Hi everyone,
Today we’re looking at RAD AI, a first-of-its-kind marketing solution for businesses across the globe.
We’ll check out their early investment opportunity that has just raised over $2 million from 2,500+ investors.
Quick Summary
- Investment type: Priced Round
- Requirements: Both accredited and non-accredited investors
- Location: Worldwide, except Canada
- Minimum investment: $250
- Hold period: Long-term (exit strategy is to take RAD AI public)
The world of Martech
We don’t need to tell you how important marketing is. The industry is worth a whopping $155 billion in the United States alone.
The marketing technology sub-sector has been gaining traction. We’re looking at a CAGR of 44% over the past year.
You’d think that with so much money pumping into the industry, marketing optimization wouldn’t be an issue, right?
Well, in reality, marketing is still largely plagued with inefficiencies. Businesses want to find something that resonates but are frequently out of touch with what people really want.
33% of marketing budgets go to waste — that’s almost $75 billion yearly. People are spammed with numb advertising messages, and most emails get deleted immediately.
Content marketing is still a black box of confusion for most.
The solution — RAD AI
RAD AI believes they have the key to accurate, authentic marketing. Their core philosophy is simple — customers want to be spoken to, not at. Their platform aims to tell businesses not just what content to make, but also why.
The backbone of RAD AI is its artificial intelligence technology, which analyzes what real people on the internet are saying.
RAD AI correlates real-time conversations across the web with demographics, in order to provide businesses with this very important bit of context. And they go all the way, guiding each client from the demographic research stage to the content distribution stage, providing everything they need for marketing their content.
Often, businesses can only adapt to their audience after their marketing content is released, but the cool part about RAD AI’s tech is that it can offer intelligence before the business starts their marketing campaigns.
RAD AI’s team
RAD AI has a pretty small team — less than 25 people.
Jeremy Barnett is the CEO. He co-founded the fashion tech company Trendy Butler in 2013, which reached an ARR of $35+ million within three years.
In a recent coup, RAD AI welcomed Alex Wissner-Gross to its team. Alex has a PhD in Physics from Harvard University, 23 patents, and just sold his previous company for $600M.
What sets RAD AI apart?
Content authenticity is king when it comes to marketing, but in order for the companies to know what’s “authentic”, they need exposure to what the customers are actually saying.
The framework for RAD AI’s success is a $20 million-dollar investment into research and development. The team also has a grant from the Canadian Government with a subsidized 40% of dev costs.
This focus on creating a powerful product is where RAD AI gains its competitive advantage. The proprietary AI tech, acquired from Atomic Reach, has an accuracy rating of 92% from over 100 million marketing impressions.
The tech is powerful enough to scrape information from over ten years of historical data and 550M+ web pages, in order to create reliable, unbiased, and authentic marketing campaigns.
RAD AI believe they’re the first (and only) company to market themselves as “offering end-to-end service for marketing campaigns”, which so far has led to excellent client retention.
Currently, they have eight clients, each spending well over a quarter-million annually. By Q1 2023, RAD AI plans to have onboarded four new clients and to continue the scaling process.
Case study
All of RAD AI’s research demonstrated that AI-driven marketing campaigns significantly outperformed others – to the tune of nearly 200%. The impressive performance is particularly prominent in certain sectors that need authentic content the most, like entertainment, healthcare, and politics.
One of RAD AI’s most successful campaigns was for a major company in the entertainment industry. The business saw an impressive 3x ROI from their previous marketing efforts.
The process
To get that 3x ROI, they had to go through a few steps:
- First, RAD AI used its technology to perform pre-campaign analysis by browsing Reddit, TikTok, Instagram, and other social media outlets, to find the perfect target audience.
- Once the audience had been identified, it was time for RAD AI and the company to develop a content strategy.
- Finally, the content for the marketing campaign was created and distributed across multiple media channels.
In this case, RAD AI managed to identify micro-communities — an incredibly important segment for entertainment providers to tap into.
The results
- The business recorded a 197% increase in engagement rate with content, compared to previous marketing campaigns that were not using AI technology
- The creation of 397 content pieces
- Over 6.8m impressions
- Over 750k engagements
In a similar case, a client in the men’s vitality sector was starting a new marketing campaign with written, visual, and audio elements. They went to RAD with the idea that they should target men in their 40s and 50s who may have some trouble…getting it up.
