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Gleantap

AI-enabled member engagement platform for fitness centers

$112,633

Raised from 513 investors

Min: $50,000

Max: $1,070,000

Security Offered

Convertible Note

Minimum Investment: $100

Gleantap is hosting an investor webinar on
November 21st at 11:00am CST. Sign up here.

  • Current clients include Planet Fitness, Gold’s Gym, Anytime Fitness, and Orangetheory

  • Servicing 27 clients representing 300+ gyms and wellness studio locations that engage 1.5 million end clients

  • Has generated $375,252 of revenue in last 16 months and $32,694 of MRR as of September 2019

  • Core team has been part of five startups, of which three exited successfully

Executive Snapshot

Gleantap provides gyms and wellness studios an AI-enabled marketing platform to help them acquire and retain customers with less effort. The Austin, Texas-based business-to-business (B2B) software company has 27 clients with over 300 locations, including Planet Fitness, Anytime Fitness, Gold’s Gym, Orangetheory Fitness and Restore Cryotherapy, and was generating monthly recurring revenue (MRR) of $32,694 as of September 2019. Currently, Gleantap integrates with some of the leading fitness member management software platforms, potentially allowing the company to scale to the 78,000+ gym and wellness studio locations who utilize these platforms right now. The company plans to use the proceeds from this raise to increase marketing and sales to drive business development, while investing in research and development to help further build its customer engagement platform. In the future, Gleantap plans to expand into other industries beyond the fitness industry, targeting the entertainment, hospitality, auto service, and retail verticals. Assuming roughly $109 of monthly recurring revenue per location, the company is targeting a comprehensive market of 400,000 fitness centers,i spas,ii and salonsiii with a total projected addressable market of $562 million.

Terms

Security Type: Crowd Notes

Round Size: Min: $50,000 Max: $1,070,000

Valuation Cap: $5,000,000 (or $3,500,000)

Discount: 20%

Conversion Provisions: In connection with equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $5,000,000 or $3,500,000 valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Transaction Type: Primary

Perks

Investors that purchase the first 50,000 Crowd Notes, and thereby fund the first $50,000, will receive Crowd Notes with a conversion provision based on a $3.5 million valuation cap instead of a $5 million valuation cap. That means, in connection with equity financing of at least $1,000,000, the company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per unit paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $3.5 million valuation cap (instead of $5 million).

Overview

Opportunity

Shaped by the ever-increasing accessibility of information afforded by technology, consumers’ expectations for service are forcing companies to reevaluate the ways in which they interact with their customers. According to research conducted by Salesforce, 73% of consumers expect companies to understand their needs and expectations, while only 51% believe that companies generally understand these needs. This could pose issues for companies who don’t adapt to customers’ expectations, given that 83% of the customers polled in the same report stated that the experience provided by a company is as important as its product or services. In response, Salesforce notes that companies need to develop tailored, contextualized engagement methods across multiple touchpoints in lieu of one-size-fits-all approaches.i

For companies, engaging customers can reap benefits. In a study conducted by Gallup, fully engaged customers represented a 23% increase in revenue for companies relative to the average customer.ii Further, leveraging technology such as artificial intelligence (AI) to engage customers has been found to reduce the churn, or loss, of customers by up to 50%.iii  Now, as consumers continue to adopt various channels of communication such as email, text messages, and messaging apps, companies may leverage these platforms to better engage individual customers.

Gleantap, an Austin, Texas-based software company, has developed a customer engagement platform to help gyms and fitness studios acquire and retain customers. Leveraging AI, the company enables clients to tailor personalized engagement campaigns for their customers through email, text message, and messaging apps, among others. Currently, Gleantap serves 27 clients including Planet Fitness, Orangetheory Fitness, Gold's Gym, and Anytime Fitness, and hopes to expand their client base with the proceeds of the raise. Assuming roughly $109 of month recurring revenue per location, the company is targeting a market of 400,000 fitness centers,iv spas,v and salonsvi with a total projected addressable market of $562 million.

Product

Gleantap offers businesses technology to help acquire, engage, and retain customers. Leveraging AI, the company allows wellness studios and gyms to understand their clients, gleaning insights that help them engage customers at the right time.

To begin its process, Gleantap connects to a business’s pre-existing member management system and automatically pulls  member profiles and activity information.

