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DirecTech Labs

Platform helping businesses better leverage their gig workers, micro-influencers, and social sellers

DirecTech Labs is offering securities under both Regulation D and Regulation CF through SI Securities, LLC ("SI Securities"). SI Securities is an affiliate of SeedInvest Technology, LLC, a registered broker-dealer, and member FINRA/SIPC. SI Securities will receive cash compensation equal to 7.50% of the value of the securities sold and equity compensation equal to 5.00% of the number of securities sold. Investments made under both Regulation D and Regulation CF involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Furthermore, the contents of the Highlights, Term Sheet sections have been prepared by SI Securities and shall be deemed broker-dealer communications subject to FINRA Rule 2210 (the “Excluded Sections”). With the exception of the Excluded Sections noted above, this profile contains offering materials prepared solely by DirecTech Labs without the assistance of SI Securities, and not subject to FINRA Rule 2210 (the “Issuer Profile”). The Issuer Profile may contain forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. Investors should review the risks and disclosures in the offering's draft. The contents of this profile are meant to be a summary of the information found in the company’s Form C. Before making an investment decision, investors should review the company’s Form C for a complete description of its business and offering information, a copy of which may be found both here and below.


Company Highlights

  • Grew revenue over 350% in one year to 770k in 2018 (unaudited)
  • Quadrupled product performance for customers from a 3.28% conversion rate to 14.8% between period Oct 2017 and March 2019.
  • Our marquis customers (such as Plexus Worldwide, Modere, and Oriflame) are some of the largest in our first target market, with revenues up to $1.4B.
  • Our product, Distro is live in 70+ countries and 24 languages with over 11mm data points in our database.
  • Graduated from Techstars LA in 2017. Received two investments from Techstars Ventures.

Fundraise Highlights

  • Total Amount Raised: US $649,871
  • Total Round Size: US $2,000,000
  • Raise Description:  Seed
  • Minimum Investment:  US $1,000 per investor
  • Security Type:  Tiered Preferred Equity  (SWIFT)
  • Pre-Money Valuation:  US $11,525,000
  • Offering Type:   Side by Side Offering

Tiered Pricing

  • Purchase Price:  US $0.7049 Final

We use AI, behavioral science, and interactive bots to make micro-influencers and gig workers more productive and successful, making their companies more efficient and valuable. We’re doing it now in 70+ countries and 24 languages.


Problem

 Large enterprise software providers like Salesforce, Adobe, Oracle, and SAP are vying for market share in the $189B subset of the gig economy known as direct selling.  But their systems are cramming square pegs into round holes, attempting to use the same technology that has worked for their e-commerce and retail customers in a market that we believe needs unique solutions which maximize the unique asset direct sellers have that no other go-to-market channel has to offer: personal relationships their reps have with customers.  

Solution

Our product, Distro is helping customers better understand and motivate their independent reps and customers.  Using the type of AI that is already driving billions for Netflix, Facebook, Amazon, and Google, we build deep behavior profiles about a company's customers and reps.  Then we use those profiles to deliver value in two ways:

  1. We deliver behavioral insights that directly affect customer strategies, helping them create more personalized training, promotions, and communications to reps and customers that result in deeper engagement and higher LTV.
  2. We send hyper-targeted alerts to reps around the world alerting them to their customers and teammates who need their support now.  We cut our teeth on alerting (via internal company CRM, email, and text) people who Distro predicts are in the last 30 days of their lifecycle, along with some tips on how to retain the person at risk. Now we're moving into other use cases and more deeply integrating with more of our customers' sales and marketing tech.

Annual contract value has nearly doubled in the last year and customers are beginning to expand their accounts with us. Over the last year, we've launched in 74 countries and quadrupled product performance and ROI for customers.  Recently a customer earned $100K in new revenue in a weekend and $1M in 75 days.

Product & Service

Product Overview

Customers begin with the core solution: "Focus Alerts" for retention. First, Distro predicts that a customer or rep is in the last 30 days of their lifecycle.  Then Distro uses influencer scoring to select the rep that would be best suited to help the person at risk.   It alerts that person with a personalized, interactive text message including tips on how to retain the customer.  If they don't take action, Distro reminds them. If they continue to be unresponsive, Distro will escalate the alert to another rep, a corporate employee and (soon with a new module launch ) to the company contact center to take action.   It's all automated and results are tracked all the way to new revenue in the bank.

The second element is the Distro Dashboard:  This is where we segment the reps and customers into behavioral groups and give the company insight into how to create more engaging training, promotions, communication, and other programs for both reps and customers.

