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3DHoudini Q&A
Exit Strategy
DESCRIBE YOUR EXIT STRATEGY (METHOD AND EXPECTED RETURN)
Sale, Merger or Acquisition – Because 3DHoudini has a huge market, is infinitely scalable and has
extremely low overhead, it will be a target for acquisition.
IPO – An initial public offering is possible. Freelancing platforms Fiverr and Upwork have both
completed IPOs since 2018.
Dividends (Cash Cow) – A shareholder may choose to remain vested and earn dividends (see
WHAT IS THE EXPECTED EXIT AMOUNT… below).
EXIT TIMEFRAME
2-5 years
IF LIKELY EXIT IS COMPANY ACQUISITION, WHO ARE PROSPECTIVE ACQUIRERS?
Leading companies in the technology and manufacturing industries.
DOES THE COMPANY ALREADY HAVE A RELATIONSHIP WITH A PROSPECTIVE
ACQUIRER?
Members of the Advisory Board have relationships with prospective acquirers.
WHAT IS THE EXPECTED EXIT AMOUNT AS A MULTIPLE OF REVENUE? GIVE AN EXAMPLE.
5-7X. Upwork’s IPO valued the company at a 7.5 multiple of revenue ($200M / $1.5B market cap).
Basics
WHAT STAGE IS YOUR COMPANY?
Revenue
DATE COMPANY WAS FOUNDED
7/29/2019
LEGAL ENTITY TYPE
Delaware C Corp
TWO-LINEBUSINESS SUMMARY
We are the Upwork/Fiverr platform for manufacturing! 3DHoudini is the first online marketplace to
apply a freelancing platform model to the manufacturing industry.
LIST AND DESCRIBE THE MEMBERS OF YOUR MANAGEMENT TEAM
Chris White (CEO/COO) - Chris’s prior business ventures include founding manufacturing,
wholesale distribution and nanotechnology start-ups, as well as a global record label. In his 20
years of experience, Chris has overseen operations, sales, marketing, advertising and financing.
Chris holds an MFA from the University of Pennsylvania and a BFA from the University of
Minnesota.
Chris Lambrou (VP of Sales/Marketing) - Chris has over 12 years of experience in marketing from
direct mail to six-figure pay-per-click campaigns. In recent years, he's focused on helping e-
commerce brands accelerate their growth through his deep knowledge of both Google and
Facebook's ad platforms. Chris holds a BS in Economics from the University of Wisconsin-
Madison.
Jay Jung (Fractional CFO) - Jay assists with capital raising, M&A, financial planning, market
research, presentations, financial models and deal advisory and underwriting. Jay previously held
the position of VP of Investment Banking at Goldman Sachs and has an MBA in Finance from the
Wharton Business School.
Nihar Dodiya (Lead Developer) - Nihar is a Full Stack Developer. He has a Msc IT from J.P. Dawer
Institute of Information Science & Technology. From Surat, India, Nihar leads a team of six other
developers with a broad range of skills.
3DHoudini will also be using the assistance of Smith Bunday Berman Britton, PS for audits,
reviews, compilations and tax consulting and compliance services. Smith Bunday Berman Britton,
PS, is a Top Tier accounting firm in Bellevue, Washington. Chris White has been working with
Smith Bunday Berman Britton since 2003.
CURRENT PERCENTAGE OF OWNERSHIP OF FOUNDERS AND KEY EMPLOYEES
95.7%, assuming all options are exercised.
Market Opportunity
SUMMARIZE YOUR BUSINESS
We are an online marketplace that facilitates the sale of manufactured products and related
services. In the past, market access was cost-prohibitive for sizable sectors of manufacturing, such
as small businesses and companies with excess downtime on equipment. By applying a
freelancing platform model to our industry, we have granted new market access to these
companies.
Like a clearinghouse, we are an intermediary between buyers and sellers; we do not take
possession of product and therefore avoid liabilities associated with the sale of product.
We are also the first platform in our industry to provide escrow and dispute resolution services,
features guaranteed to be game changers for buyers and sellers of all types and sizes.
CURRENT TAM (TOTALADDRESSABLE MARKET) BY REVENUE (GIVE EXACT NUMBER IF
POSSIBLE)
Our TAM is valued at more than $1T.
WHAT IS THE CUSTOMER PROBLEM YOUR PRODUCT IS SOLVING?
a) Purchasing manufactured products online is risky, especially when purchasing internationally.
b) Sourcing the best and most affordable manufacturing can be overwhelming.
c) Small manufacturing shops or sole proprietors (“little guys”) can’t afford market access.
d) Companies lose revenue due to downtime on expensive equipment.
e) High upfront costs and large minimum orders are required with traditional manufacturing.
f) High cost associated with using a broker for sourcing manufactured products.