Next, the company begins building profiles on members, gathering demographic and behavioral data, as well as conducting targeted polls. Then, using its proprietary algorithm, Gleantap analyzes the data, calculating the probability that a customer will return, churn, upgrade, or refer a friend. Gleantap’s algorithm is designed to work by referencing specific consumer profile data with member data from other gyms to more accurately predict consumer behavior.


Once analyzed, consumer profiles can be used by companies to connect with customers at the most appropriate time with the most appropriate message. Companies can choose to trigger campaigns manually, or leverage Gleantap’s automation engine to drive engagement campaigns.

Gleantap uses multiple channels to send out messages to the end-customers, providing an omnichannel experience to allow them to converse with the gym or wellness studio. Currently, Gleantap is equipped with the following channels - email, SMS, mobile push notifications & Facebook. Below is a high-level snapshot of Gleantap’s channel architecture.

Gleantap plans to expand to a wider array of social channels in the future in an attempt to tap into the international markets where Whatsapp, WeChat, LINE, and others are more predominant modes of communication. Gleantap plans to continue improving its omnichannel experience, allowing end-customers to jump from one channel to another while maintaining a single thread of conversation.

Every campaign that gets triggered through Gleantap is monitored and measured. Gleantap tracks not only opens and clicks but everything down to conversions. For instance, if it runs a campaign to up-sell members to premium plan, it can actually track in real-time how many members upgraded to that plan and the ROI generated from those upgrades.

Gleantap’s suite of products includes text message marketing, email marketing, mobile push notifications, chatbots, and business intelligence features. The company’s platform also integrates with point-of-sale (POS) systems, customer relationship management (CRM) platforms, and marketing tools including MindBody, ABC Financial, Facebook, Shopify, MailChimp, and HubSpot.

Text Message Marketing

Gleantap enables businesses to reach out to their customers via SMS messaging campaigns. As part of the product offering, Gleantap provides access to in-house text marketing experts to help businesses implement best practices for their campaigns. Below are popular use cases for text campaigns:

Automated Text Campaigns

Run automated text campaigns to engage your customers throughout the journey and provide an amazing experience. Set it and forget it.

Multiple Inbound Keywords

Facilitate customer dialogue by enabling them to text in with inbound keyword campaigns. For instance, “text REWARDS to register for our loyalty program.” or “text BOOK to book your class.

A/B Testing

Identify winning campaigns with split tests that clearly demonstrate which messages resonate most with your specific customer segments. Create as many variations as needed to identify winning messages.

MMS Enabled

Send out rich text messages with photos, videos, links and more. Communicate with customers beyond words.

Personalized Engagement

Send highly relevant messages to customers based on their personal attributes and behavior. Use variable tags such as name, membership type, etc.

Two-Way Communication

Engage customers manually in a two-way conversation to drive more results.

Contacts and Opt-Ins

Auto-segment customers into logical lists and easily manage contacts and opt-in for informed engagement targeting.

Link Tracking

Send external links within your text campaigns to direct customers to take action. View auto-generated click through rates and conversions to understand your customers’ behavior.

Smart Analytics

Integrate with your existing systems and review reports on how text engagement drives ROI. Track campaign performance metrics and continuously optimize.

Email Marketing

Gleantap allows businesses to automate and personalize emails to target customers based on their journey or behavior. With this feature, businesses can segment customers based on attributes and appropriately target each segment with the right message to drive optimal engagement. Gleantap also enables its clients to test different subject lines, template bodies, and more to compare the engagement results of email variations.

Mobile Push Notifications

With Gleantap’s push notifications, businesses can further engage customers through mobile apps. Gleantap integrates with a business’s iOS or Android mobile app to allow the business to send out automated, rule-based push notifications.

Features of Gleantap’s mobile push notification product include:

Target Push Notifications

Send personalized push campaigns targeted to specific group of users. Target users based on attributes, behavior, and more.

Automated Push Notifications

Automate push campaigns at scale and forget it. Engage users through relevant messages throughout their journey.

Advanced Segmentation

Segment users based on demographic, attributes, events, and more. Combine multiple conditions to create advanced segments.

In-App Notifications

Provide a great user experience with context rich in-app notifications to boost app engagement. Reach everyone including opt-out users.

Rich Push Notifications

Go beyond text in push notifications by embedding images and rich media for better open and click through rates.

Geo-location and Proximity

Segment users based on demographic, attributes, events, and more. Combine multiple conditions to create advanced segments.

