A few days ago I was notified about an investment opportunity that not only 'rang a bell' but also got me into investigation mode.
Why?
Because of the product. A great innovation in the bio sustainable, and bio-degradable coffins. The enormous amounts of money that is spent in the funeral business. The trend of citizens in many Western world countries becoming more environmentally aware. The fact this coffin and urn products they bring to the market aren't outrageously expensive. I am not sure when it was, but I read about this innovation some time ago, somewhere, someplace. And now this offer to invest for shares.
About time to dig into this.
The Product? remarkable
I won't bore you with too many details, just give you the essentials. The product is based on pure mushroom, a coffin. Each unit is grown in a factory in my country the Netherlands, in about 7 days. From scratch to full-blow coffin. Moss is used to cover the bottom, for the deceased to lie on. The headrest is made from hemp, another bio-degradable material. Some of you may smoke the flowers produced by hemp. Others may wear clothes made from this material. Now available as a headrest for your last 'bed' on planet Earth.
I had quite a few questions about this type of coffin. Can it be used to present the deceased for a wake period? How the coffin can be moved? How quickly will it become one with nature? Can it handle rain, sun heat and whatnot? Must the coffin be used quickly after production, or can these be stocked, and for how long?
Turns out, it looks like everything is accounted for. The units can be stored for a long time when stored dry. It can handle pouring rain. It withstands the sun in any circumstances. Handles are attached for carrying and it also allows carrying on the shoulders. No limitations during the burial and the ceremonies around a burial. For those preferring cremation, no issues as well, the material can easily be burned. Sure when burning the effect of the biodegradability isn't a big plus anymore, but that aside.
Last but not least, the aesthetics of the coffin is more than nice. A great looking model. Something that isn't possible with wood, or carton, or straw. Optionally one can get a biodegradable painting set, to use the coffin as a canvas to be painted in any way one desires.
Market? sizeable
Somehow I felt the market size of coffins is large. Most of the people who pass away are either buried or cremated in a coffin. In my country only, about 170 thousand people die each year; In a population of about 18 million people.
The company aim to expand in Northern Europe. Let us assume the UK, Germany, Belgium, Denmark, Norway and Sweden markets. All in all this area populates more than 10x of the Netherlands alone, at least 170 million inhabitants. Taking the Dutch death numbers, this is at least 1.7 million people per year needing a coffin. In the Netherlands, about 40% of the deceased are buried, and 60% are cremated.
Competition? plenty but then again not so much
I suppose plenty of competition. Perhaps not direct competition, but so many larger and smaller woodworking shops and factories producing coffins. Wasn't too easy to figure out market leaders. A newspaper article I found in Belgium (our southern neighbours) showed a single factory owning 60% of their local market. From what I could read, they deliver any wood-based coffins, from cheap to expensive ones. No one seems to offer coffins based on mushroom material. I suspect this is the result of the material not being straightforward, and the patents to protect this technology/production process and perhaps even the product itself.
In the biodegradable market segment, I came across straw/cane-based coffins, as well as those made from carton. I suppose direct competition for the mushroom-based coffin. Not for its aesthetics though, at least not for my eyes. But perhaps others prefer the looks of straw/cane material.
Pricing? not the cheapest option
The company says on their website the price of about 1000 Euro per coffin is on par with the biodegradable coffin market. After quite a thorough research on prices, I noticed plenty of wooden coffins going for 300 to 500 euros. Ok, wood isn't quickly biodegradable though. When varnish and paint are applied, with metal handles and whatnot, these coffins are even less biodegradable. Straw/Cane-based coffins have a higher level of biodegradability. These seem to go from around 500 euros upwards. Carton coffins seem to be the cheapest. Perfectly biodegradable with a price between 300 and 500 euros.
Looks like the mushroom coffin is at least 2x more expensive than most of the other options. Well sure, one can spend up to 4-5 thousand euros on a coffin, but I feel that is a niche market, options for just a few of us.