WHAT IS YOUR SOLUTION?
a) Our escrow, dispute resolution and review & ratings services provide greater security.
b) Our broader range of sourcing alternatives and bidding process provides more competition.
c) We empower the little guys with global market access.
d) We provide a low-cost market entry for businesses that have under-utilized equipment.
e) Local sourcing and more flexible alternatives offer low production minimums and costs.
f) We provide the advantages of a broker with greater choices at a lower price.
LIST YOUR SPECIFIC CURRENT OR POTENTIAL CUSTOMERS
Buyers include everything from one-off orders of hobbyists to established companies taking bids
for large production runs. Our sellers include traditional contract manufacturers, manufacturing
businesses with downtime on equipment and those we call “freelancers.” These freelancers are
typically small shops or sole proprietors who operate sophisticated manufacturing equipment made
affordable by advances in technology.
WHAT MARKETS(S)/APPLICATIONS ARE YOU TARGETING?
The areas of the manufacturing market that 3DHoudini is targeting total more than $1 trillion. 3D
Printing (Additive Manufacturing), 3D Scanning, Computer-aided Design (CAD), CNC Machining,
Electronics, Engineering, Fiberglass, Injection Molded Plastics, Tooling and Mold Making.
ARE THERE OTHER REVENUE STREAMS (APPLICATIONS/INDUSTRIES/CUSTOMERS)
THAT MAY EXIST BEYOND THE CURRENT OPPORTUNITY?
Premium Services (Subscription-based Membership), Financing (Lending) and Education.
WHAT IS THE POTENTIAL FOR MARKET SHARE IN 1, 5, 10 YEARS?
3DHoudini is the first of its kind in this industry; therefore, we can confidently say we will have
100% of the market share in Year 1. We know competitors are going to come along. We believe
the most accurate predictor for the future is to look at Upwork. Upwork was first to market
(approximately 10 years ago), and they are still their industry’s leader, with approximately 14% of
their market share. Our 10-year goal is to have 25% market share.
DESCRIBE YOUR GO-TO MARKET STRATEGY AND SALES STRATEGY
We already have enough manufacturers on the site for a great user experience. Therefore, the
next focus will be on growing the user base, both to generate revenue and to refine the workflows.
Early efforts at promoting the platform with pay-per-click ads (PPC) have been promising. Due to
the niche nature of this space, PPC advertising is well-suited to building a foundation of users
rapidly and cheaply. We intend to explore advertising partnerships with industry associations and
trade groups.
WHAT IS THE PROSPECTIVE PLAN AND THE ANTICIPATED COST OF SALES, OR
CUSTOMER ACQUISITIONCOST?
We estimate the acquisition of a customer for our business to cost $82. Our projections show that
to meet our current FY1 growth and revenue goals, we should acquire 6,500 customers. In order to
meet those goals, we are allocating $535,000 of the proceeds of this offering to marketing,
advertising and branding.
One well-known feature of marketplace platforms like Airbnb and eBay is their scalability. Because
of this inherent scalability, 3DHoudini can add 1,000 new customers in a day as easily as adding
one; it only requires a successful advertising campaign and advertising dollars. In addition to its
scalability, 3DHoudini also has high profit margins and a low operating overhead (we are a virtual
business, meaning we have no designated offices). The combination of these attributes in a
business can result in incredibly rapid growth.
User retention is equally as important as new user acquisition. There are many incentives, as well
as deterrents, for buyers and sellers to keep their business on our platform. They are the following:
a) It is our policy that a user can be permanently banned from our platform for making the offer
to take business off-site. We will be implementing software that alerts the 3DHoudini staff when
contact information is posted.
b) A freelancer’s livelihood relies on their ability to distinguish themselves and promote their
business on their platform. Our ratings, reviews and number of transaction listings on a user’s
profile are incentive enough for most sellers to stay on-site and build their reputation.
c) The user is taking a risk when they go off-site without the safety net of the 3DHoudini
platform features, such as escrow and dispute resolution. When something goes wrong off-site, the
damaged party has no recourse.
d) Our low overhead affords us to offer our users low commissions, which are a great incentive
for most businesses to want to stay on-site and take advantage of our beneficial features.
Additionally, we have added incentive for larger-volume users to stay with us. When the total
volume of business between a buyer and seller exceeds $10,000, the commission drops to 5%.
e) Finally, users have the option to pay a fee to 3DHoudini that buys permission to conduct
business on-site.
WHAT IS YOUR BUSINESS MODEL?
We are an online marketplace that facilitates the sale of manufactured products and related
services.
Like a clearinghouse, we are an intermediary between buyers and sellers; we do not take
possession of product and therefore avoid liabilities associated with the sale of product.
WHAT IS THE REVENUE MODEL (HOW DOES/WILL THE COMPANY MAKE MONEY)?
