KC Underweight Deal: Interest-Based Connections for Business Travelers

$2M

Key Stats: NeatMEETS on WunderFund

Post Money Valuation

$2M

Amount Raised

$2,150

Number of Investors

10

Minimum Raise

$20,000

Maximum Raise

$107,000

Likelihood of Max Unlikely
Start Date

08/02/2019

Stop Date

11/21/2019

Days Remaining

7

Security Type

Common Stock

Investment Minimum

$100

Deal Analytics

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NeatMEETS

Today we are investigating the pros and cons of the latest deal to be launched over at WunderFund: NeatMEETS. NeatMEETS is a travel meet-ups application that allows users to connect with others based upon shared interests while traveling. 

The idea is for frequent travelers to use the NeatMEETS app to find, say, a golfing partner, a morning run group, a fellow beer drinker, or a ‘foodie’ to accompany them while they are traveling and staying in the same (or nearby) hotels.

A major point of the company’s business model is that NeatMEETS aims to leverage hotels as “public meet-up spaces,” based on the specific social interests of the travelers. The hope is that the application will encourage travelers to stop watching television in their hotel rooms and get out and enjoy the city they happen to be traveling in. 

When travelers book their travel through the NeatMEETS app, the algorithm of NeatMEETS matches the social interests and travel time with other people of similar interests, traveling around the same time, and staying in a conveniently located hotel. The app then arranges a convenient and safe meet-up location for them before allowing them to coordinate further details.

The idea has some merit. First, Millennials are known for embracing a tech-fueled active lifestyle. Second, more and more people are traveling for business (an assumed major source of traffic for NeatMEETS) than ever. Last year, according to USAtravel.org, Americans logged 463.6 million trips in 2018.  

Despite these positive trends, we remain unconvinced of NeatMEETS viability as a business at this juncture. 

The concept of using communications technology to meet up with others is not new. For years, the appropriately named meetup.com has facilitated just that. Not only does it offer clubs and interest-based activities (24 in all), but local event meetups (think festivals and sporting events) as well. 

Bottom line: NeatMEETS’s founding team is entering a semi-mature market without prior experience of either the travel or app development industry. This is not an inherent negative, but it is a point for the investor to consider. 

Below, we take a deeper dive into the facts surrounding NeatMEETS crowdfunding raise.

Business Concerns

1. Valuation: NeatMEETS has a post-money valuation of $2 million. Such a valuation raises questions, as the social application doesn’t have a proof of concept in-hand as of the time of this writing. As such, it has not reported any revenues or income to-date. 

The valuation of $2 million seems a bit steep based on the concept alone. Especially when there are players already in the market and no clear indication that there is a demand for NeatMEETS precise concept. 

Lastly, we raised an eyebrow at the company’s financial projections and monetization strategy. The company estimates annual revenues (for an unspecified future year) of $127 million. Were anything close to that number to come to fruition a $2 million valuation would prove to be a bargain. However, the logic behind this figure (capturing a percentage of hotel bookings arranged through the app) is suspect. As the company’s raise page puts it: 

“We plan to monetize these transactions through our online booking service. There are 1.3B rooms booked each year, which we aim to capture half a percent of all bookings. We charge a 15% commission to corporate hotels & entertainment chains to book their rooms. That amounts to $127 million in potential revenue.”

This back-of-the-envelope business plan raises many questions. How will the company gain 0.5% of ALL hotel rooms booked in the U.S.? Will hotels find it necessary to pay the 15% fees NeatMEETS’ management plans to charge (which just so happens to be the estimated fee charged by mega-travel booking sites like Priceline). We found no answers to these troubling questions. 

2. The Market: NeatMEETS’s business plan assumes that people would like to meet and hang out with other people while they are on business trips. The app will allow people to meet others with similar social interests in foreign cities or hotels.

However, we are unsure whether travelers are interested in engaging in anything along these lines. Hundreds of millions of travel trips occur every year, but many are brief and occur for the sole purpose of connecting in-person with a client or business associate. Factor in jet-lag or general travel fatigue and it becomes unlikely NeatMEETS will become a must-have application on traveler’s phones. 

3. Competition: NeatMEETS is competing with established players like meetup.com, TripIT, TravelAdvisor, and KLM Airlines (flag carrier of The Netherlands).

The company does not offer a  truly unique proposition that sets it apart from its competitors. Meetup.com already has over 24 million users, and there is no solid reason why a traveler will not use this better-established platform. True, NeatMEETS offers location-based connections, but there is no indication that this is a truly desired feature for business travelers. They are already in a foreign city and likely already ‘Ubering’ from place to place. 

Airlines themselves are already getting in on the game. KLM Airlines, The Netherland’s flagship carrier, also offers a similar “meet & seat” program wherein travelers can get together right from the beginning of their travel on the flight and continue hanging out at the destination city or hotel.

4. Lack of Founder Experience: The individual members of the NeatMEETS founding team have a history of success under their belts. However, upon reviewing the resumes of the founding team, experience with application development or marketing is nowhere to be found.

Don Farrell, CEO, and Co-founder of NeatMEETS has long-term experience in hospitality sales and service training while George VonAllmen, CMO and Co-Founder, holds 30 years of experience in the hotel industry. On the other hand, Ananda Jami, CIO, and Co-Founder of NeatMEETS have more than 18 years of experience in IT.

The team has a rich combination of backgrounds, yet app development and promotion are a completely different ballgame. The experience and background in the hotel, hospitality, and IT industries do not guarantee success in building a social meet-up application, attracting users and clients, and making it economically viable.

The Rating: Underweight Deal

After weighing the uncertainty of NeatMEETS chosen target market, the business model of the company, and the lack of similar experience of the founders, we are assigning NeatMEETS the rating of an Underweight Deal.

NeatMEETS is entering a semi-mature market with an untested and unproven solution. It is not certain if there will be enough demand for people wanting to meet fellow travelers in hotels to pursue social interests together. Even if there is a demand, there are enough other applications and platforms. 

Should you have any questions regarding the underweight rating of NeatMEETS, you can reach us at hello@kingscrowd.com.

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About: Sean o'reilly

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