Hey tough guy, why do you insist on trying to re-invent the wheel???

Ooops, too late.  SharkWheel may have already done exactly that.  And that is the firm we will use in this piece to take a look at what happens AFTER someone executes a transaction on a platform such as StartEngine. 

Here are a few recent posts on this platform:

Fed Jawboning and Bitcoin

StartEngine Raises That Intrigue Us - March 2024

Crowdfunding is an interesting sector.  It is growing nicely if one takes a look at the big picture, but hey this is people's money we are talking about here.  Now that a few years have passed there is an elevated amount of scrutiny on how the firms raising capital are doing.  This is good and welcome. 

Within this context - we've noticed that StartEngine began cranking up the heat on firms that used the platform regarding communications with investors.  Here's the reality - the firms that raise are not formally required to tickle you with updates at any given interval.  They're simply not required to do this.

They are required to keep up with SEC disclosures and reporting requirements, and we will assume that each adheres to this on their own.  Beyond that however, there is a big difference between firms and how they provide updates to shareholders. 

Again - the firms that raise in the private markets don't OWE YOU a minimum number of YouTube updates, X tweets, blogs, emails, or other contacts to rev up your own engine.  But, we all know that maintaining good contact with investors sounds very logical and like the right move to make. 

Consequently - StartEngine began to basically call firms out and use tactics to encourage them strongly to provide updates.  We have noticed more are doing so in response.  Some are better than others.  Some updates are "check the box" updates that don't provide much and even leave open anxiety ridden questions. 

So, what does SharkWheel have to do with this?  First, we'll summarize our experience as we entered three different times, all at valuations that were fairly close to each other.

- SharkWheel was for years essentially an R&D company

- first traction was with wheels for skateboards and luggage

- skateboards started picking up big time with the covid situation, kind of like bikes, scooters, and ebikes

- the reality is, the skateboard market is important but a very SMALL portion of the overall big picture

- SharkWheel used Reg CF a few times, and there may have even been the DREADED DOWN ROUND (oh no!!!!!!!!!!!!!!!!!!!) and/or some lateral rounds

- SharkWheel entered into a strategic partnership with Bridgestone (kinda big deal)

- skateboard inventory is piling up at retailers (like bikes and especially ebikes), although the SharkWheel powered boards have done well and are well received.  This has been a distraction but the firm is rolling with it

- SharkWheel is into it's transition from R&D mainly to primarily commercialization

SharkWheel stands out in our view with the way they communicate with shareholders from the numerous Reg CF raises they executed.  This is why we use them as an example here. 

Now, we'll pull some items from a recent investor update sent out, an update that was in line with others in terms of frankness and information provided. 

First, the most important some might argue:

Wait, what????  They had a down round and kept using Reg CF, doesn't that mean they are a failure?  Looks like revenue is JUST STARTING to ramp, and it's with one of their core spaces (ag). 

Sales are not yet skyrocketing, but they are growing indeed. 

Lots of critical data points and updates in there. 

Summary:

- very easy to waive a finger at OTHER firms for a DOWN ROUND or using Reg CF

- nothing happens overnight

- there are companies that DO provide good investor updates, though certainly not all

- StartEngine, and other Reg CF platforms, are better serving the investors if they help to professionally and appropriately get the firms raising to provide consistent and clear updates beyond SEC filings

Our take on SharkWheel right now:

- happy with position

- this did and still does fit our model of seeking "winner takes all or most" outcomes

- when we saw the Bridgestone news, we doubled our position via StartEngine

- never saw it as a "skateboard wheel company"

- always felt Ag would be very, very HUGE: nice surprise to see DOD coming into the mix sooner than anticipated

- standing pat and holding

- hope they don't sell it too early

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