In order to keep Asarasi growing, the company is offering a SAFE that will convert at a 10% discount to the company’s next equity raise. That conversion is subject to a $10 million valuation cap. This matches the terms of the crowd raise the firm completed last year. This valuation is reasonable, given the company’s recent revenue increases. As a result, Asarasi’s price score is above average.

The market for water is truly vast. On a global scale it was estimated to be worth $770 billion in 2018. With an annualized growth rate expected for it of 3.5%, it should be worth about $854 billion this year. By 2023, the expectation is for it to climb to nearly $915 billion. The opportunity for Asarasi, however, is notably smaller because the company’s prospects are limited by the amount of sap that’s extracted annually.

According to our sources, about 14.29 million gallons of maple syrup were produced in Canada in 2020. The US produced a further 4.18 million gallons, with more than half of its share coming from Vermont alone. These two countries account for the overwhelming majority of maple syrup produced across the globe. If management’s water-to-syrup ratio of 49-to-1 holds true, this implies up to 914.44 million gallons of water they could source every year. At $1.69 per 12-ounce bottle or $6.99 for a pack of four of these, this implies revenue of between $16.48 billion and $17.04 billion annually. It is worth noting that the amount of syrup produced can vary materially from year-to-year. In 2018, for instance, Canada saw output of less than 10 million gallons. Generally speaking, though, the market for syrup should only grow over the long run. Due to these considerations, Asarasi scored very highly in the market metric.

The founder and CEO of Asarasi is Adam Lazar. Prior to setting up the company, he worked as a Category Business Manager at 5.11 Tactical. As a clothing retailer, there’s very little crossover between that and what Asarasi has been focused on. The general emphasis of management could apply, as could the fact that both involve logistics. But beyond that, the work is unrelated. Prior to working at 5.11 Tactical, Lazar served as a Product Development Manager of Hard Goods. He was also a Product Marketing Manager at Revision Eyewear. The first of these is a provider of wood, concrete, and steel products. The second is an eyewear firm as its name suggests. Beyond general management expertise, there isn’t much relevance between Lazar’s prior work and what he is doing today.

Though not a founder, the next big player at Asarasi is Dennis Noone. He serves as Asarasi’s Head of Sales and as its CRO (Chief Revenue Officer). Before joining Asarasi, he was a Principal at 12PMER LLC, and prior to that he was a Corporate VP of Sales at Henkel Consumer Goods. 12PMER LLC provides contract executive sales leadership for its client companies. Henkel sells products in the adhesive technologies, beauty care and laundry products categories. Once again, there is not strong crossover here. As such, Asaras’s team score is its lowest across all five metrics.

In one sense, Asarasi is incredibly different from its peers. We could not find any other companies that derived water from the maple syrup production process. This concept is novel, and it could become an important source of water in a world where its potable form is uncommon. On the other hand, Asarasi is, at the end of the day, a water company. There is the possibility that many consumers won’t care about the renewable nature of the product when comparing price. In such a commoditized space, achieving a niche is definitely doable, but it’s challenging. Usually the winner is the player that can drive costs down the most. Balancing Asarasi’s unique product creation against potential difficulty with consumer appeal, the company’s differentiators score is above average.

So far, management has yet to release financial results for 2020. However, unit sales clearly indicate that the firm had a great year. The only financial figures we do have cover 2018 and 2019. In 2018, revenue totaled $148,474, while in 2019 this figure grew to $185,392. Net losses were similar each year, dropping from $181,199 in 2018 to $180,184 in 2019. Operating cash outflows, meanwhile, improved from $166,451 to $131,158. While it’s discouraging to see the company generate losses and cash outflows, it’s to be expected for one so small. The continued growth in sales is what’s most important. Add in the contracts it has for up to 100 million gallons of water annually, its presence in more than 1,100 stores, and its partnership with Anheuser-Busch, and it should come as no surprise that Asarasi scored quite highly in the performance metric.

There are limited bearish concerns regarding Asarasi. For starters, the market opportunity of the company is constrained by the syrup industry, which does add risk to the business. Its management team looks about average. The price of the company is a bit lofty, and the commoditized nature of its product does warrant some concern. None of these mean the firm is a bad investment — but investors should still be cognizant of them.

While there are some negative aspects to Asarasi, there are bullish ones as well. First and foremost is the performance of the company in recent years. It’s clear that sales are continuously rising, and its losses and cash outflows are reasonable for a business its size. While the market for the company is constrained, it does still benefit from the fact that it’s the only real player. Add in its presence in stores and other locations across the country, as well as its partnerships and awards, and there’s plenty for investors to be excited about.

Putting everything together, it appears clear that Asarasi is an interesting business. The firm is far from being a riskless play. But management has definitely latched onto an interesting concept that is showing signs that it can succeed. Due to the fact that we believe the rewards outweigh the risks, Asarasi is a Deal to Watch for a second time.

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

Analysis written by Daniel Jones.