First Stage Investor Issue No. 28

First Stage Investor Issue No. 28
By Early Investing
Date November 9, 2018

Recommendation: HyperSciences


Startup: HyperSciences
Security type: Preferred equity
Valuation: $25 million
Share price: $3.84
Minimum investment: $1,000
Investment portal: SeedInvest
Raise: Series A
Click to invest

Some industries are changing quickly. And some are not.

As an investor, I’m more interested in the ones that are not. They tend to be inefficient, begging for disruption.

Industries that have escaped the onslaught of new technology are getting harder and harder to find.

And some stubborn industries have proven to be particularly resistant to major change.

Take tunneling. While it’s a pretty big part of the economy in its own right, it’s hardly exciting. It’s barely changed in the past 150 years. Big, expensive and slow tunneling machines date back to 1853. Rotary tunneling machines are still incredibly slow and expensive.

Oil drilling is in the same boat. The technology is all of six years newer than boring and tunneling! The biggest change since then has been the advent of horizontal drilling.

Horizontal drilling allowed well production to increase up to 20X. But my recommendation’s technology is poised to blow that out of the water.

Even space travel hasn’t changed that much since its inception in the 1950s. Nearly 70 years later, nothing has fundamentally changed. Rocket propulsion is still the fulcrum of space and near-space flight technology.

And then there’s energy generation, where some real action has taken place with the increased use of alternative energy. But even more than aerospace, tunneling and drilling, this is an area where a new technology can change everything.

We’re much closer than you think to completely changing the way we heat our houses and power our industries.

If I could introduce you to a startup whose game-changing technology is set to disrupt one of these industries, would you be interested?

You’d be crazy not to be, right?

Well, what if I told you that I’ve found a company whose technology (based on 31 pending patents) is aiming to disrupt…

  • Tunneling and boring
  • Alternative energy generation
  • And aerospace.

And it can further disrupt oil and gas drilling.

These markets, taken together, are worth more than $100 billion in annual revenue.

I think you’d probably have the same thought I did: That sounds too good to be true.

So, when I talked to Mark Russell, the founder of HyperSciences, the company developing and commercializing this technology, my first question was… Just how real and deployable is your technology?

Mark Russell, founder of HyperSciences


His answer surprised me (in a good way). But before I tell you what he said, I need to explain what this technology is.


How It Works

Mark calls it “underground technology merged with aerospace technology.” He quips, “It really is rocket science.”

Here’s how it works: The fuel (his “special sauce”) creates a chemical reaction that propels a projectile at supersonic speeds through a tube. These projectiles can blast through even the hardest rock.

It sort of reminds me of the nail gun I use around the house for quick maintenance jobs.

“The technology risk is minimal,” Mark told me. “The technology itself is mature – it’s the applications that are new. Our job is to prove the technology works in the user cases we’ve identified.”

To that end, HyperSciences has built one of the world’s fastest, safest and most cost-effective hypersonic engines. It can robotically launch projectiles at velocities greater than Mach 5.

How fast is Mach 5? It’s five times the speed of sound fast. It’s 3,836.35 miles per hour fast. It’ll get you across the Atlantic in two hours fast.

At that speed, the projectiles vaporize the rock they come into contact with. Point it upward, and they can reach near space (100 kilometers high) in seconds instead of minutes, as with current rockets. Mark and some of his team used to work for NASA, by the way.

Will It Work?

Oh, it works.

Now it’s all about finding out how well it works. Each of the company’s use cases has a different time frame and set of issues.

Tunneling and mining. HyperSciences’ technology represents a significant upgrade from traditional rotary tunnel boring machines. We know it’s faster and cheaper.

Here’s what else we need to keep an eye on. Can projectiles be blasted out every few minutes? Can the number of projectiles fired be increased to two per minute by year three, as the company asserts? How much rock is pulverized per projectile?

We’ll find out starting next year when an estimated 20 of HyperSciences’ machines are leased out. But the company’s estimate is half a ton to a full ton of rock per projectile.

By the end of year two, HyperSciences aims to have 100 tunneling (and drilling) machines in the field.

We’ll know a lot more then. But, of course, we’re investing now. So what do we already know?

We know it’s faster. It can tunnel through rock more than five times faster than competing technologies. It’s also safer because it doesn’t use explosives.