App Analytics

Measure daily sessions, installs, open rates, and more. Track how campaigns are performing and continuously optimize.

Personalization

Send highly relevant messages to users based on their personal attributes & behavior. Include variable tags like name, club name, membership type, etc. to personalize messaging.

Rich User Profiles

Track user data and attributes across multiple devices to better understand your customers. Create rich user profiles with activity feeds for each user.

Chatbots

Gleantap also offers AI-powered chatbots that help provide a positive customer experience to existing customers, as well as prospective customers. The company’s chatbots are multi-modal, operating through Facebook Messenger, SMS text message, and businesses’ websites. Use cases for Gleantap’s chatbots may include:

  • Automatically sending texts to numbers that you missed calls from
  • Collecting contact information from inquiries and setting up automatic follow-ups
  • Setting up a personalized and automated helpdesk that works around the clock, including after business hours

Business Intelligence

Using Gleantap’s business intelligence tools, businesses can track metrics such as customer lifetime value, churn rate, growth rate, and more to identify their most profitable, or dormant customers. Gleantap pulls data from a business’s core management system to create easy-to-understand visual analytics to track business performance.

The company also allows businesses to perform retention cohort analysis to identify which cohorts of customers are dropping, and when, in order to create engagement strategies. It also provides churn predictions based on customer attributes and behavior, analyzing cancellation data to find correlations that can be used to tailor future engagement campaigns.

Use of Proceeds

Should the company raise the minimum of $50,000, it plans to use 80% of the proceeds towards general marketing and 20% for research and development. Should it reach the maximum goal of $1,070,000, the company plans to allocate 76% for general marketing, with the remaining proceeds used for research and development. The company has discretion to alter the use of proceeds from this raise.

General Marketing

Currently, the company markets its product primarily through tradeshows and Facebook advertising. The company hopes to use the allocated general marketing proceeds to ramp up these existing efforts while tapping into new marketing channels such as email, Google ads, LinkedIn campaigns, webinars, and blogs.

Research and Development

The company plans to use the proceeds allocated to research and development to expand their current product offerings. The company hopes to optimize its artificial intelligence engine to predict customer behavior more accurately. Gleantap will also work to integrate its software platform with more fitness and wellness member management software platforms. Finally, the company plans to improve its chatbot feature to completely automate two-way conversations with members. Through these chatbots, customers would be able to book classes, make membership changes, answer questions, and more.

Product Roadmap

Over the next 8 months, Gleantap hopes to incorporate the following features and services to its customer engagement platform:

  • Additional engagement channels (Q3 2019)
  • Added integrations (Q1 2020)
  • Rich communication services (RCS) messaging (Q1 2020)
  • Gleantap mobile application (Q2 2020)

Additional Engagement Channels

Gleantap hopes to integrate a variety of new channels to help clients further engage with their customers. Proposed channels include Whatsapp, Twitter direct messages, WeChat, Viber, Line, and Telegram.

Added Integrations

Gleantap plans to give clients the ability to integrate additional data sources to provide a more complete understanding of customers. Proposed integrations include Club Automation, Netpulse, Pike13, and Jonas Software.

Rich Communication Services (RCS) Messaging

The company also hopes to incorporate rich and interactive chatbot features through RCS messaging. This feature may include GIFs or multimedia messages in response to customers’ messages sent to the chatbot. Gleantap believes that this form of messaging will increase engagement with friendlier and more impactful customer conversations.

Mobile Application

Through Gleantap’s planned mobile app, business owners can track and monitor their Gleantap marketing dashboards and campaigns for added accessibility and insights.

Business Model

Gleantap offers its software platform to businesses utilizing a tiered software-as-a-service (SaaS) model. Current pricing tiers and features are as follows:

Boutique Studio Plan

Meant for small clubs and boutique studios with up to 1,000 members

$99/month per location

  • Full integration and setup
  • Contact management
  • Outbound rules engine
  • Unlimited text and emails
  • Two-way messaging
  • Automation

Growing Club Plan

For mid-size growing clubs or studios with up to 5,000 members

$199/month per location

Includes Boutique Studio Plan features and:

  • Unlimited Facebook messaging
  • A/B testing
  • Business intelligence
  • A dedicated account manager

Large Club Plan

Great for innovative businesses or large clubs with up to 10,000 members

$249/month per location

Includes Growing Club Plan features and:

  • AI to predict member behavior
  • Social integration
  • Chatbot
  • Advanced business intelligence
  • Unlimited multimedia messaging (+$49 per month)

Gleantap bills clients monthly, and also offers six month and annual plans at a 10% and 15% discount, respectively.

