is significant risk for investors to be aware of. While CEO Jason Smith is committed, his team members Rosenberry and Frazer show a notable lack of dedication. Rosenberry is still publicly part of CeramicSpeed, and Frazer is committed to GTP. This may change as Driven becomes more fully fleshed-out as its own organization, but in the meantime, investors would prefer to see total commitment to the organization itself. Additionally, Driven’s product is still in development. Smith estimates the market will start seeing Driven-equipped bikes in late 2022, so revenue is still a ways off, presenting a significant time risk as well.

With regards to Driven’s future, there is little investors can rely on for sure. The company holds only $2,186 in cash as of mid-April and has no audited financial statements. Its limited and uncommitted team — combined with a product still in the development stage — are also good cause for hesitancy. Finally, bike drivetrains are an extremely niche section of a limited market. Furthermore, while the Driven system has drawn some attention as a novelty, it has yet to prove a market fit. 

The benefit of this particular risky investment is the chance to get in on the ground of something at a game-changing level of market disruption, albeit on a limited scale. Competition in this space is complacent and much lower quality next to Driven’s highly efficient system. CEO Jason Smith is also an old hand at this. After starting and leading Friction Facts to acquisition after development of a more optimised racing chain, he does appear to be the right pioneer to lead the charge. Lastly, the valuation on this round offers investors a very attractive price.

Driven Technologies is developing an entirely new kind of bicycle drivetrain, a system that has hardly changed in a hundred years. The Driven system eliminates the greasy chain in favor of a highly-efficient gear system using a shaft drive. It is cleaner, more compact, and can be covered for better rider safety. The system is still in the throes of laboratory development, but parent company CeramicSpeed has formed Driven under industry expert Jason Smith to lead this innovation to market success.

Drivetrain manufacture is an incredibly small proportion of a suddenly-explosive biking market. While the market is niche and competitors are well-established, Driven has the potential to completely disrupt the existing competition with its patent-protected tech and be the first mover in a space that has been oddly lacking in innovation for many decades. If Driven can pull off its development and secure a sizable portion of even the tiny drivetrain market, investors who got in now at the startup’s generous valuation will see significant returns. Balancing all these factors together, Driven Technologies has been rated a Neutral Deal at this time.

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Analysis written by Benjamin Potts.