Sircles on WeFunder | Deal Review

Apr 11, 2021 3 min read
Sircles on WeFunder | Deal Review

Company Overview & Business Model

Problem Addressed: Yelp and other online review platforms create an unreliable and untrusted source of recommendations for the unsuspecting consumer.

The Product: Sircles is an app where you can find (positive-only) recommendations from your friends and people you trust.

Note: With regards to the "positive-only" moat: It isn't clear how this actually works. Can't one leave a bad review under a business page? I'd love to hear more from the founder.

How Sircles Makes Money: Sircles is subscription based and aims to stay away from the ad based revenue model. When businesses claim their profile page ($20/mo),  they unlock the ability to place coupons on a local map, gain full control over their profile, and get access to detailed analytics, such as which users have "favorited" their business. Very simple, affordable, and automated.

Sircles Business Structure

  • Form: Corporation
  • Jurisdiction of Incorporation/Organization: Delaware
  • Date of organization: December 15, 2019

The Deal Terms

  • Security: SAFE
  • Valuation Cap: $23,000,000
  • Discount Rate: 90%
  • Min. Offering Amount: $100,000
  • Max. Offering Amount: $3,930,000
  • Min. Investment: $250
Note: Sircles looks like a nice idea! But I can see from other comments on the Wefunder campaign that the app has many bugs (no problem, since this is a very new venture). But they also have no revenue yet. How can you justify a $23M valuation cap?

The Team

John Worthington (Co-Founder, CEO): Founded and scaled Tech 2U to nearly $10M in ARR. Built a highly qualified and loyal team of executives. Tech 2U provides computer repair, managed services, web development and digital marketing to the Sacramento, San Diego, and Las Vegas markets.

Todd Fiore (Co-Founder, CIO): Co-Founder of Tech 2U. Established the technical systems and infrastructure to scale Tech 2U to nearly 100 employees. Created the culture at Tech 2U that makes it the most beloved tech company in Sacramento for IT professionals and customers.

Danny Hinkle (Co-Founder, COO) Early employee at Tech 2U, VP of Digital Marketing. Generated millions in revenue. Formed key strategic partnerships with celebrity influencers that were critical to scaling Tech 2U and have proven extremely beneficial to Sircles.

Sircles Cap Table

The table below lists the beneficial owners of twenty percent (20%) or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power:

Sircles’s Cap Table
(Source: Sircles' Form C)

How will Sircles Use The Funds Raised On WeFunder?

Sircles use of WeFunder campaign’s proceeds
(Source: Sircles' Form C)

Debt

Apart from SAFE and Convertible Notes, the company applied for and received an SBA Paycheck Protection Program loan for $15,895. This loan bears interest at 0.98% per annum and will mature 5 years from the date of first disbursement of the loan, including the deferral period of maximum of 10 months from the date of first disbursmement of the loan. This loan requires equal monthly payments of principal and interest after the deferment period. The loan is forgivable if certain conditions are met and the company expects to meet those conditions, though no assurance can be given that any amount will be forgiven. As no repayments have occurred to date, the outstanding principal balance as of December 31, 2020 was $15,895. (Source: Sircles' Form C)

Financials & Liquidity

Sircles cash in hand is $920,460, as of March 2021. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $80,000/month, for an average burn rate of $80,000/month. According to the company, they can rely on Tech 2U, a business owned and managed by the directors and officers of Sircles, for additional capital if necessary.

Sircles' Financials (Source: WeFunder Campaign)
(Source: Sircles' WeFunder Campaign)

Conclusion: Did I Invest?

I’m still in the process of writing a full deal report and decide whether or not I will invest in Sircles. I will send my final investment decision on Saturday to subscribers of the Angel Notes newsletter (you can join through the form below). See you soon!

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