To expand its operations to global markets, secure new partnerships, and meet existing demand, GolfKicks is raising capital through a SAFE at a $12 million valuation cap with no discount. This is a little bit on the high side, considering the startup’s revenue multiple of around twelve times. Regardless, the valuation isn’t unreasonable given the startup’s good traction. Thus, Golfkicks’ price score is above average.

Golfkicks isn’t confining its business to the biggest golf-obsessed countries like Scotland and the US. It is tapping into a global golf shoes market that will reach a value of $8.5 billion in 2022. The company estimates around 20% of today’s golfers don’t use specialized golf shoes. That said, the market’s growth is tepid. Given that the spikes aren’t just applicable as a golf accessory but for other sports as well, Golfkicks might also capture some additional share of the $98 billion athletic footwear market.

Golfkicks does sell directly to consumers through Amazon and Shopify, as well as through partnerships with Pride Sports and boutique retail partnerships in Japan, South Korea, and France. Balancing the company’s global reach against the market’s slow growth, the market score for Golfkicks is middle of the road. 

Golfkicks is run by a three-person co-founding team of serial entrepreneurs. CEO Tyler Stuart is the inventor of the Traction Kits as well as Sushi Roll by Fishpond. After getting started in sales and account management, Stuart leapt into the startup game as co-founder of Format Dynamics in 2003, a business building connections between advertisers and consumers. He built up Format over nine years before shifting to co-found HANDLL, which occupied a similar space. During that time, he also founded a website for outdoors activities called Wildmans.com and is developing Roamer, an augmented reality (AR) platform for storytelling about locations in the real world.

Co-founder and COO John Krosky is a self-professed “idea guy.” He holds a BA in journalism from the University of Northern Colorado. Like Stuart, Krosky has roots in the advertising business. He first worked with Stuart at Format Dynamics for a few years before moving to promote another startup, MyMobileCE.com, a mobile education application. He stayed in the sales space for the next several years, in roles with New Hope Natural Media and Altitude Digital, until teaming up with Stuart again for Golfkicks.

Matt Mockus co-founded Golfkicks with Krosky and Stuart but appears to be largely hands-off at this point, focusing on his role leading a small advertising agency in Denver, ifficient. Mockus holds a BBA in marketing from the University of Iowa and like his co-founders, has many years of sales experience with smaller companies. So far, the team overall has remained small and limited to its founders, though that may change as it expands its markets.

While none of these three co-founders have direct experience with sports or golf, they do bring skills in sales and marketing. There is also previous entrepreneurial experience, a boon to the company. Due to these reasons, the team score for Golfkicks is above average.

Existing golf shoes do technically compete with Golfkicks. When it comes to golf spikes, though, Golfkicks is the undisputed lead seller, which makes it a leader in the market. It has not secured this dominance not through product defensibility — the product’s patents are still pending — nor by going cheap. The company instead succeeded through focusing on product quality and providing whole kits to consumers. Thanks to its product being first-to-market, Golfkicks has managed to establish itself firmly in a dominant role. Therefore, the company’s differentiators score is its highest across all five metrics.

If 2020 was a hard year for most businesses, Golfkicks has certainly not felt that pain. Revenue dramatically jumped from $358,160 in 2019 to $909,155 last year. Its cost-of-goods-sold (COGS) rose from $190,650 to $404,993 over the same period. The product is selling at 55% gross margins. Despite this remarkable growth, the business is still in a pre-profit stage. However, it used its impressive earnings to pay down more than half its existing liabilities (going from $408,539 to $183,713 in debts owed) and converted some of it from short- to long-term debt. As it stands now, Golfkicks is in excellent financial health. Its performance score is strong in reflection of these factors.

There are some concerns that the golf market is showing anemic growth, and the company’s various team members are involved in other businesses. In addition, while Golfkicks has paid down significant debt, there remains yet more debt outstanding. However, Golfkicks’s biggest threat comes from its competitors. While its status as current market leader is enviable, a much larger competitor with the capability to outsource might be able to undercut Golfkicks with a cheaper product. The mechanics of the spikes are not complex and could be readily replicable. A single pending patent may not be enough to fend off inevitable imitators forever.

The product has a distinct defensibility blindspot. Especially as Golfkicks expands into growing Asian markets, it seems nearly certain that cheaper imitations from foreign brands are likely to crop up. If they do, this new competition will become a threat to Golfkick’s market share. While the startup’s rise has been nearly meteoric, investors may not see such revenue spikes continue if cheaper competition begins to flood the market. 

Despite potential imitator woes down the line, Golfkicks has achieved remarkable results thus far. The startup has generated excellent traction with partners and consumers. A number-one Amazon best seller rating is a truly impressive achievement. It has also demonstrated a capability to deploy capital efficiently, maintaining a lead on its debts. Assuming the business remains lean, disciplined, and ahead of the market, it could sell many more millions worth of traction kits and provide a healthy return to investors.

Golfkicks believes that golf should be open to economically- and fashion-conscious consumers. To that end, it is selling traction kits — golf spikes that screw into the soles of conventional sneakers and other kinds of footwear. These kits turn ordinary shoes into functional golfing footwear, enabling golfers to surpass the expense and drollery of traditional golf shoes.

Thanks to outstanding early traction, Golfkicks has brought a first-to-market, patent-pending offering to consumers through partnerships with Amazon and Shopify. The company is expanding across European and Asian markets and plans to expand beyond golf-oriented sales into other sports like baseball.The product’s simple design makes it vulnerable to off-brand imitators in the near future, and the product itself might damage the shoes it modifies. However, the company is in excellent financial health and demonstrates potential for significant scalability. For these reasons, Golfkicks has been rated a Deal to Watch.

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Analysis written by Benjamin Potts.