Graze is raising capital via preferred equity at $5.80 per share. The pre-money valuation for this round is $23 million. The company is still pre-revenue and has kept the same valuation as their prior raise on SeedInvest — despite not having a minimum viable product for either round. This valuation is somewhat reasonable given the capital-intensive nature of the product, however, no revenue has been reported to date.

It should be noted that the preferred stock offering does provide additional benefits to potential investors. Preferred equity deals make up just nine percent of all deal flow at this time.

Claiming to exist in the $100 billion lawn and landscaping market as suggested by the raise page is a bit generous. According to our research, the robotic lawn mower market sits at around $177 million for 2020 with a CAGR of 13.10%.

The North American market share — or Graze’s serviceable obtainable market — is about one third of this total, coming out to just over $5.9 million for 2020.

This is a far cry from the total addressable market reported by the founders. However, the market remains niche and void of many established competitors of the same quality, making the obtainable market a reasonable goal in terms of realistic capture.

Graze is led by CEO John Vlay. Prior to Graze, Vlay led Jensen Landscape as the Chairman, CEO, and President.  In 2016, Jensen Landscape was acquired by Monarch Landscape and Vlay oversaw safety for Monarch’s six rollup companies and worked on acquisition prospects. Vlay holds a Bachelor’s degree in Business and Economics from UCLA.

Vlay is joined by Lead Systems Engineer Phillip Wong. Prior to joining Graze, Wong served as the lead engineer at Knightscope, another company with repeat raises in the online private markets. Finally, Robotics Advisor Rob Anderson co-founded Miso Robotics, a KingsCrowd Top Deal.

This team has thorough startup creation and crowdfunding experience. Vlay also brings direct industry experience through his time at Jensen Landscape and Monarch Landscape.

From a quality standpoint, Graze appears to be heavily differentiated from any competition within a very niche market. Many competitors have bluetooth, GPS, and cellular technology — but few are equipped for large corporate customers and are fully electric. Grazes computer vision and other technologies — including weather tracking and plant disease detection — appear unique to the company.

This quality comes at a price, however. The starting price for the Husqvarna Automower 435X AWD (closest and self-reported competitor) sits at $4,229. Graze comes in at $30,000 per machine up front with a recurring monthly SaaS fee of $1,000. The Husqvarna machine is also battery operated, though lacks wifi capabilities. 

When Graze last raised on SeedInvest with the same valuation it appeared to be for the purpose of creating a minimum viable product. It seems that the team did not raise enough capital in the last round to make that happen and has returned to the online private markets. 

It also appears that one of the two LOIs present in the last raise fell through or was cancelled. Commercial landscaping company Mainscape seems to have stuck with the letter of intent mentioned in the last raise and has pre-ordered 200 mowers. It should be noted that Mainscape is also an investor in Graze. The company also looks to be in conversation with various golf courses to further prove product-market fit.

Lastly, Graze has been backed by Wavemaker Partners. In sum, Graze has raised $3.9 million in seed capital across venture funding and various raises in the online private markets.

As always, investing in startups poses certain risks. We have yet to see a minimum viable product from the Graze team, not to mention nothing is patented. The company remains pre-revenue and needs time to scale sales and distribution. The LOIs from major companies are promising but are in no way binding. 

Additionally, Graze’s product costs up to six times that of the more expensive competition, in addition to recurring SaaS fees. This is reasonable given the amount saved on labor and fuel costs, but may pose a hard sell to some customers. 

Also of note, the offering circular reveals Vlay to be the, “one dedicated executive…who currently spends approximately three days a week in his role.” If the company hopes to scale, additional hiring will be imperative, especially to fill out sales and marketing roles.

Finally, this market is also incredibly niche, making huge returns unlikely even with significant market capture.

If LOIs come to fruition and a viable product is presented in the near future, investors at this stage could see healthy returns. Additionally, though Graze is by no means a first mover in the space, the product offering (provided an MVP is delivered as described) will have a massive lead over competition in terms of quality. Not to mention, there is a general shift across the nation to move to more autonomous and greener machinery. Graze could be coming into the market at just the right time. 

Finally, Vlay and his team are well suited for the job. It would be hard to find a CEO with more direct industry experience and an exit under his belt.

Graze has been rated a Neutral Deal. This is a downgrade from the prior rating of a Deal to Watch as the company valuation remains the same but a minimum viable product still has not been presented. This would massively eliminate much of the product risk associated with the deal.

Additionally, the LOIs on which much of the value proposition rests are non-binding.  In fact, the offering circular states “Investors should note that this LOI only represents potential revenue for the Company. Mainscape is under no obligation to purchase any products and we may never generate any revenue based on this LOI.” Operating in such a niche market is also a double-edged sword. On the one hand, little quality competition exists. On the other, a significant market capture, though definitely feasible, may not yield massive returns. 

An acquisition opportunity is a natural exit route for Graze, especially considering Vlay has one under his belt already. For all these reasons, Graze 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 Olivia Strobl.