3DHoudini charges a fee to both the buyer and the seller. We charge a 7% commission (in FY2,
we will raise it to 10%) on the money that a service provider receives from a client for services, and
a 3% service fee to the buyer. These may seem like low commissions; however, our projected
profit margins are very high and our projected overhead is very low. Therefore, we believe we can
afford to offer low commissions.
3DHoudini will add paid Premium Services in its third fiscal year. These products will provide
additional revenue for the Company through subscription membership plans offered for a monthly
fee, as well as one-time purchase “showcasing” and “placement” upgrades. Plan benefits will
include:
• Dedicated support
• Additional tools and reports
• Perks to help projects and services stand out
• “Showcased” emails sent to top-rated clients
• Site placement to help projects and services stand out in searches
HOW EASY/HARD IS IT FOR CUSTOMERS TO ABANDON THEIR CURRENT OPTIONSAND
SWITCH TO THE COMPANY'S PRODUCT/SERVICE?
It would be very easy, as we are the first to provide these services.
DESCRIBE YOUR COMPETITORS’ BARRIER TO ENTRY, INCLUDING PATENTS, TRADE
SECRETS, COPYRIGHTS (FILED VS. PUBLISHED AND WHO OWNS THEM)
3DHoudini’s intellectual property includes trademarks and trade secrets. However, our biggest
edge will be first-mover advantage and our deep industry know-how.
Any competitors coming from the freelance platform industry, or from inside the manufacturing
industry, will have to construct platforms, or completely redesign their platforms, which is time-
consuming and expensive. Because our business model targets a nontraditional customer,
customer acquisition will require new marketing strategies for any competitor.
LIST YOUR COMPETITORSAND THEIR RELATIVE STRENGTH.
There are no direct competitors. Currently, any manufacturer with excess production capacity
would have to find one-off clients, or change their business model entirely, which simply doesn’t
make economic sense. The “little guys,” small shops and sole proprietors (freelancers), don’t have
anywhere to go to find affordable market access, either. Anyone looking for an affordable option for
such services has nowhere to go.
Our primary competitors are service bureaus and contract manufacturers, but they are also our
customers. There are also several online resellers of contract manufacturer services such as
Xometry and 3D Hubs. These companies offer on-demand purchases using a standardized instant
quote system. These companies do little to create a competitive marketplace, are not
accommodating to anyone but traditional contract manufacturers and don’t offer the features that
we offer, such as escrow and dispute resolution services.
WHAT ARE THE KEY PRODUCT/SERVICE DIFFERENTIATORS?
3DHoudini offers a suite of features to make online business transactions more successful. We’ve
learned a lot from the freelancing geniuses at Fiverr and Upwork. We took what we learned from
studying freelance platforms and tailored it to fit manufacturing. As a result, the 3DHoudini platform
is packed with powerful features that no one else in the online manufacturing industry has. These
are market-specific features that appeal to manufacturers of all sizes. We have a customizable
order process that mirrors real-world manufacturing and security features, such as electronic
consent non-disclosure agreements that protect both parties and avert bad actor situations. We
are also the first platform in our industry to introduce escrow and dispute resolution services,
features guaranteed to be game changers for buyers and sellers of all types and sizes.
NUMBER OF MEMBERS ON THE ADVISORY BOARD
4 Advisory Board Members (3 Board Members, 1 Advisory Board Member).
DESCRIBE THE ADVISORY BOARD AND THEIR DEPTH OF EXPERIENCE (BUSINESS,
INDUSTRY, CEO, START-UP)?
3DHoudini will have access to an experienced team of individuals for advice and guidance. These
individuals include:
Jean-Louis Guillou – Board Member. Jean-Louis was formerly President Director at Cargill, Head
of Indonesian Equity Distribution and Executive Director of US Equity Institutional Sales at UBS
Investment Bank. Jean-Louis holds an MBA in Marketing from Thunderbird.
Steve Shamblott – Board Member. Steve is experienced in starting and operating companies and
has been involved in a multitude of mergers and acquisitions. He was co-founder of Adayana, Inc.,
Founder and CEO of LearningByte, Inc., EVP of Sales & Marketing and EVP of International
Operations for Datacard Group.
Todd Basche – Portola Valley Partners/3DHoudini Development Team. Todd was formerly a VP
of Applications at Apple
John Majeski – Portola Valley Partners/3DHoudini Development Team. John was formerly a
VP/GM at Dell
Steve Douty – Portola Valley Partners/3DHoudini Development Team. Steve was formerly a
Senior VP at Yahoo!
Jay Jung - Fractional CFO for 3DHoudini. Jay was formerly a VP of Investment Banking at
Goldman Sachs and has an MBA in Finance from the Wharton Business School.
