HYLETE does not have any public investment opportunities available at this time. Please reach out to investor.relations@hylete.com for any information on potential upcoming offerings. If a new opportunity becomes available, we will update this investment portal accordingly and you will also be notified via email if you are signed up for the HYLETE newsletter.

Key metrics and financial performance

  • Successfully conducted seven separate crowdfunding campaigns; raising more than $9.77M from over 4,250 investors
  • $3.9M Reg A+ raised (equity and debt)
  • Acquired over 165k+ customers
  • 320k+ followers on social media platforms (e.g., Facebook, Instagram, Twitter, YouTube, and Pinterest)

*Metrics as of November 30, 2018

Investor Account Perks

HYLETE reserves the right to adjust pricing for investors in the future which may result in more or less percentage discounts to retail value being applicable.

*Store credit is given to equity investors only.

** Free ground shipping is available in the contiguous U.S. only

IMPORTANT: HYLETE does not give permission to sell HYLETE products via any third party online reseller platform (e.g., Amazon, eBay, etc.) or personally owned and operated e-commerce site without any additional embellishment. Violation of this rule, as well as any other form of abuse of the investor account, will result in the termination of your investor account.

Market Opportunity

The Total Available Market (TAM) for athletic wear (which includes apparel and footwear) is a $97 billion a year industry in the United States. [1]

The gym industry places the number of people who engage in fitness in the U.S. at 66.5 million. [2] Taking the TAM, as defined above, and dividing by the 66.5 million, places the average yearly spend per individual at $1,459.

The Serviceable Available Market (SAM) totals 22.5 million and is comprised of individuals who participate frequently in cross-training and high-intensity interval training. [3] Taking this core market and then multiplying by the average yearly spend per person yields a SAM of $32.8 billion per year.

Definition:

TAM  or Total Available Market is the total market demand for a product or service. SAM  or Serviceable Available Market is the segment of the TAM  targeted by your products and services which is within your geographical reach.

 

Why Now? Why Us?

Projected Growth for Digitally Native Vertical Athletic Brands

As termed by Bonobos founder, Andy Dunn, “Digitally native vertical brands are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web. Unlike typical e-commerce companies, digitally native vertical brands control their own distribution.” [4]

The US apparel, footwear, and accessories eCommerce market is projected to represent a $118 billion opportunity by 2020. Digitally native brands are expected to coexist with companies like Amazon while taking the market share from legacy players to create a $25 billion sub-segment of this market. [5]

Clothing and clothing accessories (including footwear) is the largest category for online sales, accounting for 17% of all eCommerce sales, double the size of electronics, and growing at a faster rate than overall online sales. Better than 50% of US retail spending growth in 2017 is being driven by eCommerce, and it is estimated that eCommerce represent more than all of growth in US consumer spending beginning in 2019. Market share shift from brick and mortar to online removes the limitations of shelf space and allows brands a direct connection to consumers. [5]

There are several success factors for digitally native brands. the first is brand and product distinction. The key to success is high quality product and differentiation, with the differentiation not based exclusively price. Second is customer acquisition by getting the word out, and recruiting high value customers while establishing durable consumer connections through efficiency and community building. Next, is digital connection and customer retention. Most strong online brands value connection to their customers as a core competency. This is accomplished by leveraging social media, subscriptions, digital platforms, and a range of consumer data. Finally, the frequency of engagements and breadth of exclusive products is a key success factor. Scalability is essential to making brands investable by the public markets or attractive to publicly traded suitors. [5]

Simply put, those companies that are able to connect the right product with the right price, at the right time, and place; win customer and investor dollars. [5]

Millennials Projected to Fuel Growth of Athletic Gear

Millennials are poised to reshape the economy; their unique experiences will change the way we buy and sell. Millennials have grown up in a time of rapid change, giving them a set of priorities and expectations sharply different from previous generations. They now account for almost 80 million of the 319 million people living in the United States. Along with buying habits, wellness is a daily and active pursuit for Millennials. They are exercising more, eating smarter, and purchasing brands they find compelling via the internet. As their consumption in other areas drop, they are willing to pay more for athletic gear, with an annual purchasing power of over $200 billion; year-over-year sales growth of athletic apparel continues to grow. [6]

REVENUES BY YEAR

We started HYLETE in March of 2012, and launched our first product (men’s cross-training shorts) in July of that year. We finished the year with $250k in revenues. During 2013, our revenues continued to climb, and we raised $328k of angel investment at a pre-money valuation of $1.5 million.

In early 2014, we conducted a crowdfunding round on the CircleUp platform that yielded an additional $1.8 million in equity, priced at a pre-money valuation of $3.0 million, while closing the year at revenues of $4.0 million. During 2015, we completed our second successful CircleUp round raise for another $1.5 million in new equity, on a pre-money valuation of $9.0 million, and finished the year at $6.0 million in revenues.

We finished 2016 with revenues of $7.0 million and secured a three-year debt security in the amount of $3.15 million during the latter part of the year, while also converting $900k in debt to equity priced at a pre-money of $10.5 million. Early in 2017 (February through April), we raised $1 million via a small online public offering (Reg CF) at a pre-money valuation of $25.0 million.

We closed our first Reg A+ equity offering on June 15, 2018, which resulted in a total raise of just under $2.1 million and over 2,100 new investors.  We closed our second Reg A+ equity offering on November 30, 2018, with a total raise of $875k.

 

THE FUTURE
2017 was a solid year to date, as we completed the year at approximately $9 million in revenues. A big part of our growth this year has been favorable adoption of our new lifestyle products for men, as well as the success of our latest performance products for women.

The early success of pre-orders in our footwear category (over 2,700 pairs), and selling over 9,700 pairs to date, has given us the confidence that this category will not only have a significant impact to 2018, but will be a category that can become a substantial portion of our revenue base into the future.

To achieve our revenue target in 2018, we are anticipating a successful raise of up to $3.5 million of new equity through the Regulation A+ offering (Title IV of the JOBS Act) that launched late August 2018. We are now able to make sales under Regulation A+ after we filed an offering statement with the SEC, and the SEC has “qualified” the offering statement. The pre-money valuation on this round has been initially set at $50.0 million ($1.75 per share).

We intend to move ahead aggressively to seek a liquidity option for our shareholders. This may involve an OTC quotation or an exchange listing. We are evaluating potential syndicates for an eventual listing. If that proves to be an option, we would aim to make the appropriate filings in late 2018 or early 2019.

Note: There are many factors that may prevent us from listing our stock on a public exchange, including failure to receive the required company or regulatory approvals, or an inability to establish sufficient investor interest to develop a liquid trading market for the stock.

References

  1. Morgan Stanley  https://morganstanley.com/ideas/global-athletic-wear-geared-for-growth
  2. IHRSA http://www.ihrsa.org/about-the-industry/
  3. 2017 SFIA – Sports, Fitness, and Leisure Activities Total Participation Report
  4. The Book of DNVB https://medium.com/@dunn/digitally-native-vertical-brands-b26a26f2cf83
  5. Stifel Equity Research: Opportunity through Disruption for Specialized Digitally Competent Brands and Branded Platforms. October 2, 2017.
  6. Forbes https://www.forbes.com/sites/greatspeculations/2016/01/14/for-athletic-wear-vendors-how-athleisure-can-continue-to-grow-by-remaining-trendy/#72d149b8541