Turns out, this wasn’t actually their biggest market. It was 20 to 30-year-old men.
If you think about it, most older men with performance setbacks are probably going to see their GP. But the younger man building his career and always on the move might need that extra little edge.
RAD AI provided the brand with valuable demographic data that guided the brand when shaping and targeting their message. But these are just some of the ways in which the technology can prove useful. Here’s a video showcasing RAD AI in action:
Investment offering
The investment is a Priced Round, hosted by WeFunder.
RAD AI has valued itself at $18M. This means the price of a share is worth ±$0.18.
If you’re investing, you’re essentially “betting” that the company’s value will eclipse this figure in the future. Investors worldwide (well, except Canadians) can get involved for as little as $250, which is a super low investment minimum.
So far, over 2,000 people have invested $2M.
Fund distribution
- 20% of the raise will be used for building a sales team
- 20% will be used for marketing and brand management
- 55% will be used to develop the primary AI product
- 5% will be used for Wefunder fees
Ultimately, the goal of this fundraiser is to scale the business while continuing to improve the underlying AI technology.
Financials & others
Let’s look at some more company stats and details that are worth considering:
- RAD AI believe they have a path to become profitable in Q1 2023
- The cash in hand is $400k+
- 2021 saw a net loss of $1M
- They have $600k in liabilities
- Revenue jumped from $169k in 2020 to $515k in 2021
- RAD AI have a $2.2M revenue run-rate
- They have backing from Fidelity Investments, a VC with $4 trillion+ AUM
- They have traction and have been featured in Bloomberg, TechCrunch, Nasdaq, and more
- SaaS clients often sign multi-year contracts, ensuring long relationships
- Independent investors have suggested RAD AI could’ve raised the $18M valuation at least two-fold
What we like
- Industry strength: Investments in AI companies really are booming right now. This can increase the odds of a future successful exit — whether through an increased valuation in subsequent funding rounds, acquisition, or IPO.
- Total Addressable Market: RAD AI’s 2022 estimated revenue of $2.2M is just a fraction of the overall $155b spent annually on advertising in the US.
- Client traction/market fit: RAD AI already has clients using its services, which have produced impressive marketing campaign results. There is a market for what RAD AI is offering.
- Recurring nature of revenue: SAAS companies that can provide value to customers have great business models — the recurring revenue stream can provide stable long-term cash flows, and companies are often hesitant to eliminate/switch SAAS products that they rely on.
Potential risks
- Risks of startup investing: Any investment in a startup is risky. Though RAD AI has shown impressive early results, there is no guarantee that they can scale to profitability and continue to win market share/customers.
- Customer concentration: RAD AI’s current revenue base is concentrated amongst eight customers. The loss of one or multiple of them would significantly impact revenue and extend the timeline to profitability.
- Marketing/R&D spend: Like other SAAS companies, RAD AI will need to continue to spend significantly on R&D (improving their offering) and sales/marketing efforts (extending awareness of their product and sell/upsell to increase their customer base).
Closing thoughts
RAD AI is an exciting player in an industry that needs shaking up.
The demand for authentic content that can generate an emotional response is obvious. Venue promoters, sports leagues, and hospitality companies are just some of the industries crying out for marketing innovations. RAD AI is offering access to artificial intelligence that understands emotions and delivers authentic content for the entire marketing mix.
The team’s devotion to the technology is clear. The company’s future success will depend on how well they continue to develop and implement it across various sectors.
Of course, investing could be risky (again, that’s startups for you). But their management has an excellent track record of taking businesses to exit. There’s no reason that RAD AI won’t be the next successful business to join their glowing (and growing) portfolio.
Disclosures
- None of the authors of this issue currently own any shares or assets of RAD AI.
- We have no RAD AI shares or assets in the ALTS 1 Fund
This issue has been a sponsored deep-dive, meaning Alts has been paid to write an independent analysis of RAD AI. RAD has agreed to offer an unconstrained look at their business & operations. RAD is a sponsor of Alts, but our research is neutral and unbiased. This should not be considered investment advice, but rather an independent analysis to help readers make their own investment decisions. All opinions expressed here are ours, and ours alone. We hope you find it informative and fair.