Kendall Main - Kendall has more than 30 years of experience in public accounting with expertise
in federal income tax planning and compliance. Kendall is a Shareholder and Partner at Smith
Bunday Berman Britton, PS.
Financial Data
FUNDING ROUND NAME
Pre-Series A
PREVIOUS CAPITAL RAISED (INCLUDING SEED MONEY AND PREVIOUS INVESTOR
ROUNDS)
Capital Raised
Contribution Shares Valuation
Founder 1 $10,400 5,200,000 $10,000
Founder 2 $9,000 300,000 $150,000
Pre-Launch Limited Raise $37,383 109,951 $2,000,000
Seed Round (Self-funded) $400,836 556,716 $4,000,000
Total $457,619 6,166,667
AMOUNT OF CAPITAL SEEKING
$1,000,000
ESTIMATED PRE-MONEY VALUATION
$5,000,000
MONTHLY BURN RATE
$2,500
CURRENT YEAR REVENUE
$39. While that number may not sound like much, to us it represents a successful Phase One of
our business plan and the accomplishments we have made thus far. Phase One is focused on
onboarding service providers and testing the platform, and we exceeded our expectations. We are
now starting into Phase Two of our business plan (where buyers can purchase products). Phase
Two will be focused on fundraising, sales and marketing.
The onboarding process was also a test of our marketability and our ability to market. Since our
launch in early June, we have had over 100 users from six countries list 85 services on the
3DHoudini platform, confirming a real need for such a platform. These achievements were the
result of well-conceived but relatively inexpensive emailing, social media and search engine
marketing campaigns. These advertising campaigns generated significant web traffic. We had 4.4K
visitors to 3DHoudini in one week and 910 visitors in a single day!
To accelerate the onboarding process, we offered discounted commissions for limited periods of
time as a promotion to our early service providers. While we anticipate that these promotions will
have some negative impact on early revenues, we feel that it had a significant impact on our
Phase One onboarding results.
HOW MUCH IS BEING SPENT AND ON WHAT?
We are currently spending approximately $2,500 per month; of that, approximately 55% has gone
to web development, 20% to advertising and marketing, 20% to investment preparation and
execution and 5% toward miscellaneous expenses.
ACTUAL AND PROJECTED FINANCIAL INFO
2019 2020 2021 2022 2023 2024 2015
Revenue $0 $10,000 $700.000 $1,773,000 $9,600,000 $35,250,000 $116,500,000
Expenditures $5,246 $40,000 $713,000 $1,238,000 $5,262,000 $13,075,000 $38,235,000
Net -$5,246 -$30,000 -$13,000 $422,000 $4,157,000 $22,175,000 $78,265,000
WHAT ARE THE EXPECTED GROSS AND NET MARGINS AS A PERCENT OF REVENUE?
FY1 Gross Margin 91.0%, Net Margin 91.0%, NPAT $637,000
FY2 Gross Margin 92.4%, Net Margin 86.1%, NPAT $1,526,000
FY3 Gross Margin 93.9%, Net Margin 82.4%, NPAT $7,907,000
FY4 Gross Margin 95.2%, Net Margin 82.0%, NPAT $28,913,000
FY5 Gross Margin 96.0%, Net Margin 81.9%, NPAT $95,444,000
INCLUDING SEED MONEY AND PREVIOUS INVESTOR ROUNDS, DESCRIBE THE CURRENT
CAPITALIZATION OF THE COMPANY.
Capitalization
(as of October 15, 2020, as adjusted for maximum offering):
No. of Shares % Fully Diluted
Common Shares Issued: 6,166,667 77.08%
Stock Options Outstanding: 200,000 2.50%
Portola Valley Shares 300,000 3.75%
Common Stock to Be Sold in the Offering: 1,333,333 16.67%
Total Issued (Assuming Maximums) 8,000,000 100%
Common Shares Outstanding: 20,000,000
Chris White, 3DHoudini’s founder, is the principle owner, with 86% ownership of its Common
Stock.
WHAT IS THE CAPITAL CONTRIBUTION TO THE COMPANY BY INSIDERS (FOUNDERS,
BOARD, ADVISORS?)
$420,236
HOW DO YOU INTEND TO DEPLOY THE RAISED FUNDS?
Sixty (60) percent of the proceeds from this offering will go toward business development
(business development is branding, website development, professional services, Portola Valley
Partners’ services, advertising, marketing and travel), 29% toward reserve, 6% toward hiring and
5% toward offering expenses.