Business Model

We have a SaaS model. $18K-50K+ per month for the core module. $5K-10K per month for add-ons. Customer acquisition: Reach targets via content, digital & conferences, push leads to sales.

Traction to Date

  • $145K MRR (4X growth from Q3 2018) 
  • Six of the largest global direct and social selling companies are now customers, including Plexus Worldwide, Oriflame, Kyani, Advocare, PM International, and Modere
  • Product is live in 70+ countries and 24 languages
  • Now working to expand product-market fit and are now expanding current accounts and ready to grow another 4X in 12 months
  • CAC has been recovered in first month MRR
  • ACV: ~Doubled in last 12 months

Roadmap

2019 | WhatsApp:  Integrated with WhatsApp via Twilio’s API.   Multiple customers are currently considering adding this module. WeChat, FB Messenger, and others over time.

2019 -2020 | Onboarding: Focus Alerts system evolves into an interactive bot. It will onboard new customers and reps.  As it is caring for them to be sure they receive products, are properly using them, and are taking personalized first steps into their new gig, Distro is also gathering goals, personality, etc. This new data will  allow us to:

  • Alert the company or a rep if something isn't going right.
  • Improv Focus Alerts with more specific context on how to communicate with the rep or customer based on their personality profile (ie. Jane is an extrovert, so let her talk and tell you all about what's going on with her).
  • This data also allows us to build more accurate and actionable predictions about reps and customers, creating more add-on modules and increasing performance and customer ROI.
  • Once we've established market share in direct selling, we move to other gig verticals.

2020+ |  Distro evolves into the brain that powers customer and rep interactions across a variety of channels with an empathetic chatbot that interacts on SMS, FB messenger, WhatsApp, Wechat, etc. and will even work with voice.

Testimonials

"The team at DirecTech Labs had us live and earning new revenue in 45 days. They are constantly enhancing their product based on corporate and field feedback, and more importantly, deep analytics to back up their work and claims. They’ve been one of the most responsive, innovative, and enjoyable partners I’ve worked with over 17 years in the industry." - Gareth Hooper, CIO of Plexus Worldwide

"Because of DTL we feel like we have the tool to help us stay relevant and move forward." - Sharif Sayed, Senior Dir., Operations of Advocare International

The above individuals were not compensated in exchange for their testimonials. In addition, their testimonials should not be construed as and/or considered investment advice.

Media Mentions

Team Story

Accomplished executives have been innovating throughout their careers. CEO/Co-Founder, Michel Bayan's third company serving the target market. The first one exited to Ebay/Stubhub. He led marketing, sales, and product at another company, taking them from $1M to $4M in ARR in 15 months with $18M in booked contract value. Destiny had him meet CTO/Co-Founder, Jordan Zommick on the site FounderDating.com in 2015. Jordan has built new technologies for the military, one of the first online gaming platforms and most notably headed software at Las Vegas Sands, helping them scale from $1B to $30B, introducing CRM, loyalty programs and a retention program that brought billions in new revenue. VP, Product Performance, Scott Bell has 25 years in data in direct selling (built Herbalife's first BI system). VP, Product Will Ackerman led digital at Jafra ($400M) and brought American Media into digital. VP, Customer Experience, Travis Stock developed CX with major brands like Ride Aid and Tiffany & Co.

Founders and Officers

Jordan Zommick

Co-founder, CTO

From Startups to the Fortune 500, Jordan has been leading development teams to bring new technology into various industries. Most notably, Jordan led software at Las Vegas Sands, helping them scale from $1B-$30B. There he developed their loyalty and retention systems which have driven billions in new revenue.

Jordan Zommick

Co-founder, CTO

From Startups to the Fortune 500, Jordan has been leading development teams to bring new technology into various industries. Most notably, Jordan led software at Las Vegas Sands, helping them scale from $1B-$30B. There he developed their loyalty and retention systems which have driven billions in new revenue.

Michel Bayan

CEO- Co-Founder

Michel has had a passion for behavioral sciences since childhood, learning from his father, a pioneer in Psycho-Acoustics. DirecTech Labs is his third venture-backed startup. The first company introduced mobile CRM to the direct and social selling market and later exited to Ebay/Stubhub.  At the second Michel led sales, marketing and product vision for another mobile company taking them from $1M to $4M ARR in 16 months.  Michel's experience in the direct selling and gig marketplace is vast. He was a Real Estate agent, shares a six figure Airbnb business with his life-partner, Chloe who has also been an Uber driver, Turo Renter, and runs an Etsy Store.  Michel has worked with many of the largest global direct selling enterprises over the past 9 years. He regularly speaks at global conferences and hosts CEOs and executives on the DirecTech Podcast. 

