Gryphon

Cloud managed network protection with machine learning to keep families and businesses safe

Analytics

Raised to Date: Raised: $4,083,429

Aggregate Commitments $
Platform

SeedInvest

Start Date

04/21/2021

Close Date

01/19/2022

Min. Goal

$500,000

Max. Goal

$10,000,000

Min. Investment

$1,000

Security Type

Equity - Preferred

Funding Type

RegA+

Series

Series A

Pre-Money Valuation

$25,000,000

Rolling Commitments $
Status

Active

Reporting Date

07/31/2021

Days Remaining

172

% of Min. Goal

817%

% of Max. Goal

41%

Likelihood of Max
likely
Avg. Daily Raise

$40,430

# of Investors

1,213

Momentum
hot
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Location

San Diego, California

Industry

Security, Cybersecurity, & Defense

Tech Sector

Hardwaretech

Distribution Model

B2C

Margin

Low

Capital Intensity

High

Business Type

Growth

Gryphon, with a $25 million pre-money valuation, is raising funds on SeedInvest through Reg A+ crowdfunding. The company is offering a cloud-managed network-based protection service platform against cyber threats. The system comes with a high-performance WiFi system, a simple app, and machine learning. John Wu and Arup Bhattacharya founded Gryphon in 2014 and have raised over $5.5 million in previous rounds of financing. The current round of crowdfunding has a minimum goal of $500,000 and a maximum goal of $10,000,000. The proceeds will be used for sales and marketing, research and development, inventory, and operations. Gryphon has achieved over $5 million in total sales and more than 5 million threats blocked since its launch.
Balance Sheet

Cash and Cash Equivalents

$702,835

Investment Securities

$0

Total Investments

$0

Accounts and Notes Receivable

$2,804

Loans

$0

Property, Plant and Equipment (PP&E)

$0

Property and Equipment

$0

Total Assets

$3,043,996

Accounts Payable & Accrued Liabilities

$548,376

Policy Liabilities and Accruals

$0

Deposits

$0

Long Term Debt

$0

Total Liabilities

$1,185,702

Total Stockholders' Equity

$1,858,294

Total Liabilities and Equity

$3,043,996

Statement of Comprehensive Income Information

Total Revenues

$1,266,421

Total Interest Income

$0

Costs & Expenses Applicable to Rev

$-699,208

Total Interest Expenses

$0

Depreciation and Amortization

$162,000

Net Income

$-688,228

Earnings Per Share - Basic

$0

Earnings Per Share - Diluted

$0

Auditor: Fruci & Associates II, PLLC
Financials as of: 04/21/2021
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Raise History
Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Gryphon 01/19/2022 SeedInvest $25,000,000 $4,083,429 Equity - Preferred Active RegA+
Gryphon 04/21/2021 SeedInvest $25,000,000 $1,959,289 Equity - Preferred Funded Test the Waters
Gryphon 03/23/2018 SeedInvest $0 $775,389 Debt Funded RegCF
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Analyst Report

Synopsis

Over the past couple of decades, the rise of the internet has created invaluable opportunities for investors. This trend continues as the world becomes ever-more digital with the advent of cloud computing and the Internet of Things (IoT). This brings with it tremendous potential, but where there’s potential, there is also risk. The digital age is plagued with problems, including cyberattacks, identity theft, and the transmission of age-inappropriate content.

One company that’s tackling these challenges is Gryphon. Gryphon’s WiFi router offers a protected, cloud-managed network that allows homes and offices to connect to the internet. The company’s cloud-based systems can identify and remove malware, enable parental control over children’s devices, manage screen time, and utilize artificial intelligence to protect users from hostile third parties. Gryphon’s patent-pending app, Homebound, allows all registered devices to benefit from its safety services from anywhere, even when using public WiFi or cellular data. This is a major innovation on other, more traditional routers and security services. 

Gryphon is generating revenue by selling its routers, subscriptions to the Homebound app, and advanced internet protection services. Gryphon also intends to license out its software and generate revenue from data intelligence activities.

Gryphon’s current SeedInvest raise has been rated a Deal to Watch by the KingsCrowd investment team.

Price

Gryphon is offering preferred equity at a $25 million pre-money valuation. This amount seems high, but the price is actually reasonable given the company’s traction and historical growth. The company has more than $3 million in held assets and has seen more than $1 million in total revenue already. 