Estimated Use of Proceeds ($1M)
Pre-Series A Round - Fiscal Year 1
OFFERING AMOUNT SOLD $1,000,000
LESS
OFFERING EXPENSES $50,000
NET PROCEEDS $950,000
PLANNED USES
Branding $15,000
Website $40,000
Total proceeds used for capital expenditures $55,000
WORKING CAPITAL
Salaries, Wages and other Compensation $63,000
Professional Services (Accounting & Legal) $20,000
Marketing Development and Advertising* $520,000
Travel $5,000
Reserve $287,000
Total proceeds for working capital and reserve $895,000
Total Uses $1,000,000

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3DHoudini Q&A

  • 1. 3DHoudini Q&A Exit Strategy DESCRIBE YOUR EXIT STRATEGY (METHOD AND EXPECTED RETURN) Sale, Merger or Acquisition – Because 3DHoudini has a huge market, is infinitely scalable and has extremely low overhead, it will be a target for acquisition. IPO – An initial public offering is possible. Freelancing platforms Fiverr and Upwork have both completed IPOs since 2018. Dividends (Cash Cow) – A shareholder may choose to remain vested and earn dividends (see WHAT IS THE EXPECTED EXIT AMOUNT… below). EXIT TIMEFRAME 2-5 years IF LIKELY EXIT IS COMPANY ACQUISITION, WHO ARE PROSPECTIVE ACQUIRERS? Leading companies in the technology and manufacturing industries. DOES THE COMPANY ALREADY HAVE A RELATIONSHIP WITH A PROSPECTIVE ACQUIRER? Members of the Advisory Board have relationships with prospective acquirers. WHAT IS THE EXPECTED EXIT AMOUNT AS A MULTIPLE OF REVENUE? GIVE AN EXAMPLE. 5-7X. Upwork’s IPO valued the company at a 7.5 multiple of revenue ($200M / $1.5B market cap).
  • 2. Basics WHAT STAGE IS YOUR COMPANY? Revenue DATE COMPANY WAS FOUNDED 7/29/2019 LEGAL ENTITY TYPE Delaware C Corp TWO-LINEBUSINESS SUMMARY We are the Upwork/Fiverr platform for manufacturing! 3DHoudini is the first online marketplace to apply a freelancing platform model to the manufacturing industry. LIST AND DESCRIBE THE MEMBERS OF YOUR MANAGEMENT TEAM Chris White (CEO/COO) - Chris’s prior business ventures include founding manufacturing, wholesale distribution and nanotechnology start-ups, as well as a global record label. In his 20 years of experience, Chris has overseen operations, sales, marketing, advertising and financing. Chris holds an MFA from the University of Pennsylvania and a BFA from the University of Minnesota. Chris Lambrou (VP of Sales/Marketing) - Chris has over 12 years of experience in marketing from direct mail to six-figure pay-per-click campaigns. In recent years, he's focused on helping e- commerce brands accelerate their growth through his deep knowledge of both Google and Facebook's ad platforms. Chris holds a BS in Economics from the University of Wisconsin- Madison. Jay Jung (Fractional CFO) - Jay assists with capital raising, M&A, financial planning, market research, presentations, financial models and deal advisory and underwriting. Jay previously held the position of VP of Investment Banking at Goldman Sachs and has an MBA in Finance from the Wharton Business School. Nihar Dodiya (Lead Developer) - Nihar is a Full Stack Developer. He has a Msc IT from J.P. Dawer Institute of Information Science & Technology. From Surat, India, Nihar leads a team of six other developers with a broad range of skills. 3DHoudini will also be using the assistance of Smith Bunday Berman Britton, PS for audits, reviews, compilations and tax consulting and compliance services. Smith Bunday Berman Britton, PS, is a Top Tier accounting firm in Bellevue, Washington. Chris White has been working with Smith Bunday Berman Britton since 2003. CURRENT PERCENTAGE OF OWNERSHIP OF FOUNDERS AND KEY EMPLOYEES 95.7%, assuming all options are exercised.
  • 3. Market Opportunity SUMMARIZE YOUR BUSINESS We are an online marketplace that facilitates the sale of manufactured products and related services. In the past, market access was cost-prohibitive for sizable sectors of manufacturing, such as small businesses and companies with excess downtime on equipment. By applying a freelancing platform model to our industry, we have granted new market access to these companies. Like a clearinghouse, we are an intermediary between buyers and sellers; we do not take possession of product and therefore avoid liabilities associated with the sale of product. We are also the first platform in our industry to provide escrow and dispute resolution services, features guaranteed to be game changers for buyers and sellers of all types and sizes. CURRENT TAM (TOTALADDRESSABLE MARKET) BY REVENUE (GIVE EXACT NUMBER IF POSSIBLE) Our TAM is valued at more than $1T. WHAT IS THE CUSTOMER PROBLEM YOUR PRODUCT IS SOLVING? a) Purchasing manufactured products online is risky, especially when purchasing internationally. b) Sourcing the best and most affordable manufacturing can be overwhelming. c) Small manufacturing shops or sole proprietors (“little guys”) can’t afford market access. d) Companies lose revenue due to downtime on expensive equipment. e) High upfront costs and large minimum orders are required with traditional manufacturing. f) High cost associated with using a broker for sourcing manufactured products. WHAT IS YOUR SOLUTION? a) Our escrow, dispute resolution and review & ratings services provide greater security. b) Our broader range of sourcing alternatives and bidding process provides more competition. c) We empower the little guys with global market access. d) We provide a low-cost market entry for businesses that have under-utilized equipment. e) Local sourcing and more flexible alternatives offer low production minimums and costs. f) We provide the advantages of a broker with greater choices at a lower price. LIST YOUR SPECIFIC CURRENT OR POTENTIAL CUSTOMERS Buyers include everything from one-off orders of hobbyists to established companies taking bids for large production runs. Our sellers include traditional contract manufacturers, manufacturing businesses with downtime on equipment and those we call “freelancers.” These freelancers are typically small shops or sole proprietors who operate sophisticated manufacturing equipment made affordable by advances in technology.
