LimeLoop is raising funds via convertible note at a $7 million valuation cap. This relatively reasonable valuation led to a price rating on the higher end of the spectrum. With just over $70,000 in revenue for the most recent fiscal year, this makes for a high revenue multiple. There is no discount rate applied to the valuation cap for this round.

With applied growth rates, the US share of the global returnable packaging market is approximately $20 billion. But this figure includes crates, palettes, dunnage, and other forms of packaging that don’t apply to LimeLoop’s target market. A more accurate number for the addressable market is $2.3 billion, which accounts for direct-to-consumer home shipping solutions like LimeLoop’s product offering. The market’s compound annual growth rate is approximately 5.7%.

The market is undoubtedly large and saturated with both eco-friendly and traditional products (single-use boxes, envelopes, etc.). But trends are leaning heavily in favor of returnable shipping solutions. In 2018 and 2019, a large group of brands publicly announced new goals to make their packaging more sustainable, particularly in regards to plastic packaging. Large incumbents like Amazon are even citing sustainable packaging as a top priority. But given LimeLoop’s large number of competitors and smaller-than-expected obtainable market, its market score is its lowest.

Ashley Etling and Chantal Emmanuel founded LimeLoop in 2017 and serve as the CEO and CTO, respectively. The pair shares experience at Red Clay, a platform for on-demand industrial design that Etling founded in 2010. According to Crunchbase, Red Clay has raised $1 million in committed capital since its inception.

Emmanuel brings technical expertise to the table where Etling brings business acumen. Emmanuel has served as a software engineer at various institutions, including SYPartners and Red Clay. She holds a bachelor’s degree from State University of New York at Binghamton. 

No other employees are mentioned on the company’s raise page, though the Form C lists three total. LinkedIn suggests the third employee may be Kara Kreutzberg, who seems to be a recent full-time addition dedicated to growth. She has prior experience at various companies in miscellaneous sales and business development roles.

Overall, the team is lean (though not without gaps) and has highly relevant experience. The team’s shared and complementary experience give LimeLoop a decent team score.

LimeLoop’s differentiation score is one of its highest. Though there are already several reusable packaging companies out there, many are product specific. For example, BarePack, a Singapore-based company, aims to reuse food packaging. Returnity and Packoorang are closer competitors, though Packoorang is based in Norway and primarily services Scandinavia. 

In addition, few companies offer smart packaging that tracks statistics like temperature and user engagement. This gives LimeLoop a unique value proposition. 

It should be noted, however, that LimeLoop does not have any known patents, making defensibility relatively low. This is also a space with few barriers to entry, so more competitors could easily emerge.

LimeLoop’s mediocre performance score reflects conflicting data points. The raise page claims the company is generating $35,000 in monthly recurring revenue (MRR). The Form C reports just over $70,000 in revenue for the most recent fiscal year. It’s likely that the SEC filings are outdated or the reported MRR is a recent accomplishment, and the numbers on the Form C are reflective of just two months. Additionally, the company still hasn’t generated a profit, and very little capital has been invested prior to this round.

The raise page reports investments from Sequoia Scout, City Light Ventures, Straubel Foundation, and BeyGood Grant. But the exact amounts and nature of these investments are not mentioned on Crunchbase.

LimeLoop’s risk level is moderate. The company needs to prove product market fit and scale sales and distribution. The overall legal risk is minimal, but the product remains relatively untested. The founders are dedicated, but the team will need time to scale both sales and distribution as well as production. This is especially important as the business relies on customers returning the product, making a loss of inventory seem inevitable. 

The financial risk should also be noted. The company has approximately $650,000 in long-term debt with just $96,000 in assets for the same reported fiscal year. Why this debt is accumulating is unclear, though it makes for a high debt-to-asset ratio.

LimeLoop is a company that almost entirely relies on changing consumer behavior, making its early entry to the market a large disadvantage. In order to succeed, the company must educate the market and incentivize its users. The company must also have a way to make up for its likely loss of inventory. The team is also quite lean, and though there is a technical founder, the company will eventually scale beyond a three-person operation. Additionally, defensibility is relatively low. LimeLoop has no patents. Competition has already cropped up, and barriers to entry are minimal. This could be a problem for LimeLoop. Finally, though revenue is steadily increasing, it should be noted that the company has accumulated quite a bit of debt over its years of operation.

Social trends are heavily in favor of LimeLoop. Major corporations are prioritizing sustainable practices, and the LimeLoop solution offers businesses a chance to have a smaller environmental impact with an add-on data play. The company’s temperature and user engagement tracking sets it apart from domestic competitors. Not to mention, it already has a presence in all 50 states. Finally, the founders have both shared and complementary past experience.

LimeLoop is a business-to-business subscription service for reusable smart packaging. The solution reduces the environmental impact of online shopping and tracks statistics on temperature and open rate, among other user engagement metrics.

Overall, LimeLoop scores well for price and differentiation. The reasonable terms and quality differentiation of the product are obvious. The small team has very complementary skill sets, though it will need to grow significantly as operations scale. LimeLoop grew revenue by 49% over the past two years, which is a good sign despite its high debt. The team also reports $35,000 in monthly recurring revenue, a number it expects to grow over the coming years.

Finally, LimeLoop is a first-mover in the US. However, in this case, being an early mover may be a disadvantage. The company relies on changing consumer behavior. It’s not certain that  environmental impact will be enough to incentivize users to return LimeLoop’s product to be reused. As such, the team must be prepared to account for lost inventory. This also means that the company’s success may be, in some regards, out of the founders’ control.

Despite a trending market and impressive founders, the company has some hurdles it must overcome to succeed. As such, LimeLoop is a Neutral Deal.

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

Analysis written by Olivia Strobl.