Michel Bayan

CEO- Co-Founder

Michel has had a passion for behavioral sciences since childhood, learning from his father, a pioneer in Psycho-Acoustics. DirecTech Labs is his third venture-backed startup. The first company introduced mobile CRM to the direct and social selling market and later exited to Ebay/Stubhub.  At the second Michel led sales, marketing and product vision for another mobile company taking them from $1M to $4M ARR in 16 months.  Michel's experience in the direct selling and gig marketplace is vast. He was a Real Estate agent, shares a six figure Airbnb business with his life-partner, Chloe who has also been an Uber driver, Turo Renter, and runs an Etsy Store.  Michel has worked with many of the largest global direct selling enterprises over the past 9 years. He regularly speaks at global conferences and hosts CEOs and executives on the DirecTech Podcast. 

Key Team Members

Travis Stock

VP, Customer Experience

Will Ackerman

VP, Product

Anoop Jain

VP, Development

Michael Lanni

VP, Sales

Notable Advisors & Investors

Dave Wentz

Investor, Former CEO, Usana

Michael Kane

Investor, Managing Director, Caltius Capital

Tom Mendell

Investor, Former Goldman Sachs Partner

Elliot Sainer

Investor, Behavioral Health Education, Executive & Investor

Techstars Ventures

Investor, Global Accelerator and Venture Fund

Chris Shonk

Investor, Managing Director, ATX Venture Partners

Term Sheet

A Side by Side offering refers to a deal that is raising capital under two offering types. If you plan on investing less than US $20,000.00, you will automatically invest under the Regulation CF offering type. If you invest more than US $20,000.00, you must be an accredited investor and invest under the Regulation D offering type.

Fundraising Description

  • Round type:
    Seed

  • Round size:
    US $2,000,000

  • Raised to date:
    US $649,871
    US $299,871 (under Reg CF only)

  • Minimum investment:
    US $1,000

  • Target Minimum:
    US $350,000
  • Key Terms

  • Security Type:
    Tiered Preferred Equity  (SWIFT)

  • Purchase Price:
    US $0.5992 no later than Aug 9, 2019 (15.0% discount)
    US $0.6697 no later than Aug 23, 2019 (5.0% discount)
    US $0.7049 Final

  • Pre-money valuation:
    US $11,525,000

  • Option pool:
    7.0%

  • Is participating?:
    False

  • Liquidation preference:
    1.0x
  • Additional Terms

  • Custody of Shares

    Investors who invest $50,000 or less will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information. 


  • Investment Proxy Agreement

    All non-Major Purchasers will be subject to an Investment Proxy Agreement (“IPA”). The IPA will authorize an investment Manager to act as representative for each non-Major Purchaser and take certain actions for their benefit and on their behalf. Please see a copy of the IPA included with Company's offering materials for additional details.


  • Closing conditions:
    While DirecTech Labs has set an overall target minimum of US $350,000 for the round, DirecTech Labs must raise at least US $25,000 of that amount through the Regulation CF portion of their raise before being able to conduct a close on any investments below $20,000. For further information please refer to DirecTech Labs's Form C.

  • Regulation CF cap:
    While DirecTech Labs is offering up to US $2,000,000 worth of securities in its Seed, only up to US $1,070,000 of that amount may be raised through Regulation CF.

  • Transfer restrictions:
    Securities issued through Regulation CF have a one year restriction on transfer from the date of purchase (except to certain qualified parties as specified under Section 4(a)(6) of the Securities Act of 1933), after which they become freely transferable. While securities issued through Regulation D are similarly considered "restricted securities" and investors must hold their securities indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

  • Use of Proceeds

    Prior Rounds

    The graph below illustrates the valuation cap or the pre-money valuation of DirecTech Labs's prior rounds by year.


    This chart does not represent guarantees of future valuation growth and/or declines.

    Pre-Seed

  • Round Size
    US $250,000
  • Closed Date
    Jul 17, 2017
  • Security Type
    Convertible Note
  • Valuation Cap
    US $3,000,000
  • Other

  • Round Size
    US $1,000,000
  • Closed Date
    Dec 20, 2017
  • Security Type
    Convertible Note
  • Valuation Cap
    US $6,000,000
  • Other

  • Round Size
    US $125,000
  • Closed Date
    Dec 22, 2017
  • Security Type
    Convertible Note
  • Valuation Cap
    US $7,000,000
  • Market Landscape

    Direct Selling continues to grow, most strongly in Asia and Latin America.  The US market has seen a slow down as pressures from e-commerce and new gig opportunities require companies to re-tool and find better ways to care for customers and reps.  