  • 4. WHAT MARKETS(S)/APPLICATIONS ARE YOU TARGETING? The areas of the manufacturing market that 3DHoudini is targeting total more than $1 trillion. 3D Printing (Additive Manufacturing), 3D Scanning, Computer-aided Design (CAD), CNC Machining, Electronics, Engineering, Fiberglass, Injection Molded Plastics, Tooling and Mold Making. ARE THERE OTHER REVENUE STREAMS (APPLICATIONS/INDUSTRIES/CUSTOMERS) THAT MAY EXIST BEYOND THE CURRENT OPPORTUNITY? Premium Services (Subscription-based Membership), Financing (Lending) and Education. WHAT IS THE POTENTIAL FOR MARKET SHARE IN 1, 5, 10 YEARS? 3DHoudini is the first of its kind in this industry; therefore, we can confidently say we will have 100% of the market share in Year 1. We know competitors are going to come along. We believe the most accurate predictor for the future is to look at Upwork. Upwork was first to market (approximately 10 years ago), and they are still their industry’s leader, with approximately 14% of their market share. Our 10-year goal is to have 25% market share. DESCRIBE YOUR GO-TO MARKET STRATEGY AND SALES STRATEGY We already have enough manufacturers on the site for a great user experience. Therefore, the next focus will be on growing the user base, both to generate revenue and to refine the workflows. Early efforts at promoting the platform with pay-per-click ads (PPC) have been promising. Due to the niche nature of this space, PPC advertising is well-suited to building a foundation of users rapidly and cheaply. We intend to explore advertising partnerships with industry associations and trade groups. WHAT IS THE PROSPECTIVE PLAN AND THE ANTICIPATED COST OF SALES, OR CUSTOMER ACQUISITIONCOST? We estimate the acquisition of a customer for our business to cost $82. Our projections show that to meet our current FY1 growth and revenue goals, we should acquire 6,500 customers. In order to meet those goals, we are allocating $535,000 of the proceeds of this offering to marketing, advertising and branding. One well-known feature of marketplace platforms like Airbnb and eBay is their scalability. Because of this inherent scalability, 3DHoudini can add 1,000 new customers in a day as easily as adding one; it only requires a successful advertising campaign and advertising dollars. In addition to its scalability, 3DHoudini also has high profit margins and a low operating overhead (we are a virtual business, meaning we have no designated offices). The combination of these attributes in a business can result in incredibly rapid growth. User retention is equally as important as new user acquisition. There are many incentives, as well as deterrents, for buyers and sellers to keep their business on our platform. They are the following: a) It is our policy that a user can be permanently banned from our platform for making the offer to take business off-site. We will be implementing software that alerts the 3DHoudini staff when contact information is posted.
  • 5. b) A freelancer’s livelihood relies on their ability to distinguish themselves and promote their business on their platform. Our ratings, reviews and number of transaction listings on a user’s profile are incentive enough for most sellers to stay on-site and build their reputation. c) The user is taking a risk when they go off-site without the safety net of the 3DHoudini platform features, such as escrow and dispute resolution. When something goes wrong off-site, the damaged party has no recourse. d) Our low overhead affords us to offer our users low commissions, which are a great incentive for most businesses to want to stay on-site and take advantage of our beneficial features. Additionally, we have added incentive for larger-volume users to stay with us. When the total volume of business between a buyer and seller exceeds $10,000, the commission drops to 5%. e) Finally, users have the option to pay a fee to 3DHoudini that buys permission to conduct business on-site. WHAT IS YOUR BUSINESS MODEL? We are an online marketplace that facilitates the sale of manufactured products and related services. Like a clearinghouse, we are an intermediary between buyers and sellers; we do not take possession of product and therefore avoid liabilities associated with the sale of product. WHAT IS THE REVENUE MODEL (HOW DOES/WILL THE COMPANY MAKE MONEY)? 3DHoudini charges a fee to both the buyer and the seller. We charge a 7% commission (in FY2, we will raise it to 10%) on the money that a service provider receives from a client for services, and a 3% service fee to the buyer. These may seem like low commissions; however, our projected profit margins are very high and our projected overhead is very low. Therefore, we believe we can afford to offer low commissions. 3DHoudini will add paid Premium Services in its third fiscal year. These products will provide additional revenue for the Company through subscription membership plans offered for a monthly fee, as well as one-time purchase “showcasing” and “placement” upgrades. Plan benefits will include: • Dedicated support • Additional tools and reports • Perks to help projects and services stand out • “Showcased” emails sent to top-rated clients • Site placement to help projects and services stand out in searches HOW EASY/HARD IS IT FOR CUSTOMERS TO ABANDON THEIR CURRENT OPTIONSAND SWITCH TO THE COMPANY'S PRODUCT/SERVICE? It would be very easy, as we are the first to provide these services.
