Shyft Auto is offering investors a SAFE that will convert subject to a 0% discount to the company’s future valuation. It will also be subject to a valuation cap of $6 million. For where the business is in its stage of development, this price seems pretty decent. If anything, the price could perhaps be marginally higher and still represent an attractive risk/reward prospect. Thus, Shyft Auto’s price score is above average.

The car repair service space, while niche in nature, has a vast physical footprint. Just in the US alone, there exist 233,390 mechanics and repair shops. This is a number that’s growing at between 1% and 2% per year. Assuming the low-end of the firm’s pricing, this implies one-time setup fees of $116.47 million, plus annualized revenue of $1.40 billion. At the high-end, these figures are $208.89 million and $3.98 billion, respectively. However, it is unlikely that Shyft Auto would reach market saturation, so these figures represent only the total addressable market.

On the whole, the small size of the opportunity — combined with the low-to-modest growth rate — leave much to be desired for Shyft Auto’s market opportunity. As a result, the company’s market score is middle-of-the-road.

Shyft Auto has a highly-qualified team at this point in time. At its helm is Marcus Aman, a co-founders and CEO. His past work includes 14 years at Hendrick Automotive Group. For 12 of those years, he was employed as a Fixed Operations Director. He oversaw a team of more than 50 people, managed the company’s loaner car fleet, and engaged in business development and call center operations. Across six years of management oversight, Aman saw the firm’s profits rise from $2.5 million to $5 million. 

Next in line at the company is Peter Seymour, the company’s second co-founder and COO. He claims to have more than 24 years of experience when it comes to developing web-based IT solutions. At present, he is the COO of Kloud DMS, which is a company that focuses on building a Dealer Management System. He also serves as the CEO of Java Enterprise Solutions where he is focused on building an electronic health system. Before that, he worked as a Systems Engineer for Sun Microsystems.

The third and final co-founder on the team is Matthew Blackmon. He operates as Shyft Auto’s CTO at this time. He is a graduate of Computer Science from East Carolina University. His experience includes more than 15 years building backend solutions for various firms. He served as the co-founder of John Rapheal Bailey, a hair beauty services company. He has also worked as an interim CTO of both Entrepreneurship Platform — an SaaS tech platform dedicated to enabling faster organization for new startups — and of an unnamed social media company.  

Though not a co-founder, another important person to discuss is Hal Eason, Shyft Auto’s CFO. Eason earned his MBA from Harvard Business School. Since then, he has been involved with a large number of companies in differing capacities. At present, he is the co-founder and COO for momi brands. He is also the co-founder of Foenestra Corporation. Another company he recently co-founded was Aeva Bioscience. None of his experience seems all that relevant to the direct operations of Shyft Auto. But his MBA and its emphasis on Finance and Entrepreneurship, would be relevant for a CFO.

This team brings together relevant industry experience with technical expertise and past entrepreneurial endeavors. Although none of the co-founders have worked together previously, the scope of their knowledge overcomes this issue. Due to the team’s various qualifications, Shyft Auto’s team score is its highest.

It’s probably no surprise that there aren’t all that many companies operating in this space. The ones that do, however, are still radically different from Shyft Auto. Perhaps the most comparable firms are mykaarma and Redcap. Both of these have significant full-service solutions, but they charge the consumer rather than the repair shops. Another competitor worth mentioning is spiffy, but it too is different. Unlike Shyft Auto — which offers a full-service solution — spiffy only focuses on low-level services, such as car detailing. 

Despite these strong differences, Shyft Auto’s services have little defensibility at this time. It is conceivable that another company could offer the same service — with some minor differences — and directly compete with Shyft Auto. Balancing the company’s current lack of competition with the risk of easily replicated services, Shyft Auto’s differentiators score is slightly above average.

Performance for Shyft Auto has been a little questionable. In both 2018 and 2019, the company failed to generate any revenue. Its net loss in 2018 was $2,115. In 2019, this grew to $7,439. Operating cash flows matched net losses for each year. Since the end of 2019, though, the business has seen some traction supporting it. The firm currently has over 18 repair shops signed up for their service. They also have a pipeline of more than 40 awaiting integration. Management has already raised over $600,000 as of this writing and they are aiming for 2,000 repair shops for year five. However, these numbers are purely speculative and for now their 18+ customers are not indicative of strong traction. For all of these reasons, Shyft Auto’s performance score is very low.

In looking at Shyft Auto, there are plenty of reasons a prospective investor might be bearish. The middling market size certainly limits the potential returns an investor might see. Even bigger than that, Shyft Auto’s traction is severely limited — progress toward the year’s end goal of well over 100 repair shops looks elusive. The other issue the business has will likely never go away: regular repeat usage. While consumers who use the app are likely to come back to it for future need, car repairs are typically sporadic. This could result in a very bumpy revenue stream with many consumers going months or years without coming back to the app. It’s difficult to build brand loyalty and a business when you constantly need new clients coming in the door.

Shyft Auto also has bullish attributes in its favor. The industry is continuing to grow, yielding more opportunity for the business. The company’s flagship product is strongly differentiated from current competitors. And it addresses several needs for both the consumer and the repair shops. The founding team is also solid and experienced. Throw in the firm’s fairly low valuation cap and it’s hard not to at least find the prospect appealing.

Based on all of the data provided, it seems Shyft Auto does deliver value to both the consumer and the repair shop. Management has big plans for their platform that they hope will take off and turn the company into a success. But in order for that to come to pass, traction must be impressive and that has yet to be the case. If traction does pick up, the company could prove to be an attractive prospect. But until that time comes, Shyft Auto remains a Neutral prospect.

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

Analysis written by Daniel Jones.