Market

Identifying Gryphon’s market is a bit tricky. The company does offer a router, but that’s not its sole market. Gryphon is ultimately a cybersecurity play. That gives investors a significant opportunity. According to one source, the cybersecurity market was valued at $162.5 billion in 2020, and current forecasts call for it to grow to $418.3 billion by 2028 at an annual rate of 12.5%. A second source pegs the market opportunity at $167.1 billion with a 10.9% annualized growth rate, taking it to $382.4 billion by 2028. A third source sees the industry growing at that same 10.9% growth rate from $162.6 billion in 2020 to $372 billion by 2028. All of these estimates indicate that Gryphon is targeting a large and growing market, providing ample opportunity for the company to scale. In North America, the cybersecurity market was worth $51.6 billion in 2018, and it should climb to $82.5 billion by 2023 at an annualized growth rate of 9.8%. Thus, Gryphon should be able to address a substantial local market from the start. 

Team

At the helm of Gryphon stand two co-founders. The first is John Wu, the company’s current CEO. Previously, he was employed as a vice president of advanced engineering and MiFi labs at Novatel Wireless. Prior to that, he worked at that same company as its vice president of global software. These roles demonstrate not just leadership experience, but also an emphasis on the very types of technology that Gryphon is based on. Before holding these positions, Wu was employed as a DSP manager at Motorola, where he worked on software and algorithm development for its wireless CDMA chipsets. 

Gryphon’s other co-founder is CTO Arup Bhattacharya. Bhattacharya was previously employed as a senior director of software, MiFi, machine-to-machine, and IoT at Novatel Wireless. Before that, he was a senior director of mobile software as well as a site leader at NVIDIA. He has also worked as the vice president of engineering at PortalPlayer and as a senior principal of software engineering at America Megatrends. These positions demonstrate significant technical and leadership experience that would be relevant for his current role at Gryphon.

Overall, Gryphon’s co-founders are well-qualified to lead a tech-focused startup. The only drawback is that they both lack any prior entrepreneurial experience, but this is not a massive mark against them.

Differentiators

One of Gryphon’s big differentiators is its Homebound appnamely, its ability to route all activity that a device sees through the cloud and subject that activity to its settings. Second, the company relies heavily on the data it collects to allow its system to teach itself. This allows Gryphon to take that information and improve the network over time, resulting in a business model that is essentially an upgraded version of many of the routers and routing services that exist today. These strong distinctions should help the company stand out against big name competitors. Management also boasts five patents and more that are pending. Those patents provide Gryphon with much-needed defensibility.

Performance

In terms of performance, Gryphon has excelled in many ways. The company already has multiple devices for sale as well as multiple services for its customers. It is actively generating revenue. According to the company’s audited financial statements, sales rose from $1.6 million in 2019 to $3.2 million in 2020. Much of these sales have occurred as a result of the company selling more than 25,000 routers. The service portion of this revenue continues to grow, climbing from 13.9% of total sales in 2019 to 16.4% last year. This is particularly positive since service-based revenue tends to be higher-margin in nature. Perhaps the only downside is Gryphon’s bottom line, with net loss rising from $1.41 million in 2019 to almost $1.55 million last year. However, its net cash outflow improved from $1.2 million in 2019 to $802,636 last year. 

Bearish Outlook

Gryphon is still generating net losses and net cash outflows. However, this is to be expected given how early-stage the company is. Gryphon’s other main disadvantage is that its core offering, a router, is not unique on its own. Although the company has patents protecting it and more pending, competitors could still come out with similar service offerings. Gryphon will need to continue expanding and emphasizing its cybersecurity features and services in order to maintain distinction from competitors.

Bullish Outlook

Gryphon has several patents and an entire ecosystem of products and services that it is already selling. The founding team is highly experienced, and the company’s revenue growth is excellent. The service revenue aspect of the business model is particularly promising since it allows for recurring revenue that, on its own, should generate attractive margins for the enterprise. The market the company operates in is large and growing at an attractive rate as well. Overall, Gryphon is positioned to excel.

Executive Summary

Gryphon offers investors an attractive opportunity. The company produces a WiFi router with a protected, cloud-managed network and a long list of other smart features. The company is still generating net losses, and routers alone are not a unique proposition. However, Gryphon’s business model is differentiated from the competition, and its emphasis on growing its service revenue is appealing. The company has multiple patents and a robust management team. In all, Gryphon is a Deal to Watch.

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

Analysis written by Daniel Jones.

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