  • 6. DESCRIBE YOUR COMPETITORS’ BARRIER TO ENTRY, INCLUDING PATENTS, TRADE SECRETS, COPYRIGHTS (FILED VS. PUBLISHED AND WHO OWNS THEM) 3DHoudini’s intellectual property includes trademarks and trade secrets. However, our biggest edge will be first-mover advantage and our deep industry know-how. Any competitors coming from the freelance platform industry, or from inside the manufacturing industry, will have to construct platforms, or completely redesign their platforms, which is time- consuming and expensive. Because our business model targets a nontraditional customer, customer acquisition will require new marketing strategies for any competitor. LIST YOUR COMPETITORSAND THEIR RELATIVE STRENGTH. There are no direct competitors. Currently, any manufacturer with excess production capacity would have to find one-off clients, or change their business model entirely, which simply doesn’t make economic sense. The “little guys,” small shops and sole proprietors (freelancers), don’t have anywhere to go to find affordable market access, either. Anyone looking for an affordable option for such services has nowhere to go. Our primary competitors are service bureaus and contract manufacturers, but they are also our customers. There are also several online resellers of contract manufacturer services such as Xometry and 3D Hubs. These companies offer on-demand purchases using a standardized instant quote system. These companies do little to create a competitive marketplace, are not accommodating to anyone but traditional contract manufacturers and don’t offer the features that we offer, such as escrow and dispute resolution services. WHAT ARE THE KEY PRODUCT/SERVICE DIFFERENTIATORS? 3DHoudini offers a suite of features to make online business transactions more successful. We’ve learned a lot from the freelancing geniuses at Fiverr and Upwork. We took what we learned from studying freelance platforms and tailored it to fit manufacturing. As a result, the 3DHoudini platform is packed with powerful features that no one else in the online manufacturing industry has. These are market-specific features that appeal to manufacturers of all sizes. We have a customizable order process that mirrors real-world manufacturing and security features, such as electronic consent non-disclosure agreements that protect both parties and avert bad actor situations. We are also the first platform in our industry to introduce escrow and dispute resolution services, features guaranteed to be game changers for buyers and sellers of all types and sizes. NUMBER OF MEMBERS ON THE ADVISORY BOARD 4 Advisory Board Members (3 Board Members, 1 Advisory Board Member). DESCRIBE THE ADVISORY BOARD AND THEIR DEPTH OF EXPERIENCE (BUSINESS, INDUSTRY, CEO, START-UP)? 3DHoudini will have access to an experienced team of individuals for advice and guidance. These individuals include: Jean-Louis Guillou – Board Member. Jean-Louis was formerly President Director at Cargill, Head of Indonesian Equity Distribution and Executive Director of US Equity Institutional Sales at UBS Investment Bank. Jean-Louis holds an MBA in Marketing from Thunderbird.