User Traction

As of September 2019, Gleantap had 27 clients, representing over 300 gym and wellness studio locations that serve over 1.5 million customers. Currently, the company generates monthly recurring revenue (MRR) of $32,694 from its 27 clients, up from MRR of $21,213 from 17 clients in September 2018. As of August 2019, the company boasted a customer acquisition cost of $7,130 with an estimated customer lifetime value of $29,077.

Gleantap’s clients include Planet Fitness, Orangetheory Fitness, Gold's Gym, Anytime Fitness, Retro Fitness, Restore Hyper Wellness, and Altitude Trampoline Park.

Historical Financials

Gleantap began generating revenue in May 2018. In 2018, the company generated revenues of $131,172. In 2019, through August, the company generated $244,081, an increase of 86.1% over all of 2018. The rise in revenue can be attributed to the company’s acquisition of new clients driven by business development efforts. Since its inception, the company has generated revenues of $375,252. Because Gleantap allows clients to prepay for biannual and annual contracts, the company accrues revenue for accounting purposes. The estimated average lifetime value of a Gleantap customer is $29,077. In 2019, the company achieved gross margins of 64.5%.

Through August, Gleantap had incurred $294,841 of total expenses in 2019. In all of 2018, the company incurred expenses totaling $136,999. Expenses have increased in 2019 relative to 2018 due to increases in cost of goods sold as a result of increases in clients, increased marketing and sales expenses related to trade shows and sales commissions, and substantial increases in software development costs as the company worked to improve its platform. The company’s expenses began to ramp up starting in May 2018, coinciding with the company’s first month of revenue generation.

Expenses in 2019 can be attributed largely to costs of goods sold, general administrative costs such as office supplies and accounting/legal services, and sales and marketing. Gleantap’s costs of goods sold consist of email and messaging services of the product, customer and tech support related to the product, and data center costs for data storage. Tradeshow expenses including registration and travel, sales staff payroll and commission, and general marketing expenses comprise the majority of sales and marketing expenses. Other major expenses, which accounted for 18.3% of total expenses in 2019, can be attributed primarily to software development costs.

Expenses in 2018 can be attributed largely to costs of goods sold, general administrative expenses, and sales and marketing. The company’s costs of goods sold included email and messaging services, as well as data center storage costs. General administrative costs consisted primarily of payroll between July through December, as well as contract work and legal services. Sales and marketing expenses consisted of tradeshow travel expenses and general marketing costs associated with the use of a lead generation platform.

Through August, Gleantap has incurred a net loss of $50,760, an increase over all of 2018 in which the company incurred a net loss $5,827. Despite increasing revenue, net losses have expanded due to increases in sales, marketing, and advertising expenses as the company aims to acquire new clients. Though it has averaged a net loss since inception, the company has achieved profitability in the following months: June through September 2018, November through December 2018, and June 2019. Net losses increased sharply in July 2019 due to increases in cost of goods sold related to the company’s email and messaging services, as well as increased tradeshow costs related to the company’s registration for the MindBody BOLD Conference which occurred in August 2019. In 2019, as of July, the company has averaged a monthly burn rate of $857. As of August 31, the company had $31,182 of cash on hand, giving it roughly 36 months of runway.

Industry

Gleantap offers its clients a suite of customer engagement services. According to Mordor Intelligence, the customer engagement solutions market was valued at $12.56 billion in 2017. By 2023, the industry is projected to grow to $21.95 billion, representing a compounded annual growth rate (CAGR) of 9.77%. Mordor Intelligence notes that growth rates will be determined by the increasing adoption of AI, development of Internet of Things (IoT) infrastructure, and rising smartphone adoption.vii

In its 2019 “State of the Connected Consumer” report, Salesforce found that consumers’ expectations for brand engagement have increased significantly. According to the report, 83% of consumers stated that the experience a company provides is as important as its products and services, while 69% claimed that one extraordinary experience raises their expectation of other companies. Further, 59% asserted that they are willing to pay more for a great experience. The report also found that consumers believe that companies aren’t living up to their expectations. While 73% of consumers expect companies to understand their needs and expectations, only 51% say that companies actually understand their needs. What’s more, consumers also find companies lacking in adaptations based on consumer behavior. While 62% of customers expect companies to adapt based on their actions, only 47% claim that companies generally do so.viii

