Deal Details
Startup: Yahyn
Security type: Common equity
Round size: Up to $20 million
Valuation: $4,955,781
Share price: $44.38
Minimum investment: $133.14
Raise: Seed
Investment Portal: Netcapital
Deadline: June 30, 2020
COVID-19 is changing our world in so many ways. Socially. Professionally. Financially too. It’s decimating many industries. And creating huge opportunities in other industries.
The key to investing in this environment is to keep it simple. Avoid industries that rely on crowds and gatherings. Find startups whose business models don’t rely on crowds and gatherings. And embrace startups that address needs that used to require social contact in new, socially distant ways.
That’s why I’m recommending you invest in Yahyn. It lets you shop for your favorite bottles of wine online and have them shipped directly to your home. It’s the perfect COVID-19 investment.
Even before the pandemic hit, the wine-shopping experience was begging to be disrupted.
Consider this sad but true fact: 78% of shoppers choose their wine based on how much they like the label on the bottle, not the wine itself. I’m guilty of doing this. It’s taken me decades of hit-and-miss buying and drinking to discover my favorite vineyards.
Yahyn doesn’t want to educate you. It doesn’t think you need to know the difference between a California Syrah, a French Petit Sirah and an Australian Shiraz to enjoy your next glass of wine. It just wants to help find a bottle of wine you’ll enjoy.
That’s why Yahyn is developing AI capability to do this work for you. It will make sure the bottles you buy on your home computer (or mobile device – an app is on the way) are the kinds of wine you love. Yahyn will even have your back when you’re at a restaurant (those days are coming back!). Take a snapshot of the wine list, and it’ll recommend the best bottle for the best buy.
In 2019 (before COVID-19), online wine sales reached $2.6 billion. That’s a 22% increase from 2018 and about 3.4% of the $76.7 billion U.S. wine market.
And now, in the midst of the COVID-19 pandemic, online wine sales are soaring.
Weekly wine sales are showing massive growth when compared 2018, including jumps of 243%, 387% and 441%.
And the online wine sales numbers would be even more impressive if there were better digital options. The vast majority of brick-and-mortar wine shops lack an online presence. And there’s no Kayak or Expedia to aggregate wine options. Until Yahyn, consumers did not have an easy way to shop from their home for a great bottle of wine — regardless of who made it.
Both suppliers and customers are now rushing to go online. And Yahyn is in the right place at the right time. Its numbers are skyrocketing.
When the pandemic first reached our shores, 1,700 vineyards were interested in signing up to sell their wine on Yahyn. Now 25,000 want to join. Not all will be onboarded though. Yahyn only accepts the best vineyards. It’ll likely onboard about 10,000 of those 25,000 vineyards.
The cost of attracting new vineyards to its site has been driven down to zero. That’s not going to change any time soon. Yahyn recently inked a partnership with Outshinery. Outshinery provides professional digital imagery to more than 10,000 vineyards. Yahyn is the only online sales “aggregator” that has access to Outshinery’s images. Outshinery will also refer its clients to Yahyn as well.
Yahyn has 100,000 members right now. But its reach is much wider than that. It engages with 400,000 people through social media and email. And those followers convert to full members over time. Acquiring members used to cost $1.58. Now it’s only 54 cents per person.
The company’s pre-revenue days are coming to an end. Last month, Yahyn allowed 10,000 people to shop on its site during its one-month beta test. And those customers bought $34,000 worth of wine. Now Yahyn is allowing 50,000 members to shop on its site. And it should generate more than $150,000 in sales in the next 30 days.
In each following month, Yahyn will ramp up some more. Six months from now, Yahyn plans to accommodate 1 million customers. It expects to gross more than $3 million per month. And 12 months from now (if all goes according to plan) it will serve 2 million customers and gross more than $6 million.
It won’t be easy. But it’s doable. To get to 1 million active customers, it needs to triple or quadruple its reach. Creating and maintaining a loyal and engaged community will be key. And having an expansive selection will be a close second.
I’ve spoken with Yahyn Founder and CEO Pierre Rogers several times. He understood the challenges ahead of him. On the supply side, he said a year from now Yahyn must focus on the bestsellers… or the “power sellers,” as he called them.
On the customer side, he said that the company needs to spend more money on customer service. He drew inspiration from Airbnb and its 5-star rating system. “Getting the wine you love shipped to your home is the bare minimum,” he said. “I want to create not 5-star but 10-star experiences.”
It’s one thing to say it. It’s another to achieve it. I usually take such statements from founders with a grain of salt. Perhaps Pierre sensed this. (Was I smirking? These video calls can be tricky.) I needed to hear more.
Before Yahyn, Pierre founded and ran an online cigar marketplace company called PuroTrader (the largest peer to peer cigar platform in the world). He used that experience to give me an example of what he meant.
Cigar buyers, he said, would suggest signing up makers of very expensive cigars. “This is the cigar I would love to smoke if I could afford it,” members would write in. A few days later, lo and behold, the aforementioned $100-cigar would arrive at the member’s doorstep, with a note thanking them for the suggestion. “This one’s on us,” the note said.
When Pierre talked about pleasing the customer, he meant it. He learned a long time ago the importance of putting the customer first. “Building loyalty,” Pierre said, “means an undivided focus on how we treat our customers.”
Pierre has taken the lessons he learned from PuroTrader and applied them to wine. And PuroTrader wasn’t Pierre’s first rodeo. He started or sat as a board advisor on four previous companies. Pierre is one savvy founder.
Pierre is focused on tomorrow’s challenge of keeping his customers extremely happy and actively buying. His suppliers understand. Major brands such as Mondavi’s Opus One Brand and All Star Wines (among others) have partnered with Yahyn. Constellation Brands – with its $8.34 billion in sales in the last 12 months – is coming on board in August.
Yahyn has much more going for it than just timing. It offers a superior wine buying experience. Right now, its virtual inventory (bottles are shipped directly from the vineyard) far outstrips a typical neighborhood wine shop. It will have to accelerate onboarding to keep this edge. Reinforcing brand loyalty through blogs and social media will also be crucial. But as we’ve seen, Pierre is very focused on the customer experience.
Yahyn has all the pieces for success. And even though everything is lining up quite nicely, it won’t be easy. A $76.7 billion wine market that can’t go digital fast enough will draw other companies – new and old – into the mix. Maybe a company like wine.com takes a couple of Yahyn’s ideas and runs with them. Winc, a First Stage Investor holding, is also making a strong bid in the digital wine space with a very different business model.
You’re allowed to like both. I do. The market is more than big enough for Winc AND Yahyn to succeed. Winc is bigger, more established and more expensive (with a pre-money valuation of $110 million). Yahyn has a valuation of only $5 million. It’s smaller and less proven (but just as well-timed). You’re getting two very different investment profiles in the same online wine space. That’s smart investing.
How to Invest
Go to the Yahyn investment page on Netcapital.com. If you don’t have an account on Netcapital, you’ll be prompted to create one. Then follow the steps and fill out the required information. This shouldn’t take more than a few minutes. Then click on the orange box that says “Invest.”
Now choose the payment method that works best for you to transfer the funds. Your money will be held by an escrow agent until the deal closes, when it will be transferred to Yahyn, and you will officially own a piece of this exciting, online wine company.
Risks
Yahyn is an early-stage investment. And like all such investments, there’s some risk involved. Do not invest money you can’t afford to lose.
Also, remember that these types of investments are not liquid, meaning you can’t buy or sell your stake easily. If and when an exit opportunity arises, you’ll be informed immediately.