  • 7. Steve Shamblott – Board Member. Steve is experienced in starting and operating companies and has been involved in a multitude of mergers and acquisitions. He was co-founder of Adayana, Inc., Founder and CEO of LearningByte, Inc., EVP of Sales & Marketing and EVP of International Operations for Datacard Group. Todd Basche – Portola Valley Partners/3DHoudini Development Team. Todd was formerly a VP of Applications at Apple John Majeski – Portola Valley Partners/3DHoudini Development Team. John was formerly a VP/GM at Dell Steve Douty – Portola Valley Partners/3DHoudini Development Team. Steve was formerly a Senior VP at Yahoo! Jay Jung - Fractional CFO for 3DHoudini. Jay was formerly a VP of Investment Banking at Goldman Sachs and has an MBA in Finance from the Wharton Business School. Kendall Main - Kendall has more than 30 years of experience in public accounting with expertise in federal income tax planning and compliance. Kendall is a Shareholder and Partner at Smith Bunday Berman Britton, PS. Financial Data FUNDING ROUND NAME Pre-Series A PREVIOUS CAPITAL RAISED (INCLUDING SEED MONEY AND PREVIOUS INVESTOR ROUNDS) Capital Raised Contribution Shares Valuation Founder 1 $10,400 5,200,000 $10,000 Founder 2 $9,000 300,000 $150,000 Pre-Launch Limited Raise $37,383 109,951 $2,000,000 Seed Round (Self-funded) $400,836 556,716 $4,000,000 Total $457,619 6,166,667 AMOUNT OF CAPITAL SEEKING $1,000,000 ESTIMATED PRE-MONEY VALUATION $5,000,000
  • 8. MONTHLY BURN RATE $2,500 CURRENT YEAR REVENUE $39. While that number may not sound like much, to us it represents a successful Phase One of our business plan and the accomplishments we have made thus far. Phase One is focused on onboarding service providers and testing the platform, and we exceeded our expectations. We are now starting into Phase Two of our business plan (where buyers can purchase products). Phase Two will be focused on fundraising, sales and marketing. The onboarding process was also a test of our marketability and our ability to market. Since our launch in early June, we have had over 100 users from six countries list 85 services on the 3DHoudini platform, confirming a real need for such a platform. These achievements were the result of well-conceived but relatively inexpensive emailing, social media and search engine marketing campaigns. These advertising campaigns generated significant web traffic. We had 4.4K visitors to 3DHoudini in one week and 910 visitors in a single day! To accelerate the onboarding process, we offered discounted commissions for limited periods of time as a promotion to our early service providers. While we anticipate that these promotions will have some negative impact on early revenues, we feel that it had a significant impact on our Phase One onboarding results. HOW MUCH IS BEING SPENT AND ON WHAT? We are currently spending approximately $2,500 per month; of that, approximately 55% has gone to web development, 20% to advertising and marketing, 20% to investment preparation and execution and 5% toward miscellaneous expenses. ACTUAL AND PROJECTED FINANCIAL INFO 2019 2020 2021 2022 2023 2024 2015 Revenue $0 $10,000 $700.000 $1,773,000 $9,600,000 $35,250,000 $116,500,000 Expenditures $5,246 $40,000 $713,000 $1,238,000 $5,262,000 $13,075,000 $38,235,000 Net -$5,246 -$30,000 -$13,000 $422,000 $4,157,000 $22,175,000 $78,265,000 WHAT ARE THE EXPECTED GROSS AND NET MARGINS AS A PERCENT OF REVENUE? FY1 Gross Margin 91.0%, Net Margin 91.0%, NPAT $637,000 FY2 Gross Margin 92.4%, Net Margin 86.1%, NPAT $1,526,000 FY3 Gross Margin 93.9%, Net Margin 82.4%, NPAT $7,907,000 FY4 Gross Margin 95.2%, Net Margin 82.0%, NPAT $28,913,000 FY5 Gross Margin 96.0%, Net Margin 81.9%, NPAT $95,444,000
  • 9. INCLUDING SEED MONEY AND PREVIOUS INVESTOR ROUNDS, DESCRIBE THE CURRENT CAPITALIZATION OF THE COMPANY. Capitalization (as of October 15, 2020, as adjusted for maximum offering): No. of Shares % Fully Diluted Common Shares Issued: 6,166,667 77.08% Stock Options Outstanding: 200,000 2.50% Portola Valley Shares 300,000 3.75% Common Stock to Be Sold in the Offering: 1,333,333 16.67% Total Issued (Assuming Maximums) 8,000,000 100% Common Shares Outstanding: 20,000,000 Chris White, 3DHoudini’s founder, is the principle owner, with 86% ownership of its Common Stock. WHAT IS THE CAPITAL CONTRIBUTION TO THE COMPANY BY INSIDERS (FOUNDERS, BOARD, ADVISORS?) $420,236 HOW DO YOU INTEND TO DEPLOY THE RAISED FUNDS? Sixty (60) percent of the proceeds from this offering will go toward business development (business development is branding, website development, professional services, Portola Valley Partners’ services, advertising, marketing and travel), 29% toward reserve, 6% toward hiring and 5% toward offering expenses. Estimated Use of Proceeds ($1M) Pre-Series A Round - Fiscal Year 1 OFFERING AMOUNT SOLD $1,000,000 LESS OFFERING EXPENSES $50,000 NET PROCEEDS $950,000 PLANNED USES Branding $15,000 Website $40,000 Total proceeds used for capital expenditures $55,000 WORKING CAPITAL Salaries, Wages and other Compensation $63,000 Professional Services (Accounting & Legal) $20,000 Marketing Development and Advertising* $520,000 Travel $5,000 Reserve $287,000 Total proceeds for working capital and reserve $895,000 Total Uses $1,000,000