Product description

Zega is a stainless-steel cooking pot that self-cooks, creating a more pleasant and less time-consuming experience in the kitchen.

The product was developed by the same team that created the Magic Bullet (precursor to the Nutribullet), and the designers are now returning to the market with a new innovation.

Once the stove reaches the required cooking temperature, the Zega will be able to cook independently for hours without any heat source, minimising electricity usage.

Equipped with advanced technology, the Zega features an app that monitors your cooking, notifying you when the food is cooked. This is known as SmartControl technology — sensing when a Zega is ready to self-cook and when the food is ready to eat. The Zega product is already patented.

Zega founder, Brendan Dunne, hopes to mimic the success of the Magic Bullet which sold over 5 million units globally. Heralding 20 years of experience in developing and manufacturing consumer goods, Dunne is confident that this new product will be a hit.

Valuation

With a pre-money valuation of $2.5 million, the cookware company is hoping to raise a minimum of $700,000 through Venture Crowd’s crowdfunding platform.

The minimum subscription is $5,000, which is a significant premium to most crowdfunding raises on other platforms, some of which require as little as $100.
Shareholders participating in the capital raise will in-turn acquire 21.8% of the firm.

As of the 6th of June 2019, the company had raised $375,000 with the capital raise expiring in 24 days (30th of June).

The capital raise will fund the manufacturing, marketing, distribution, legal expenses and hiring of key staff.

Financial forecast and exit attractiveness

With plans to begin generating revenue in 2020, over the next three years the firm forecasts an aggregate gross revenue of $23 million with an EBITDA of $3.6 million.

If the firm attains its projected figures, Zega will be situated as a possible acquisition target for consumer goods multinationals or private equity companies who hold a portfolio of consumer goods brands.

On an international scale, recent acquisition in the housewares market show valuations of approximately 3-6 times revenue. Therefore, in conjunction with Zega’s projections, the company estimates a valuation of $37 to $74 million.

Risks

Although Zega is accompanied by a highly experienced team, there are still risks involved with any new consumer product. Whether potential customers see the necessity for a self-cooking pot is yet to be established. However, the current climate in the electricity market is likely to leverage the bargaining power of Zega, promoting an economical and environmentally friendly product.

Conclusion

With a proven track record behind it, Zega is positioned to emulate the Magic Bullet’s success. Evident with all start-ups, the firm’s growth and presence in the market will certainly face challenges from other players in the homeware industry. If Zega can establish a demand, its unique product offering has the potential to redefine intelligent cookware in the long term.

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This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
Former fund manager and finance academic, Dr Nigel Finch advises growing business on strategy execution, corporate governance and capital raisings. He has worked across all stages of the business cycle from start-ups to seasoned ASX-listed companies including many who have tackled Asia’s emerging markets. Authoring more than 5 books and 100 scholarly articles, Dr Finch has a thing or two to say about business.