    What is Direct Selling and How Big is it?

    Our first target vertical is the $189 Billion direct selling market.  This is companies like Avon, Mary Kay, Stream Energy, some divisions of Unilever, Mars and LG, or Warren Buffet's company, The Pampered Chef.  These companies use independent sales reps, most of whom treat it like a "gig".  These reps promote the products and services to their online and local communities.  They host events in their homes (dinner parties in the case of The Pampered Chef), or promote products online via Facebook Live, Instagram, etc.   This is a powerful business model as it levers the most powerful form of marketing: Word of Mouth.  These companies excel in customer acquisition and can achieve meteoric growth. The challenge is that the current tech landscape does not have competitive, data-driven offerings that help them keep the reps and customers they acquire. 

    How many companies are there?

    We estimate there are about 5000 direct selling companies globally.  The US Direct Selling Association estimates there are about 1100 in the USA alone. (1/5 of the market)

    What's the Total Addressable Marketing?

    In direct selling, we estimate a TAM of about $2.5B (see deck).  As we move to the broader gig space, it gets larger with each new vertical we tackle.

    Competition:  

    There are small players offering to build algorithms or send bulk text messages on behalf of companies.  There are also big players like Salesforce, Adobe, SAP, etc vying for market share but still trying to make existing products for other channels work for direct selling.  We are in a unique position to grab market share with a specialized solution.

    Risks and Disclosures

    The Company’s sales cycle is long and may be unpredictable, which can result in variability of its financial performance. Additionally, long sales cycles may require the Company to incur high sales and marketing expenses with no assurance that a sale will result, which could adversely affect its profitability. The Company’s results of operations may fluctuate, in part, because of the resource-intensive nature of its sales efforts and the length and variability of the sales cycle. A sales cycle is the period between initial contact with a prospective customer and any sale of its direct selling sales monitoring software. The sales process involves educating customers about the Company’s direct selling sales monitoring software, participating in extended direct selling sales monitoring software evaluations and configuring the direct selling sales monitoring software to customer-specific needs. The length of the sales cycle, from initial contact with a customer to the execution of a purchase order, is generally 6 to 24 months. During the sales cycle, the Company may expend significant time and resources on sales and marketing activities or make other expenditures, all of which lower its operating margins, particularly if no sale occurs or if the sale is delayed as a result of extended qualification processes or delays. It is difficult to predict when, or even if, it will make a sale to a potential customer or if the Company can increase sales to existing customers. As a result, the Company may not recognize revenue from sales efforts for extended periods of time, or at all. The loss or delay of one or more large transactions in a quarter could impact its results of operations for that quarter and any future quarters for which revenue from that transaction is lost or delayed.

    The company is raising at a $11.525MM pre-money valuation which is above average for a company at this stage in the life cycle. Since the Company is relatively new to the untested marketplace, Investors may not be adequately compensated for the risk they are taking on when investing in the Company.

    Failure to obtain new clients or renew client contracts on favorable terms could adversely affect results of operations. The Company may face pricing pressure in obtaining and retaining its clients. Its clients may be able to seek price reductions from it when they renew a contract, when a contract is extended, or when the client’s business has significant volume changes. Their clients may also reduce services if they decide to move services in-house or if their financial situation has changed and they have determined they no longer need such services. On some occasions, pricing pressure results in lower revenue from a client than the Company had anticipated based on its previous agreement with that client. This reduction in revenue could result in an adverse effect on its business and results of operations. Further, failure to renew client contracts on favorable terms could adversely affect the Company's business. If the Company is not successful in achieving a high rate of contract renewals on favorable terms or a client ends a contract prior to the end of the term, its business and results of operations could be adversely affected.

    Our business has a concentration risk from our customers. We are a relatively new Company, and currently have very few customers. Only a few customers represent the majority of our revenues and accounts receivable. Specifically, as of December 31, 2018 and 2017, 84% and 100% of total revenues were from four and two customers, respectively. And, at December 31, 2018 and 2017, 86% and 100% of accounts receivable are due from four and two customers, respectively. Until we grow our business and expand our customer base, the loss of any customer could have significant effect on our revenues.

    The Company forecasts project 100%+ growth in 1 year. If its assumptions are wrong, and its projections regarding market penetration are too aggressive, its financial projections may overstate its viability. In addition, the forward-looking statements are only predictions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

    The amount of capital the Company is attempting to raise in this Offering is not enough to sustain the Company’s current business plan. In order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is not able to raise sufficient capital in the future, the Company will not be able to execute its business plan, its continued operations will be in jeopardy and it may be forced to cease operations and sell or otherwise transfer all or substantially all of its remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.

