VC-backed startups being sold for scraps on Acquire.com (Ep. 1)

Bizness Breakdown: Motorcycle Rental Marketplace with $3.3M in TTM Revenue

As soon as you see 'Airbnb for _______' you know you're in for a wild ride

Quick stats:

- $5,500,000 raised in funding

- $3,300,000 in TTM revenue

- $10,000,000 Asking Price (Spoiler: it's not worth it)

Company Overview:

Founded in Feb 2018, this startup has generated $3.3 million TTM revenue.

Acting as the largest peer-to-peer motorcycle rental community in the US, the platform has facilitated over 70,000 successful rides. It allows riders to find their ideal rental and owners to monetize their unused motorcycles.

Financials:

Promising revenue numbers, with $250,000 in monthly revenue, it has yet to turn an annual profit.

In terms of funding, the company has raised $5.5 million to date.

Asking price: $10 million (3x revenue multiple)

Assessing the Asking Price:

They are looking for a return for common stockholders, as opposed to just preferred shareholders.

However, this valuation seems ambitious if not delusional, considering the startup's funding and lack of profitability.

Analyzing the Acquisition:

Pros:

- Established Marketplace: Built a community of motorcycle owners and renters (with over 70,000 successful rides), providing a ready-made distribution network.

- Potential for Cost Reduction: With the right buyer, there is an opportunity to optimize costs and improve the startup's bottom line.

- Profitability?: The platform no longer needs to focus on aggressive growth, allowing a new owner to explore profitability and cash flow generation.

Cons:

- Lack of Profitability, High Costs

- High Asking Price: The $10 million asking price is unreasonable

Overall:

The industry has growth potential, driven by an increase in experiential travel, and the growth of the sharing economy.

On the positive side, the startup has an established marketplace with a ready-made user base, providing immediate access to a distribution network. There is potential for cost reduction and improved profitability through streamlined operations.

However, it is important to note that the startup has not yet achieved profitability, and the high asking price of $10 million is unreasonable.

The industry is very competitive, requiring a strategic approach to differentiate and gain market share.

Buyers with expertise in cost reduction, a sustainable growth strategy, and a realistic valuation approach will be better positioned to succeed in this acquisition.

The ideal buyer is an experienced entrepreneur with a strong background in the travel and rental marketplace industry.

They should have industry expertise, operational know-how, marketing prowess, financial acumen, and risk management skills. Previous experience running rental marketplaces or travel-related businesses is highly desirable.

Proceeding with caution and careful evaluation of the startup's financials and market dynamics is crucial for a potential buyer.

Key Questions to Ask Seller:

- Revenue growth since inception?

- Churn rate for both motorcycle owners and renters?

- Cost Structure

- Customer acquisition channels

Industry overview:

The motorcycle rental industry is a niche segment within the broader travel and leisure sector. It involves renting motorcycles, providing the opportunity to experience one without the commitment of owning it.

Features:

- Peer-to-Peer Model: The industry has embraced a peer-to-peer model, connecting motorcycle owners with renters directly.

- Diverse Customer Base (Motorcycle enthusiasts, tourists) with a range of motorcycle types

- Safety and Insurance: Requiring valid licenses and comprehensive coverage

Challenges:

- Seasonality: Fluctuating demand occurs seasonally, with peak periods during warmer months and in popular tourist spots.

- Market Competition: With established operators and emerging startups vying for market share.

- Maintenance and Operational Costs: Owning and maintaining a fleet of motorcycles entails significant costs.

- Regulatory Considerations: Compliance with diverse regional regulations and licensing requirements.

Thanks for taking the time to read this breakdown! I hope you guys enjoyed it :)

I would love any feedback or ideas for content you'd like to see. Feel free to DM me or comment below.