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StartEngine's Solgaard Investors Might Have Hit a Homerun

Solgaard released their 2021 financials, and things are looking bright.

Solgaard wasn’t quite as popular as many big-name raises on StartEngine. They had a little over $3 million in revenue at a valuation of $24 million, making it a bit expensive. They make great products, but it’s not a flashy tech play, so it also seemingly got a bit overlooked in that regard as well. They raised over $900,000, so I definitely wouldn’t say they did poorly, but they were still a bit shy of their goal and maxing out their raise.

This was actually one of my earlier investments on StartEngine, and I invested for a pretty simple reason that I actually invest in a lot of companies for: I wanted their products. For companies of this size, there’s a significantly higher chance of me investing in the company if I like their products. The theory being that if I like their product, then others will too, then it’ll sell easily and grow fast.

That definitely seems to be the case here. Solgaard released their 2021 financials, and it was a complete blowout, in my opinion. They absolutely blew my expectations away. Based on some investors' updates and my own research, I figured they had been growing incredibly fast (for example, their web traffic has been quickly and steadily growing) however, I did not expect this. In 2019, the company cleared about $1 million in revenue. In 2020, they managed to get just under $3 million in revenue. In 2021, they cleared a whopping $13.8 million in revenue to include $1.2 million in net income. You can see their full income statement here:

300% growth on $3 million is pretty amazing growth. I personally haven’t received any new or updated materials for 2022, so I don’t know if they are keeping pace with similar growth and sales. However, what initially tipped me off as a potential winner here was their web traffic. I used to love using Amazon's Alexa site to track web traffic, but that actually closed down, so I use SimilarWeb now. Which, according to SimilarWeb, is still growing steadily:

This is important because Solgaard is pretty much exclusively a direct-to-consumer company. Some companies realistically benefit very little from increased web traffic because they might not be D2C, or even have online sales at all. Solgaard, however, primarily sells from their website, so if their web traffic is increasing, then it’s likely their sales are too. When I first invested in Solgaard, it had a global rank of about 800,000 and now is growing at a global rank of 125,000. So, it’s likely they are actually sustaining and even growing (assuming consistent conversion rates YoY) from that $13.8 million level likely.

Most similarly situated companies are raising funds at about 5x revenue so that actually puts the valuation at $60–70 million, which means as much as 2–3x gains for anyone that invested. Not bad for a 1-year return!

I do think this is a good example, however. When investing in startups, don’t just go after what is popular and flashy. There are plenty of gems hidden in the rough and plenty of money to be made there. Investing in what’s popular isn’t bad necessarily because lots of people backing something is actually great for the company. However, finding those good companies that will be successful either way is important.

All around, as an investor in the company, I was incredibly pleased to read the results of this company and excited to see what’s to come.

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