And it’s less expensive. Leasing will cost $125,000 to $200,000 per machine per year, plus projectile purchases (for the first two years of operation). By comparison, traditional rotary tunnel boring machines cost around $10 million or more.

In other words, we know the technology should significantly improve the economics and efficiencies of tunneling projects. My one worry: equipment failure and/or frequent breakdowns. If they can be avoided (and Mark tells me that won’t be a problem), this user case is setting up to be a big winner.

Tunneling and mining is the first user case HyperSciences will be trotting out.

Oil and gas drilling. Global oil production is already around 100 million barrels per day. That equals an $8 billion daily spend.

So how exciting is it that HyperSciences has a bead on improving the metrics the oil industry cares the most about: depth, accuracy, speed and cost?

Shell is currently funding Phase 4 (initial field trials of HyperDrill). If successful, it may consider funding a total of five phases with final field trials at a total expected cost of more than $3 million… just to find out how impactful HyperSciences’ technology is.

By the way, Shell did not receive equity for this investment. It’s interested only in gaining efficiencies. With this technology, it’s convinced it can.

That’s validation.

HyperSciences is in Phase 4 now, which involves the company’s first HyperDrill field trials. It’s drilling several shallow wells, about 1,000 feet in all, through tough Texas-red, granite-like rock. Phase 5 will be drilling a deep well at a depth of about 10,000 feet.

HyperSciences’ drilling technology can be integrated into standard drilling operations. And it can drill through nearly any ground condition.

An evaluation of the field test will be ready by the end of the first quarter of 2019. HyperSciences then expects to reach out to oil field and mud service companies that include Baker Hughes, Schlumberger and Halliburton. All of them work with Shell and other global oil companies on drilling projects throughout the world. They would fall into the first group of customers most likely to use HyperSciences’ drilling solutions.

Geothermal “energy anywhere.” Because its technology can drill through the toughest rock formations and reach extreme depths quickly and cheaply, HyperSciences could finally make geothermal drilling affordable.

Geothermal energy has by far the greatest potential to provide reliable, consistent and cheap energy on a mass scale anywhere.

Drilling technology simply hasn’t been able to drill that deep in a cost-effective way. Drilling such deep holes costs anywhere from $5 million to $20 million. HyperSciences’ drilling technology can lower that price tag significantly. And it has developed patent-pending power plant technology specifically for geothermal-generated heat. HyperSciences says these power plants can eventually scale up to power major cities.

Each of these use cases has its own trajectory. The mining and drilling applications, which have priority, are furthest along. They’ll be rolled out first. The company’s geothermal applications and drone payload launching service will take longer to commercialize.

All of these initiatives use the same basic hypervelocity technology that replaces the old rotational energy technology that has become a drag on progress and efficiency.

The Team

I feel like I know Mark pretty well for someone I’ve never met. We’ve had several Skype conversations. (I call them conversations; Mark refers to them as “grilling sessions.”)

Mark’s drilling and mining acumen comes from his family’s mining operations. His zest for growing small businesses comes from founding and growing one of the first ride-sharing startups, Zebigo (before Uber took off).

But his strongest area of experience and expertise is aerospace.

He has a master’s from Stanford in aero/astro engineering. He worked as an engineer at Boeing and Jeff Bezos’ Blue Origin startup, where he led the crew capsule program and Blue’s first vertical takeoff and landing vehicle.

Mark checks all the boxes I look for in a successful founder, and he’s built a strong team around him to steer the company toward sustainability and rapid growth.

HyperSciences’ high-impact, low-risk technology is an investor’s dream and something I highly value in a startup. Even at its relatively early stage, Big Oil has already taken notice, as has NASA.

And now HyperSciences can add First Stage Investor to that list.

The minimum investment is $1,000, a little more than what most of our other recommendations require. But at $3.84 a share, it’s worth it.

The potential upside that HyperSciences offers doesn’t come around often. When it does, you need to be opportunistic.

How to Invest

First, you’ll need a SeedInvest account. Sign up for one if you don’t already have one.

Once you’ve created your account and logged in, go to HyperSciences’ page on SeedInvest.

Click the blue “Invest” button. The minimum investment is $1,000.

Then choose your payment option and make sure you complete all the steps.

If you run into any problems, email SeedInvest at

How You Can Help

One of the most important aspects of being an early-stage investor is adding value where you can. Startups do better when their investors help.

