For where Volcon is developmentally, the company’s valuation looks quite lofty. In order to raise capital, the firm is issuing a SAFE that will convert into the future value of the company subject to a $15 million valuation cap. To add insult to injury, it includes no discount for incoming investors. This means they are not being rewarded for the early risk they are assuming compared to investors coming into the next round — unless the value of the firm at that future point exceeds $15 million. It is because of this lofty price tag that Volcon’s price score is quite low.

The market right now for all-electric bikes and UTVs is growing at a rapid clip, but it’s incredibly small and niche in nature. One source we found pegged the space for electric bikes and scooters combined at just $9.75 billion. Its forecast, though, was for the market to continue growing at a rate of 7.3% per annum through at least 2025. By that point, the industry should be worth around $13.86 billion. A second source looked at the global all-electric UTV market. Its call is for the market to have been worth about $468.9 million in 2019. With an annualized growth rate expected of it of 23.4%, it should grow to $4.30 billion by 2030. That’s a nice place to dabble in, but it’s difficult to become a household name with a space that small. It is due to this small size that Volcon’s market score is lower-than-average.

The team running Volcon at the moment is very qualified. At the helm of the business stands Andy Leisner, the company’s CEO. He was not one of the company’s co-founders, but was instead brought in by them to lead it. Previously, he worked as a Senior Vice President and Managing Director for Bonnier Motorcycle Group. There, he led a team overlooking nine of the company’s brands for issues like digital, print, and other forms of media. These brands included Cruiser and Five Best Bikes. Before working there, Leisner was a Publisher for Cycle World. There, he dealt with all things media, including television placement. Before working there, Leisner was employed as the COO of Hardcard Solutions. That firm focused on RFID-based systems that more accurately timed high-speed motorsport events. And before his post there, he was a Managing Partner for Hardcard Holdings, LLC, a motorsports management and consulting firm.

Another key member of the team who joined later on is Bruce Riggs. He is presently serving as Volcon’s COO. In the past, he has held the role of Senior Vice President and COO of the Smart Device Business Group at Compal Electronics Inc. There, he worked on a number of things that could prove useful for Volcon, including process development and life cycle management. It also includes operating relationship management involving companies like Amazon, Apple, and Fossil. And his experience includes automation process development as well. His role prior to that was as a Senior Vice President and General Manager for Quanta Computer Inc. He specialized there in manufacturing and services for devices like Apple’s iPod Touch.

In addition to these two executives, Volcon has two co-founders who warrant discussion. The first of these is Adrian James. James is also the founder of Sprout Equity Ventures. It is a global investment firm with stakes in technology, telecom, consumer products, and more. Given that he has been running the firm since 2001, it’s safe to say they have seen their share of success. Having investment oversight over a diverse portfolio is sure to give a co-founder a broad view of how companies should operate. The other co-founder of Volcon, meanwhile, is Christian Okonsky. He lists being the founder of AYRO Inc. on his resume. That firm works in the design and manufacture of electric vehicles for US consumers. He also is the co-founder of Frog, an e-mobility solutions firm. And he serves as the Chairman of Monday Motorbikes. All of this is experience that is relevant to Volcon’s overall business.

Due to the strength of this team, Volcon’s team score is above average.

What really separates Volcon out from the competition is two things. First is its focus solely on electric motorbikes and UTVs. There are other companies out there that do make these devices, but Volcon’s pitch is that it’s a pure-play in this market. Some competitors would include Polaris with its Ranger EV or Nikkola with its NZT. By focusing on a pure-play, though, the rationale is that investors are getting a company that will be better able to perform in the space and that will fully appreciate the market potential offered by the niche. The other differentiator working in Volcon’s favor is its partnership with Linear Labs. The use of its patented technology will prove instrumental to the company’s success — especially given how strongly it outperforms the existing competition. Due to these differentiators, Volcon rated quite high in this category.

Performance is a tricky subject. If by performance we were to look solely at financial results, Volcon would receive a low score on our rating system. After all, through September of this year, the company had yet to generate anything in the way of revenue. From February 21st, 2020, through September, the firm’s net loss was $311,607 and its operating cash outflows totaled $266,466. When paired with the firm’s valuation, this doesn’t look great. However, there are other areas in which the company has excelled. The fact that its timeline is so soon relative to the present day indicates that management has engaged in a great deal of work on their products. Their partnership with Linear Labs is also significant. Add on the fact that it had, as of the end of October this year, $1.45 million in cash on hand, and it’s clear there are ways in which Volcon has excelled. Because of this, our system has rated the firm slightly above average for its Performance score.

Looking at Volcon, there are a few things for investors to be bearish about. For starters, the fact that the firm is still a ways off from generating revenue is concerning. If it can stay on its own timeline, a realistic expectation for first sales would be the second quarter of next year. Investing in any company that’s pre-revenue means you’re accepting additional risk. Another issue is the small market opportunity that’s out there. This really does limit upside potential in the long run. On top of that, while the firm’s partnership with Linear Labs is significant, there’s not enough information to know if or how the company might lose the right to use their patented technology. That creates some uncertainty moving forward.

Despite the number of bearish items to consider, there are bullish ones worth mentioning as well. Once again, we have the Linear Labs partnership, which provides Volcon with a strong differentiator in the market. On top of this, the company should be generating revenue next year on not one, but two of its three main product lines. A strong market entry like that indicates that the firm is operating with focus and efficiency. Add in how much other progress the company has made to get to this point and its robust management team, and it’s hard not to like what is going on here.

On the whole, Volcon is an interesting business. After reviewing the firm thoroughly, we concluded that there’s a lot of good going on here, but it’s not without its fair share of risks. Putting everything together, we felt that the business appears to be a fairly balanced risk/reward prospect. This is, at least, relative to other startups out there. Because of this, KingsCrowd decided to rate this 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 Daniel Jones.