KulaBrands hoping to launch $40,000 target IPO
I’m not a fan of KulaBrands’ business model. I see it as crowdfunding manipulation where theoretical ROIs are emphasized over the actual viability of sponsored projects.
Typically crowdfunding backers have an interest in the project (be it a product or service). This spurs genuine demand, with enough people sharing that demand seeing the project funded.
In KulaBrands that’s still possible but polluted by a financial incentive.
To their credit, KulaBrands saw moderate growth throughout 2016 till about August this year. Alexa estimate traffic to the KulaBrands website has since gone into decline.
With the MLM business opportunity alone failing to sustain itself, KulaBrands filed a Form C Offering Statement on June 9th.
Through an initial public offering, KulaBrands hopes to issue 4551 shares and raise $40,000.
A maximum offer amount has been set at 121,729 shares ($1.07 million), to be realized by a set deadline of December 31st, 2017.
Personally I’m not seeing anyone other than existing affiliates invest. Despite recording net sales of $263,000 over the past fiscal year, net income was $33,981 in losses.
It’s worth noting that KulaBrands claims in 2016 it amassed 1960 affiliates, each of whom paid a fee to join.
Affiliates who joined prior to March 14th paid $150, those who joined after paid $199.
If we multiply 1960 by $150 we get $294,000, which accounts for more than KulaBrands’ reported 2016 sales revenue (strange).
Multiply 1960 by $199 or a combination thereof and that figure is even higher.
And yeah, that’s 100% affiliate funds making up sales revenue. KulaBrands itself doesn’t sell any products or services to retail customers (see review).
Crowdfunded products and services are sold through KulaShop, however this is external to the KulaBrands MLM opportunity.
KulaBrands shares will be initially sold for $8.79 a share, a value it says ‘is based on perceived value‘.
The price of the shares available in this offering were set by kulaBrands using a qualitative measure of value and growth opportunity.
The price does not reflect a relationship to its assets, net worth, or objective criteria.
KulaBrands CEO Peter Gantner currently holds 443,510 shares and maintains a 66% controlling stake in the company.
Of the $40,000 KulaBrands hopes to raise, $3600 will be paid in fees and $18,200 used to pay software development and operating expenses each.
Update 5th January 2022 – KulaBrands’ planned IPO appears to have flopped.
I have personally been an active member of kulaBrands since just weeks after launch in 2016. I can honestly tell you that ALL Peter Gantner has stated would be, has been.
He is the most compassionate, transparent guy I have ever worked with.
Remember the name…#kulaBrands it will be a household name.
While messing around with your numbers, be sure and Include the value kulaBrands just gained by it’s first product signing a 5 year contract with the 2nd largest plastics company in the world…
I am no genius but pretty certain that adds enormous value to our already amazing company. If you’ve not truly given this business a chance, you are only cheating yourself.
Have a very blessed day and I wish you much success!
@Wendy
Kulabrands own financial statements don’t lie.
$30,000+ in losses, revenue primarily from affiliate membership fees. That’s not “MLM success” by any stretch of the imagination.
What is not taken into account here are a few things. First off I would not call kulaBrands an MLM, as you can earn an income without recruiting even one person.
Second of all, this is a new business model, so new it is a patent pending design. So it may take a bit for some people to warm up to it. Jeff Hoffman seems to like it though.
Thirdly most businesses will never show a profit for two to three years. Requiring a company to be profitable within its first year or even two years is unrealistic.
If that is the test, most likely 99% or more would be a failure. Including almost every company on the stock market.
It might have been thinking like that, that resulted in Ronald Wayne, one of Apples original 3 founders, sell his share of the company for $800.00. I am sure he regrets the multi-billions of dollars in profits he missed out on as a result.
Last of all, not making profits, in the beginning, can actually be beneficial to a company’s health. Livable wages for employees can be helpful to keep a reliable work force.
Also, reinvesting funds into the companies operations can be a big plus. Last, of all, some companies find it beneficial to keep profits low. Employees can be well paid and have benefits in place.
Also, investors can be paid a higher rate of return. That can result in a few things. It makes for happy investors, not a bad thing.
Higher returns can make it easier to obtain more investors if ever needed. Also with lower profits, the corporate income tax rate will be lower.
MLM compensation plan = MLM company.
Whether you get paid to recruit or not is neither here nor there.
I reviewed Kulabrands in April, 2016. That makes it over a year and a half old.
An MLM company not turning profit isn’t sustainable. MLM companies are built on mathematical formulas. If affiliates are selling products and services to retail customers then they should be profitable.
How is this company doing at the moment ? its been years since launch ….any changes since then?
Do they have customers, is there business model in helping startups getting crowdfunded working?
How many supporters /backers do they have?
Crowdfunding went nowhere. KulaBrands jumped on the CBD bandwagon earlier this year, seems to have generated renewed interest in the company.
On January 31st Michel Schien left a comment on this article claiming KulaBrands was a scam and cult.
He requested I revisit the company and “put Mr Gantner (serial scammer) and his cronies OUT of Circulation.”
After I challenged him on his comments, Schein “rescinded” his claims on February 2nd. A reason was not provided.
At his request I removed his comments and our subsequent conversation. This is a record of that conversation.
well OZ we are half way to an accord!
you have recinded my comment but then repeated it on your own. if you are going to leave it would you be kind enough to strike the words “serial scammer’ or at least change those words to read “who In My Opinion is a Serial Scammer”.
and then do not publish this comment!
I try to not butcher the conversation here. You made claims about KulaBrand and then, after they’d become a discussion, rescinded your claims.
That’s recorded. Next time think before you type.