It’s a big part of startup investing. One of the company’s several top-notch advisors, Raymond Kaminski, has this advice for you…

Please share our story and investment opportunity with your friends. You can start by checking out Mark’s interview. He talks about how he came up with the idea and his unusual background. You can find the interview and other interesting information tagged to the top of the company’s Facebook page at or


As with all early-stage investments, there is significant risk the company could fail.

It could fail to secure further funding, lose important revenue streams or have any number of other things go wrong.

This is the nature of early-stage investments. You should not invest any money you can’t afford to lose.

Note: As always, our research is 100% independent. We don’t accept compensation from the investment portals or the startups we recommend.


There’s Still Time on 20/20 GeneSystems


Startup: 20/20 GeneSystems
Security type: Preferred equity
Valuation: $26 million
Share price: $3.53
Minimum investment: $1,000
Investment portal: SeedInvest
Raise: Series B
Click to invest

20/20 GeneSystems holds a special place in our portfolio. As you’d suspect, it has to do with upside. But, in 20/20’s case, it’s not the sort of upside you’re used to hearing about from me.

Sure, the company has intriguing upside potential for investors looking for big financial returns.

Just one look at the market cap of some of its publicly traded peers at roughly similar stages reveals that companies that develop promising early cancer detection tests get valuations ranging from $80 million to $320 million. 20/20 has a valuation of only $26 million in the current round.

I truly believe that 20/20’s technology is the most promising of the bunch. Which is why I recommended it to investors last December.

But it’s not the only reason.

I believe 20/20 holds a critical weapon in this country’s multidecade fight against a deadly disease.

Lung cancer ranks as cancer’s deadliest variety. The five-year survival rate for stage 4 is less than 10%.

The same can be said about other cancers –pancreatic, stomach, colon and ovarian. Late diagnoses often prove fatal.

The earlier cancer is diagnosed, the better the chances for survival.

And I mean much better. When lung cancer is detected at stage 1, survival rates are better than 90%.

Early detection is the key to winning the fight against cancer.

And this is what 20/20 helps provide.

If we don’t take full advantage of this technology, then shame on us.

One of the easiest decisions I’ve ever made was recommending 20/20 last December.

The risks were lower than usual for companies at this stage because the technology 20/20 uses isn’t new. It’s been used in East Asia to screen millions of people for around two decades!

20/20 has enhanced it, has given it greater accuracy and is now making it affordable to everyone who wants it.

And here’s the good news (especially for those of you who missed the opportunity to invest last December): 20/20 is raising again (on SeedInvest). (Continued on Page 8)

While the company has made headway in preparing for a major rollout of its OneTest – an early detection blood test that screens for lung, liver, kidney, ovarian, pancreatic and other kinds of cancer – shares have gone up only slightly.

Last December, they were $3.26. They’re now being offered for only $3.53. You’re getting basically the same deal for a company on the cusp of making its product available to millions of people in this country and tens of millions in Asia.

So let me back up for a second and explain how the early detection technology works…

It uses tumor antigen markers. Again, they’ve been around for a couple of decades. Then it adds its proprietary machine-learning algorithms that integrate clinical factors. These algorithms improve cancer detection by up to 30%, helping double the number of correctly identified cancers.

These algorithms – which are based on data 20/20 has gathered on more than 40,000 patients – are the company’s special sauce. They incorporate the patient’s individual risk factors, such as age, gender and smoking history.

At-risk individuals are given recommendations for follow-up testing so that the cancer can be pinpointed, biopsied and treated (through surgery, if necessary).

Because OneTest is a “laboratory developed test,” it doesn’t need FDA approval until test volume exceeds the capacity of 20/20’s testing laboratory. It can be mass-marketed right away.

Jonathan Cohen, CEO of 20/20 GeneSystems


20/20 founder and CEO Jonathan Cohen is considering prospective partners, including urgent and primary care centers (plus national drugstore franchises), that can set up “testing booths” in their locations.

He’s also integrating the company’s current crowdfunding raise into his marketing plans. Of the more than 3,000 crowdfunders, about 500 are entitled to one or more complimentary OneTests as a perk. They’ll all be going to their doctors to get the blood test.

Jonathan told me that he’s using it as a way to bring hundreds of doctors on board.

It’s a great way to launch the product.

These doctors will get exposure to the benefits of OneTest… which should lead to many of them using the test for their own patients.

