OTIS Dental

Providing an easy and affordable way to combat life's daily grind.

Analytics

Raised to Date: Raised: $131,648

Aggregate Commitments $
Platform

Republic

Start Date

10/13/2020

Close Date

02/15/2021

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$150

Security Type

SAFE

Funding Type

RegCF

Series

Pre-Seed

Valuation Cap

$8,000,000

Discount Rate

10%

Rolling Commitments $
Status
Funded
Reporting Date

02/28/2021

Days Remaining
Funded
% of Min. Goal

527%

% of Max. Goal

12%

Likelihood of Max
Funded
Avg. Daily Raise

$1,053

# of Investors

338

Momentum
Funded
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Location

San Francisco, California

Industry

Healthcare & Pharmaceuticals

Tech Sector

HealthTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Business Type

Growth

OTIS Dental, with an $8 million valuation cap, is raising crowdfunding on Republic. The company makes custom night guards for democratizing dentistry. The night guards make dental care easy and affordable and use the same material and methods as licensed dental providers. Andrew Lee founded OTIS Dental in March 2017 and has raised over $250,000 since its inception. The current crowdfunding campaign has a minimum target of $25,000 and a maximum target of $1,070,000, and the funds will be used to launch subscription plans, launch multichannel marketing, expand operations, and create brick and mortar locations in major cities. OTIS Dental has retail partnerships with Walgreens and Target and has received validation from UCSF and the US Department of Veterans Affairs medical center.
Summary Profit and Loss Statement
Most Recent Year Prior Year

Revenue

$8,786

$11,885

COGS

$1,470

$2,209

Tax

$0

$0

 

 

Net Income

$-83,942

$-22,567

Summary Balance Sheet
Most Recent Year Prior Year

Cash

$26

$905

Accounts Receivable

$0

$0

Total Assets

$25,278

$2,479

Short-Term Debt

$58,399

$54,105

Long-Term Debt

$127,665

$25,218

Total Liabilities

$186,064

$79,323

Financials as of: 10/13/2020
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Ratings

Analyst Report

Synopsis

Did you know that about 60% of the population moves their jaws while they sleep? While most of these movements are harmless, some are not. For about 8% of middle-aged adults, those jaw movements cause upper and lower teeth to rub together — the scientific term for this teeth grinding is “bruxism.” 

Bruxism is more likely among those who are stressed, smoke tobacco, drink caffeine or alcohol, or struggle with other disorders like sleep apnea or ADHD. Teeth grinding is not a serious condition for most people. However, bruxism can have serious negative impacts — including jaw disorders, headaches, and tooth problems. Bruxism can also grind down teeth and detrimentally affect one’s smile. 

Bruxism is typically treated by the use of a “night guard,” a mouth guard typically fitted over the upper teeth that prevents teeth from rubbing together during nighttime jaw movement. Night guards are a simple solution, but they can be very expensive. Dentists charge several hundred dollars to fit a custom mouth guard. Over-the-counter alternatives from drug stores are much cheaper, but they’re less effective than custom solutions. 

OTIS Dental is offering another solution. OTIS offers at-home tooth impression kits that allow anyone to create an imprint of their teeth patterns for roughly $100. Customers mail these imprints to OTIS and receive a custom-molded night guard back in the mail several days later. Customers can also sign up for a four, six, or 12 month subscription to receive a new night guard after old ones gather bacteria. Soon, OTIS mouth guards will also include a tech-enabled sensor to monitor grinding patterns and promote dental health. 

OTIS Dental night guard kits are sold online via OTIS’ website, and the company has forged retail partnerships with Walgreens and Target. OTIS kits are available in over 1,000 Walgreens pharmacies nationwide, and Target distribution details are forthcoming as OTIS moves closer to launch in spring 2021. 

OTIS Dental’s Republic raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

OTIS Dental is raising a Crowd SAFE at an $8 million valuation with 10% discount. This price is a bit high given OTIS’ current revenue traction — though the company has developed a competitive moat with proprietary mouth guard molding processes and retail partnerships. Therefore, OTIS Dental’s price rating is middle-of-the-road.

