KulaBrands hoping to launch $40,000 target IPO
I’m not a fan of KulaBrands’ business model. I see it as crowdfunding manipulation where theoretical ROIs are emphasized over the actual viability of sponsored projects.
Typically crowdfunding backers have an interest in the project (be it a product or service). This spurs genuine demand, with enough people sharing that demand seeing the project funded.
In KulaBrands that’s still possible but polluted by a financial incentive.
To their credit, KulaBrands saw moderate growth throughout 2016 till about August this year. Alexa estimate traffic to the KulaBrands website has since gone into decline.
With the MLM business opportunity alone failing to sustain itself, KulaBrands filed a Form C Offering Statement on June 9th.
Through an initial public offering, KulaBrands hopes to issue 4551 shares and raise $40,000.
A maximum offer amount has been set at 121,729 shares ($1.07 million), to be realized by a set deadline of December 31st, 2017.
Personally I’m not seeing anyone other than existing affiliates invest. Despite recording net sales of $263,000 over the past fiscal year, net income was $33,981 in losses.
It’s worth noting that KulaBrands claims in 2016 it amassed 1960 affiliates, each of whom paid a fee to join.
Affiliates who joined prior to March 14th paid $150, those who joined after paid $199.
If we multiply 1960 by $150 we get $294,000, which accounts for more than KulaBrands’ reported 2016 sales revenue (strange).
Multiply 1960 by $199 or a combination thereof and that figure is even higher.
And yeah, that’s 100% affiliate funds making up sales revenue. KulaBrands itself doesn’t sell any products or services to retail customers (see review).
Crowdfunded products and services are sold through KulaShop, however this is external to the KulaBrands MLM opportunity.
KulaBrands shares will be initially sold for $8.79 a share, a value it says ‘is based on perceived value‘.
The price of the shares available in this offering were set by kulaBrands using a qualitative measure of value and growth opportunity.
The price does not reflect a relationship to its assets, net worth, or objective criteria.
KulaBrands CEO Peter Gantner currently holds 443,510 shares and maintains a 66% controlling stake in the company.
Of the $40,000 KulaBrands hopes to raise, $3600 will be paid in fees and $18,200 used to pay software development and operating expenses each.