While companies attempt to engage with consumers through various mediums, consumers have defined preferences for communication. Salesforce research has found that 64% of consumers prefer email contact, while 59% prefer in-person channels. Further, 56% prefer phone, while 43% and 31% prefer mobile apps and SMS/text messaging, respectively. Though customers favor specific channels, 78% say that they prefer different channels depending on the context (i.e. where they are and what they’re doing). This popular demand makes multi-modal communication increasingly important for companies.ix

Gleantap operates within the marketing technology sector. According to PitchBook, the marketing technology industry received $3.97 billion in venture capital across 698 deals in 2018. This represented a 31.5% increase in capital invested compared to 2017, but a 12.9% decrease in deal count. In 2015, the sector received $4.56 billion, the highest yearly total over the last ten years. Since 2008, companies have received $28.23 billion in investment across 7,179 deals.x

Competitors

Frederick: Founded in 2014, Frederick is an automated marketing software platform for salons, spas, massage studios, gyms, and yoga studios. The company, based in San Francisco, California, helps clients engage in personalized email and text campaigns to better interact with customers. The software is also designed to prompt customers to submit more reviews and convert to paid packages or memberships. In 2014, the company was acquired by Booker, a leading service commerce platform. In 2018, Booker (along with Frederick) was acquired by MindBody, a wellness industry management platform.xi

Club OS: Founded in 2011, Club OS is a customer relationship management (CRM) software company that focuses specifically on the fitness industry. Through Club OS’s platform, clients can automate many of its customer management aspects, such as lead acquisition, customized follow-ups, appointment scheduling, text message-based reminders, email marketing, and analytics reporting. The company’s software suite also integrates with other management apps such as ABC Financial, Motionsoft, MindBody, and Jonas Fitness.xii Currently, the company offers tiered plans consisting of single location, multi-location, and enterprise levels. In April 2018, Club OS acquired Lead Dolphin, a competing fitness CRM platform.xiii

LoyalSnap: Founded in 2014, LoyalSnap provides fitness studios with automated marketing and customer retention solutions. Through its “concierge-style approach,” the company automates email and text messages based on personalized customer behaviors in order to reach more members. The company also sends automated reminders with scripts to a studio’s staff to help them effectively reach out to high-value clients. Currently, LoyalSnap is used by over 1,000 studios worldwide, including Pure Barre, The Bar Method, SLT, and Modo Yoga. The company offers three tiers of its platform, ranging from $199 to $449 depending on included features.xiv

ZipWhip: Founded in 2007, ZipWhip allows clients to communicate with customers through text messages. The Seattle, Washington-based company enables businesses to create reusable text templates, schedule text messages, and set auto replies. Currently, ZipWhip serves over 35,000 business clients, including the Detroit Tigers, Comcast, Cisco, Salesforce, ClassPass, and Seattle Sounders FC.xv The company offers three plans: Economy, Business, and Enterprise. Economy plans include unlimited texting and basic features at a price of $35 per month per line, while Business plans, which include advanced automation and personalization features, are priced at $100 per month per line. Enterprise plans are subject to custom pricing depending on the needs of the organization.xvi In January 2019, the company raised a $51.5 million Series D round led by Goldman Sachs.xvii

TapToBook: Founded in 2015, TapToBook allows consumer-facing businesses to automate the business processes of customer marketing and engagement. Through its suite of automated solutions, the company helps clients with lead conversion, customer engagement, churn reduction, and data syncing. Specifically serving the restaurant, fitness, and entertainment industries, TapToBook offers solutions for both multi-location franchises as well as corporate enterprises. Currently the company offers tiered plans ranging from $99 to $399 depending on the number of messages per month.xviii


Team

Sagar Babber

Founder and CEO

Sagar has served as CEO of Gleantap since its inception. At Gleantap, Sagar is responsible for leading the executive team and growing the business on all fronts. Before Gleantap, he ran a successful web & mobile development consultancy, Snyxius Technologies which he sold to First Tek in 2018. As part of that business, Sagar helped launch numerous tech startups by working closely with their founders and getting their product off the ground. Sagar also co-founded Collaborate Cloud, a business to business collaboration software company. Sagar holds his bachelor’s degree in information science from Visvesvaraya Technological University.