Market

Bruxism is most common among children and adolescents. Up to 50% of young people grind their teeth at night. However, only 8% of middle-aged adults grind their teeth, and bruxism only affects 3% of older adults. Assuming that the target market for OTIS Dental is primarily middle-aged adults (many children grow out of bruxism by the time they develop adult teeth, so they have less need for treatment), just 26 million American adults have a need for OTIS night guards. In accordance, the global market for sleeping bruxism treatment is estimated to hit just $168.74 million by 2023. This means that OTIS Dental’s potential market upside is limited, given that dentists will likely always control a large portion of that market. OTIS Dental’s market rating is therefore quite low. 

Team

OTIS Dental was founded by Andrew Lee, a registered dental hygienist. Lee graduated from the California Institute of Integral Studies with a BA in Interdisciplinary Studies and later gained an MBA in Healthcare Management and Biotechnology from IE Business School. He also completed training as a dental hygienist and practiced as a hygienist and clinical advisor at the University of California, San Francisco before transitioning to private practice. Lee was inspired to found OTIS Dental after he suffered an attack that left him with PTSD-induced bruxism. 

OTIS Dental’s broader team includes several part-time advisors with dental and consumer dental products experience, including Rishi Gupta, DDS (Chief Dental Officer), and Brendan Carberry, who has six years of experience working at Invisalign. 

OTIS Dental’s team has significant dental experience, and founder Andrew Lee holds a relevant MBA in healthcare management. Therefore, OTIS’s team score is moderately high.

Differentiators

OTIS Dental’s product is highly differentiated from consumers’ current night guard choices. Bruxism sufferers can either obtain a cheap and ineffective plastic mouth guard from drug stores or pay hundreds of dollars for their dentist to engineer a more effective, custom-fit guard. OTIS provides a high-quality product at an accessible price, following in the footsteps of Smile Direct Club and other successful companies providing consumers more direct power over their dental products. Therefore, OTIS Dental’s differentiation score is one of its strongest.

Performance

OTIS Dental generated very little revenue before 2020. Audited financials show that OTIS generated just $11,885 in revenue in 2018 and operated at a net loss of over $22,000. Concerningly, financials for 2019 were worse: OTIS made $8,786 in revenue and lost $83,942. However, OTIS reports having generated $300,000 to date. The vast majority of this revenue — roughly $275,000 — presumably has been made in 2020 alone based on previous revenue numbers. That’s a very significant year-over-year revenue increase, likely due to OTIS’ launch in Walgreens in spring 2020. 

OTIS Dental’s financial performance this year is strong, but investors should be wary of meager revenue between 2018-2019 and a decline in performance last year. These factors net out to a performance rating that is middle-of-the-road.

Bearish Outlook

OTIS Dental is operating in a very niche market. There are only about 26 million adult Americans who experience bruxism. A large portion of those likely do not need treatment or have already found a reasonably-effective night guard from their local drug store or dentist. While OTIS Dental seems to be emulating the DTC dental model of Smile Direct Club and other at-home teeth straightening services, their product covers a significantly smaller market than those successful brands. 

OTIS mentions that more dental products are in the long-term product pipeline (and a teeth whitening kit is currently for sale on the company’s website). However, raise materials do not specify what those other products might be or how OTIS would pivot its strategy to include additional use cases. All together, OTIS’s revenue potential is limited, and investors may not reap a satisfactory return.

Bullish Outlook

OTIS Dental’s product is clearly differentiated, even if it exists within a niche market. With proper marketing campaigns and additional retail partnerships, OTIS could take its place among the growing ranks of DTC dental brands cutting out the expensive dentist to create high-quality products shipped to consumers’ homes. Product expansion will almost certainly be necessary to achieve significant revenue, but OTIS has already expanded to offer teeth whitening trays as well as bruxism night guards. 

While OTIS’ revenue performance in recent years was not outstanding, the company has grown significantly this year despite COVID challenges. Retail partnerships with Walgreens and Target are certainly the cause, and enduring partnerships with those and other sellers could prove even more of an asset if and when OTIS begins selling additional products.

Executive Summary

OTIS Dental currently sells custom-fit night guards to treat nighttime teeth grinding. While the company took a couple of years to come into its own, 2020 has seen dramatic revenue growth thanks to partnerships with Walgreens and Target. 

However, teeth grinding is a rather niche issue that only affects a limited number of Americans. While OTIS’ guards are differentiated from cheap drugstore options or expensive dentist molds, there may not be enough consumer demand to spur significant revenue growth (at least without more products). Therefore, OTIS Dental has been rated 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 Katy Dolan.

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