I’ve never seen this level of integrating crowdfunding with a company’s go-to-market strategy. It’s a clever idea that I expect will do a great job of jump-starting 20/20’s marketing efforts.

20/20’s Path Forward

So what’s next for 20/20?

I suggest you read my original December 2017 recommendation to get more details. But here’s something I thought back then that still applies today…

OneTest will be offered to patients at a very affordable price ($150 to $200). I think millions of Americans will be very interested in having this active surveillance option as opposed to passively waiting for a bleak, late-stage diagnosis. It could be one of the best things to happen to the cancer space in years.

Everything about 20/20 has been proven out except one thing: its go-to-market strategy. The technology will have an impact only if it catches on.

I hope it does. Jonathan has taken a series of small but very useful steps to make sure that happens.

He’s offering the product to firefighters first. As a group, they exhibit a higher incidence rate of cancer (according to recent government studies), perhaps because their turnout gear is often caked with carcinogenic residue from fighting fires. It’s a well-chosen vertical to attack out of the gate.

He’s also starting a pilot project with a primary care center in Maryland that will be making OneTest available. Jonathan is looking forward to seeing how well it sells at its current price point.

He’s also in discussions with two partners in Taiwan and one in Japan to market OneTest in those countries. There are tens of thousands of clinics in Asia that check for these cancers. Because of confidentiality issues, I can’t say more about these developments at the moment.

But this I can say…

If you like the technology as much as I do… and if you hope it will be made available to all Americans… and if you missed out on the chance to invest in 20/20’s previous round, then this is a great time to make an investment.

For those of you who have already invested, you should feel good about the company inching closer to a nationwide rollout. Its go-to-market progress over the past 10 months has been more steady than spectacular.

Given this, I see no compelling need to invest again. You’re already an investor in this promising startup, so congratulations.

Note: As always, our research is 100% independent. We don’t accept compensation from the investment portals or the startups we recommend.

Infographic: Bitcoin turns 10!


Click to view larger image


Bitcoin’s Improving Stability

Bitcoin has been remarkably stable recently.

The last time we saw the price hold this steady was in December of 2016, just before the last big bull run truly started.

This chart shows bitcoin’s 30-day volatility level since late 2016.


The question is will it last?

Over the midterm, probably not. But that’s not a bad thing.

Historically, bitcoin’s volatility has been tilted to the high side. It’s been a wild ride, but the overall direction has been up since the beginning.

Each cycle of ups and downs has brought in new long-term holders. That’s resulted in new all-time market highs. It’s also raised the market floors. We believe these growth cycles will continue.

But even with all the volatility, bitcoin has steadily grown more stable over its life.

As you can see below, today’s volatility is tiny compared with that of the early days. I’ve been around since early 2013, and I can tell you firsthand that back then, things were far crazier.

Back then, there weren’t nearly as many big buyers waiting on the sidelines. Market sell-offs would quickly turn into all-out panic-selling, with bitcoin retracing 95% of its gains multiple times.

Today’s market is different. We can tell that big buyers are stepping in at levels they see as reasonable discounts to recent highs.

And it is extremely encouraging that the recent stability trend has included high-quality altcoins. It appears that sellers are finally becoming exhausted and buyers are stepping in.

That’s a sign the market is maturing. And I believe bitcoin’s price stability will continue to increase over the long run as more people buy and hold it.

Speaking of big buyers, the crypto market is finally opening up to institutional investors. As you know, major players like Coinbase, Fidelity, Bakkt and BitGo are all targeting big financial firms with crypto offerings. This is a brand-new aspect of the crypto world and one of the primary catalysts we’re watching going forward.

When the next bull run kicks off, I believe we will see institutions competing to get into the market. If another flood of retail investors comes into the market at the same time, things could get very exciting very quickly.

For me, it’s just a matter of time until the next leg up. I see bitcoin leading the charge and quality altcoins following shortly after.

We should remember that the infrastructure to support an institutional move into crypto is brand-new. It will take some time to mature. Big money firms tend to move somewhat slowly. But when they get going, they have the potential to send a tiny market like cryptocurrency far, far higher.

I don’t know exactly when the next bullish move will start, but now is certainly a fine time to add to or initiate positions in quality cryptocurrencies (like those in our portfolio).

We may have one more significant correction ahead of us before we go higher, but I would expect it to be relatively brief, considering the catalysts on the horizon (institutional money coming in, plus continued global financial chaos).

Keep holding.

portfolio update


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