Financials? oospy
Unfortunately, I can't say a lot about this since most information is provided behind the login account pf the crowdfunding platform. Available to those who are eligible for participation. I simply can't talk out in the open about most of these numbers. What I can tell you is what is publicly available:
- Company valuation, pre-money: 10 million Euro
- At least 2 investment rounds with sizeable funds:
- First round (2021), 2 investors: 2 million Euro
- Second round (2023), 1 sitting investor: 1 million Euro
- This round is for a maximum of 2 million Euro
- Red numbers till date
- Small-ish revenues till date
- Aggressive projection up to 2028: with (high) black number from 2026 onwards
- About 200% year-on-year revenue growth past few years
- Founders hold around 60% of the company, pre-money
The early investors came on board after a Dragon's Den show. They were ok with a minority share, so it seems. Which is a good thing in my honest opinion.
The product earned a prestigious Philips reward.
A simple calculation based on the sales price of the coffin of about 1k euros: 10k coffins need to be sold for a gross revenue of 10 million euros. Assuming the valuation of the company is about its annual revenue, 5x more coffins need to be sold to give a 5x on the currently offered investment. Or 10x more coffins, for a 10x in share value boost. Perhaps a bit conservative, but I usually use such numbers. I mean, to determine the valuation of a company I take 1x annual revenue.
Risks? tons of unknowns
I suppose plenty of risks. A startup with red figures. Early growth company. I suppose they crossed the chasm, however, they haven't proven yet they can grow towards double-digit millions in revenue. Aggressive growth projections are presented, while most of the market still needs to be opened to materialise such growth. I have no idea how easy or difficult it is to get people to buy a coffin from a webshop, B2C play. Or how easy/difficult it is to become yet another supplier in the B2B market. I suspect, it aint easy.
Considerations? uhm
Somehow I do very much like the product. The biodegradability of the product (needs just 45 days to become one with nature). The aesthetics of the product is a big plus. I so much like the fact this technology came from the university I had the privilege to study at tons of years ago. The bigger investors coming from Dragon's Den, I see as a plus as well. The additional investment made by one of them - last year - is another positive.
Am not sure about how big this company can grow though?
In my country, they deliver the coffins using electrical vehicles, a little bus. But what about a country such as Germany? Sure electrical powered vans can also drive to Germany, but delivery costs will increase with the mileage. And what about the UK? We have a train connecting mainland Europe with the UK. But I suspect these need a container type of transport. About 75 units can be fitted in a 40ft shipping container according to my quick & dirty calculations. Shipping of such container may cost how much? 1k euros? Shipping a container from China to Europe costs about 4k euros these days, but was about 2k euros before all the shizzle with covid and wars... Owww wait: Reading just yet the cost of shipping furniture from the Netherlands to the UK, is about 1.500 euros, in a 40ft container. Damn! So expensive compared to shipping half the world around.
Owwwk ... shipping to the UK, and perhaps also to Denmark, Norway, and Sweden is about 20 euros per coffin. Let's triple that, 60 euros. Not too much in comparison to the cost of the coffin itself. This shouldn't be a barrier to buying such a coffin and getting it delivered. Especially when going for the B2B model in the markets further away from the Netherlands.
Perhaps this company can grow big!? Perhaps it can go overseas to the US? Transportation isn't too environmentally friendly though. For the US, I suppose they need to start production in the US. Perhaps also lots of difficulties to get to environmentally friendly road transport on that side of the Atlantic Ocean. Ah well, nobody said anything about expansion to the US.
Your Advice?
Yesterday and this morning I jumped many times from YES invest to NO don't invest. The reason why I wrote this post. Actually. For two reasons.
- One to further clarify my mind - I wasn't successful as of publication.
- Secondly: to get this out in the open to get some feedback from the 'crowd' - You.
What are Your Thoughts?
- When reading all this, what do you say?
- You think this is a good market to invest in? And why?
- What about the product itself?
Some Links
A few web links you may like to visit.
- The company 'Loop Biotech' https://loop-biotech.com/
- The product, the coffin: https://loop-biotech.com/living-cocoon/
- The investment page: https://www.invesdor.com/rounds/8080d499-5af1-4caa-9f2b-e3a9a38ea83e#/
- The initial 'beta' product (plz use auto translate): https://www.tudelft.nl/2020/tu-delft/startup-tu-delft-ontwikkelt-levende-doodskist/
an INLEO/HIVE original
all media by edje unless stated otherwise