Just reflecting on the deal yesterday, it was staggeringly good.
Just imagine your own start up. In the space of barely 18 months, you create a company with over 80 employees, manufacturing capabilities that are getting the attention of international brands and retailers and you receive an order for $2m. Imagine if you did this yourself? Well, our CEO Paul Peros has just done it.
Could you imagine generating a $2m order after only 18 months having started with nothing. The guy is a bloody genius.
Worth putting this deal in context. In 2014, a deal to license the tech with P&G saw the MC reach over $200m. It settled for a good six months at around $160m. That’s right, ’the market’ placed a valuation of the company at $160m. With no cash in the bank and no revenue the market valued the company at $160m.
P&G sold $200m worth of product with our tech in it but due to a horrible deal negotiated by our former Chairman, we received barely $2m over the next 2-3 years as the royalty rate was just 1% (as shareholders only discovered after poor quarterly after poor quarterly). But what it did, was validated the tech with SKII and Olay. Two international juggernauts in the beauty space.
The new board realised we had something special by way of tech and IP. Ripped up that arrangement and went it alone. We now have our own brand (
www.reduit.com) being rolled out around the world, we have just validated our OEM capabilities with a $2m order and have a new brand called Swisswell about to launch, which is to offer a suite of products including patches that will compete with the likes of
Nurofen (NSAID).
To suggest ‘the market’ is sophisticated in any way is a stretch. When you look at the two scenarios above:
The first valuing the company at $160m
The second and current situation valuing the company at $11m. This is with $4m cash in the bank, a $2m order just received, growing revenues with the Reduit brand and a suite of new products about to launch.
If this was a tech company like Airtasker ($480m MC and annual revenue $22m) or a medicinal marijuana company like Little Green Pharma ($92m MC and $5m annual revenues) it would probably be valued more appropriately.
(20min delay)