Whooshh is raising funds through common equity at a pre-money valuation of $84.9 million. This valuation is excessive. The company’s revenue skyrocketed after a breakthrough 2020, so its revenue multiple is around 15 times. While the Biden administration’s laser focus on environmental sustainability is a plus for Whooshh, it isn’t enough to justify its price. Therefore, the company gets a low price rating.

The $9.7 billion US fishing industry is just one market that depends on Whooshh’s technology. Other markets Whooshh is tapping into include the slow-growing $1.9 billion US fish and seafood aquaculture market — aka fish farming — and the $11.7 billion hydroelectric power market. These small markets don’t offer a ton of room for growth. Whooshh is also working with the federal government. Though the Biden administration seems to have a focus on environmental sustainability, it’s not certain that will be a priority. Whooshh could struggle to attain a niche that’s large enough to justify its $84.9 valuation. The small markets and general uncertainty make Whooshh’s market rating its lowest across all five metrics.

After 14 years, Whooshh’s leadership team has finally made the company profitable. CEO Vincent Bryan III has led the team since late 2007. After picking up a Master of Laws degree in international business transactions at the University of the Pacific, he founded his own law firm in Washington state, Bane & Bryan. After five years in private practice, he came on as associate general counsel at Adobe Systems, the giant responsible for Adobe Creative Cloud. In 2004, Bryan got into the startup game as CEO of Montage Management, an umbrella company managing various assorted startups. By 2007, he was ready to start Whooshh.

Chief Product Officer Paul Henwood joined Whooshh in October 2020. After getting his start in production and manufacturing management, he moved into leadership roles for small companies with Metron Systems in 2006. Henwood most recently served as director for MicroConnex following its acquisition by Carlisle Interconnect Technologies. This represents a successful exit on his part, which might be part of why he was brought on at Whooshh.

Janine Bryan, sister of the CEO, joined Whooshh in 2016 as director of biological studies after four years as a scientific advisor. She now serves as the vice president of fisheries R&D at Whooshh. Bryan holds a Ph.D. in microbiology and immunology from the Indiana University School of Medicine and was the product lead for development of a cancer vaccine to prevent cervical cancer caused by human papillomavirus (HPV). She was also involved in one of the startups her brother Vincent led under the Montage Management umbrella. Before that, she worked as the principal research scientist at the University of Washington and was a program lead scientist at Merck Research Laboratory in Pennsylvania. She brings a significant level of scientific expertise to the team.

The Whooshh team brings a strong combination of legal, managerial, and scientific skills. Founder Bryan has past entrepreneurial experience, as does Chief Product Officer Henwood. These factors give Whooshh an above average team score.

Whooshh has set itself up nicely to carve out its highly specific market niche. First, it holds a strong lineup of patents, some of which it’s held since 2010. The company currently holds 48 patents with more than 50 pending. Whooshh’s product is quite different from existing fish migration solutions — custom-designed ladders and tubes from civil engineering firms that are inefficient and can hurt the fish they’re meant to assist.

In addition, the market isn’t easy to break into. Stringent environmental regulations and standards, as well as extensive R&D costs, make it difficult for any would-be competitor to challenge Whooshh, even if it was able to work around Whooshh’s patents. The industry’s margins are also high. Overall, its unique product and defensible position give the company the highest possible differentiator score.

After a decidedly extensive period of little-to-no revenue, Whooshh has finally made a breakthrough. Revenue rose from $466,613 in 2019 to $5.6 million in 2020, a more than tenfold increase with only a proportionally small increase in cost of goods sold. Much of this appears to have come from its scaling up of passage-as-a-service (PaaS), which is a recurring revenue model for its automated Passage Portal.

Whooshh used a good portion of the revenue to cut out nearly a million dollars’ worth of its short-term debt and translate another million into long-term debt. The company still holds around $4.6 million in total liabilities. Even so, its fundraising and public outreach have been impressive thus far. The company has raised more than $13 million in Regulation D fundraising. Therefore, its performance rating is the highest possible.

Though Whooshh has seen recent success, investors should still be aware that some challenges still lie ahead. While the team has some level of experience in running startups, government contracts and fish migration don’t appear to be areas of specialty among the upper management. Expertise in a similar field doesn’t necessarily translate.

In addition, while the product lineup is novel and has seen nine deployments in 2020, that doesn’t necessarily mean Whooshh will capture a considerable size of the market. Whooshh will need to further drive costs down to attract more contracts, ideally at hundreds or thousands of locations. That’s where the time risk comes in. It has taken nearly a decade and a half just for the company to reach profitability. Whooshh first needs to take care of its short-term debt and continue acquiring contracts to build up its recurring revenue and drive overall costs down. While it likely won’t require another 14 years for investors to see returns, this is not a short-term deal, either.

Reliable startups generally include steady progress, a financially responsible team, and steady growth over time. Although Whooshh does have that growth, it has been slow-going. While its recent dramatic revenue spike is exciting, sudden increases can also be followed by sudden drops. A large part of the company’s increase in revenue has come from grant and study funding, which is by no means guaranteed to continue. That said, to justify the company’s valuation, investors will want to see significant gains continue.

Whooshh is providing a unique, necessary and environmentally-conscious service. This gives it about as good PR as any business can hope for. It has raised an impressive amount of money so far and saw its revenue skyrocket more than tenfold in 2020. If Whooshh can keep the momentum going and secure a few thousand dams — about 1% of the fish passage market — it will secure a lifetime revenue of $12 billion. That would be outstanding for a startup. While investors shouldn’t expect the company to reach this level for quite a while, the potential is enormous.

Whooshh Innovations is an environmentally-conscious company providing PaaS. Its patent-protected fish transit systems enable upstream migrators like salmon to avoid dams and other obstacles to reach their spawning locations while simultaneously filtering out invasive species and would-be predators. Though the product has had a long gestation period, 2020 was a breakthrough year for Whooshh, sending revenue into the millions.

While the company’s valuation is high, a moderate revenue multiple makes it a reasonable bargain, and Whooshh’s offerings are truly unique. Thanks to contracts with the federal government which seem likely to continue given the current environmentally-conscious administration, Whooshh is making a real difference to both consumers and ecosystems alike. For these reasons, Whooshh Innovations has been rated a Deal to Watch.

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Analysis written by Benjamin Potts.