Shubham Sethi

Head of Product

Shubham has served as Gleantap’s Head of Product since April 2019. At Gleantap, Shubham is responsible for the execution of product releases. Before joining Gleantap, Shubham was a product management lead at athenahealth, a healthcare cloud computing company. He has also held positions at Hive9 and Lancope. Shubham holds his bachelor’s degree in engineering from the Institute of Technology and Management and an MBA with a focus on marketing and strategy from the University of Georgia.

Andrea Grbavac

Director of Marketing

Andrea has served as Director of Marketing at Gleantap since July 2019. She consults with Gleantap’s clients to optimize their customer engagement strategy. Andrea has over seven years of experience in marketing. Before Gleantap, she held several positions, including Senior Director of Product Development at Detekt Biomedical, a life sciences product design and engineering firm. Andrea holds her honors bachelor’s degree in Plan II from the University of Texas at Austin.

Jennifer Illig

Sales Executive

Jennifer is a sales executive with Gleantap and is responsible for driving new clients to the business. Jennifer collaborates with the CEO on short-term and long-term growth plans and executes on them. She is focused on selling Gleantap’s marketing platform nationwide in the fitness and wellness industry and has been instrumental in building key relationships with clients and partners. Jennifer has over five years of experience in sales and prior to Gleantap was managing new and existing client relationships for Fast Sign. Jennifer started her career as a sales representative for a tech startup, Yodle, selling their B2B product to local businesses.


Past Financing

To date, Gleantap has been funded solely by the founder, receiving no outside capital from investors.

Discussion

Risks

Investment Risk

An investment in the company is speculative, and as such is not suitable for anyone without a high tolerance for risk and a low need for liquidity. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that that investors will receive any return of capital or profit. Investors should have the financial ability and willingness to accept the risks (including, among other things, the risk of loss of their entire investment and the risks of lack of liquidity) that are characteristic of private placement investments. There will be no public market for the securities being offered, applicable securities laws will restrict any transfer of the securities, and the securities will not be transferable without the company’s consent.

The information provided herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice, a recommendation to purchase, or an offer to sell securities of the company. You should rely on the offering statement and documents attached as exhibits to the offering statement when making any investment decision. An investment in the company is not suitable for all investors.

Company Risk

The company’s industry is highly competitive, and the company may not be able to compete effectively against the other businesses in its industry. The company is subject to a number of significant risks that could result in a reduction in its value and the value of the company securities, potentially including, but not limited to:

  • Rapidly changing consumer preferences and market trends,
  • Inability to expand and maintain market acceptance for the company’s services and products,
  • Inability to gain access to international markets and comply with all applicable local laws and regulations,
  • Inability to achieve management’s projections for growth, to maintain or increase historical rates of growth, to achieve growth based on past or current trends, or to effectively manage rapid growth,
  • Inability to develop, maintain and expand successful marketing relationships, affiliations, joint ventures and partnerships that may be needed to continue and accelerate the company’s growth and market penetration,
  • Inability to keep pace with rapid industry, technological and market changes that could affect the company’s services, products and business,
  • Technological problems, including potentially widespread outages and disruptions in Internet and mobile commerce,
  • Potential costs and business disruption that may result if the company’s customers complain or assert claims regarding the company’s technology,
  • Failure to adequately address data security and privacy concerns in compliance with U.S. and international laws, rules and policies,
  • Performance issues arising from infrastructure changes, human or software errors, website or third-party hosting disruptions, network disruptions or capacity constraints due to a number of potential causes including technical failures, cyber-attacks, security vulnerabilities, natural disasters or fraud,
  • Inability to adequately secure and protect intellectual property rights,
  • Potential claims and litigation against the company for infringement of intellectual property rights and other alleged violations of law,
  • Difficulties in complying with applicable laws and regulations, and potential costs and business disruption if the company becomes subject to claims and litigation for legal non-compliance,
  • Changes in laws and regulations materially affecting the company’s business,
  • Liability risks and labor costs and requirements that may jeopardize the company’s business,
  • Dependence on and inability to hire or retain key members of management and a qualified workforce,
  • Ongoing need for substantial additional capital to support operations, to finance expansion and/or to maintain competitive position,
  • Issuance of additional company equity securities at prices dilutive to existing equity holders,
  • Potential significant and unexpected declines in the value of company equity securities, including prior to, during, and after an initial public offering, and
  • Inability of the company to complete an initial public offering of its securities, merger, buyout or other liquidity event.

Endnotes