Though TapRm has proven itself to be a robust growth prospect, the company’s valuation is far from cheap. Management is issuing a SAFE at a $14 million valuation with no discount. Due to the lack of discount and high amount, TapRm’s price score is its lowest across all five metrics.

The market opportunity facing TapRm is interesting to say the least. There has been resistance to a shift toward e-commerce, but in time the company will see a transition occur. Already, we are seeing some exciting data on this front. A Nielsen report estimated that alcohol sales earlier this year were up 22% compared to the same period of 2019. Beer sales specifically are up 10%. On the e-commerce side, total alcohol sales were up 291% year-over-year, bringing the share of e-commerce in the industry from around 2% to 3% up to about 8% now. 

One source we found indicated that the total US beer market is worth about $103.7 billion today. This is slightly below the $119 billion figure provided by TapRm’s management. Though sales this year have been robust, analysts expect the industry to grow at a slightly slower 5.8% per annum between now and 2025. By the end of the forecast period, this would take the market up to about $137.4 billion. Though TapRm’s primary focus is on beer, an eventual shift toward the broader alcohol market could serve as a boon for the business. In the US alone, this opportunity is worth about $232.4 billion this year. With an annualized growth rate of 6.6%, it should expand to $319.9 billion by the end of 2025. The US isn’t the only major market for alcohol either. China’s market for it is worth even more, at about $268.6 billion this year.

The market for beer sales is sizable, but it’s growing rather slowly. The shift toward e-commerce will help, as will the bump higher caused by the COVID-19 pandemic this year. Even so, the opportunity is not extraordinary in nature. As a result, the market score for TapRm is just slightly above average.

TapRm currently has a rather significant team when it comes to its size. However, there really are only two members who appear to be major figures in it. The first of these is Jason Sherman, TapRm’s founder and its current CEO. Prior to starting the business, Sherman served in the Global Legal, Disruptive Growth part of Anheuser-Busch InBev. This alone qualifies him as an expert on the market. The emphasis on disruptive growth opportunities matches perfectly what he is working on today. And his knowledge of the legal issues surrounding the space is incredibly valuable. Prior to working at Anheuser-Busch, he was involved in M&A and Strategy as a Deputy General Counsel for ZX Ventures. Here, too, his focus on law should prove quite valuable. Anything regarding M&A will also be beneficial as the company will likely engage in some of those activities if it survives long enough. Before his time at ZX Ventures, Sherman was a Corporate Associate for Davis Polk & Wardell LLP.

The other vital member of TapRm’s management team is Zachary Miles. At present, he is working as TapRm’s Head of E-Commerce. Prior experience includes as co-founder of Crafted Better under the umbrella of ZX Ventures. That firm gave Miles experience in the beer market. The research he conducted there would be relevant for e-commerce operations as well. Before that, he served as an Associate at Alterna Capital Partners, and prior to that role he was an Investment Banking Analyst at Duff & Phelps. 

Sherman’s experience makes him an excellent pick for the head of a company like TapRm. However, the rest of the management team is a bit lite. Because of this, the Team score for TapRm is slightly below average. 

TapRm is certainly different from a lot of the competition that’s out there. Perhaps the closest comparables are Drizly, Thirstie, and Postmates. Like TapRm, these platforms offer e-commerce beer sales. They also provide digital marketing and services for brands as well as home and office fulfillment. However, they lack exclusive brands and consistent pricing and inventories. And they don’t generally share insightful, real-time data with their brand partners. What these platforms lack, wholesalers like Manhattan Beer have. But those players lack e-commerce options, digital marketing services, and the ability to provide home and office fulfillment. In short, TapRm has set itself up to incorporate the best of all of these players while responding to a clear shift in consumer behavior. Thus, the differentiators score for TapRm is quite high. 

Perhaps the most exciting thing about TapRm is just how fast the company has grown since launching. Today, the platform has more than 35,000 unique customers on it and 110 brands that it has partnered with. More than $320,000 has been dedicated to its marketing investments, and the company boasts that it has delivered 1.5 million beers. All of this has helped to propel growth higher. Back in 2018, the company generated sales of just $79,737. This surged to $626,468 in 2019. The firm’s net loss also grew during this period, rising from $93,669 to $483,834, while its operating cash outflows worsened from $102,637 to $483,645. Investors should take predictions about the future with a grain of salt. But TapRm is projecting revenue of nearly $6 million for 2020. Anything even remotely close to that would mean the future is likely looking up for the business. Considering the firm is only operating in New York right now — with plans to expand to Pennsylvania, New Jersey, Connecticut, and eventually California — this is excellent for investors to see. Due to this impressive growth and positive revenue, TapRm’s performance score is very strong. 

At this point in time, there isn’t much that could be pointed out as being ‘negative’ regarding TapRm. Yes, the company’s net losses and cash outflows are discouraging, but that’s to be expected for a fast-growing, early-stage business. One possible fear is that the surge in sales caused by COVID-19 could result in a subsequent rebalancing lower once the crisis is over. If true, this would mean that current sales growth might not be representative of the company’s future growth prospects. The valuation of the business also looks high relative to confirmed financial performance thus far. 

Meanwhile, the bullish picture for TapRm is undeniable. The company’s strong sales growth is incredibly impressive for starters. If forecasts for 2020 are accurate, this will prove even more so to be the case. The market the firm operates in offers a fairly sizable opportunity, which means that there could be some nice upside for management. This is especially true if TapRm either focuses not just on beer but on alcohol more generally, and/or if it elects to move outside of the US market in time. Throw in how different the firm’s value proposition is compared to other market participants, and it’s clear that it’s an interesting prospect.

Beyond any doubt, TapRm is an intriguing firm. The company has built a platform that operates as wholesale, retailer, delivery courier, and marketing for beer companies. With e-commerce for alcohol growing and TapRm’s strong differentiators from competition, it offers an attractive investment proposition. Investors should think carefully about the company’s lofty valuation. However, so long as nothing awful comes to pass, it’s likely to grow into that price point eventually. Due to these factors and more, TapRm 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.