    The Company’s cash position is relatively weak. The Company currently has only approximately $423,000 in cash balances as of June 30, 2019. This equates to 3-6 months of runway. The Company could be harmed if it is unable to meet its cash demands, and the Company may not be able to continue operations if they are not able to raise additional funds.

    The total amount raised may include investments made outside of the SeedInvest platform. $350,000 has been raised prior to the launch of the SeedInvest campaign in private placements. The earliest investment counted towards the escrow target was made on June 20, 2019. There is no guarantee that the Company has this cash available for operations as of the date of launch. See balance sheet for current cash balance.

    The Company’s expenses will significantly increase as they seek to execute their current business model. Although the Company estimates that it has enough runway until end of the year, they will be ramping up cash burn to promote revenue growth, further develop R&D, and fund other Company operations after the raise. Doing so could require significant effort and expense or may not be feasible.

    The Company does not currently hold any significant intellectual property, outside of a trademark for “Distro,” and they may not be able to obtain such intellectual property. Their ability to obtain protection for their intellectual property is uncertain due to a number of factors, including that the Company may not have been the first to make the inventions. The Company has not conducted any formal analysis of the “prior art” in their technology, and the existence of any such prior art would bring the novelty of their technologies into question and could cause the pending patent applications to be rejected. Further, changes in U.S. and foreign intellectual property law may also impact their ability to successfully prosecute their IP applications. For example, the United States Congress and other foreign legislative bodies may amend their respective IP laws in a manner that makes obtaining IP more difficult or costly. Courts may also render decisions that alter the application of IP laws and detrimentally affect their ability to obtain such protection. Even if the Company is able to successfully register IP, this intellectual property may not provide meaningful protection or commercial advantage. Such IP may not be broad enough to prevent others from developing technologies that are similar or that achieve similar results to theirs. It is also possible that the intellectual property rights of others will bar the Company from licensing their technology and bar them or their customer licensees from exploiting any patents that issue from the pending applications. Finally, in addition to those who may claim priority, any patents that issue from the patent applications may also be challenged by competitors on the basis that they are otherwise invalid or unenforceable.

    The Company’s success is dependent on consumer adoption of direct selling sales monitoring software, a relatively unproven market. The Company may incur substantial operating costs, particularly in sales and marketing and research and development, in attempting to develop these markets. If the market for the Company’s products develops more slowly than it expects, its growth may slow or stall, and its operating results would be harmed. The market for direct selling sales monitoring software is still evolving, and the Company depends on the continued growth of this market. It is uncertain whether the trend of adoption of direct selling sales monitoring software that the Company has experienced in the past will continue in the future.

    The founder’s/management team is currently being paid salaries that are above average for a company at this stage in the life cycle. High executive compensation results in a higher overall salary burn, which in turn shortens the runway for achieving desired traction and company milestones. These higher salaries limit runway, and require the Company to raise more funds.

    The Company depends on key personnel. Our future success depends on the efforts of a small number of key personnel, including our co-founder and CEO Michel Bayan, our co-founder and CTO and Jordan Zommick and our engineering team. Our engineering team is responsible for development and maintenance of our software. There can be no assurance that we will be successful in attracting and retaining the personnel we require to operate, improve and market our software.

    The Company does not have an employment contract in place with their key employees. Employment agreements typically provide protections to the Company in the event of the employee’s departure, specifically addressing who is entitled to any intellectual property created or developed by those employees in the course of their employment and covering topics such as non-competition and non-solicitation. As a result, if a key employee were to leave DirecTech, the Company might not have any ability to prevent his direct competition, or have any legal right to intellectual property created during his employment. There is no guarantee that an employment agreement will be entered into.

    The Company's existing investors have not waived their pre-emptive rights and may plan to exercise those rights. The pre-emptive right entitles those investors to participate in this securities issuance on a pro rata basis. If those investors choose to exercise their pre-emptive right, it could dilute shareholders in this round. This dilution could reduce the economic value of the investment, the relative ownership resulting from the investment, or both.

    The Company has not filed a Form D for its prior offerings. The SEC rules require a Form D to be filed by companies within 15 days after the first sale of securities in the offering relying on Regulation D. Failing to register with the SEC or get an exemption may lead to fines, the right of investors to get their investments back, and even criminal charges. There is a risk that a late penalty could apply.

    The Company is overdue on its 2018 tax filing, which could subject it to penalties, fines, or interest changes, and which could indicate a failure to maintain adequate financial controls and safeguards. In particular, the Internal Revenue Service (IRS) could impose the Company with costly penalties and interest charges if the Company has filed its tax return late, or has not furnished certain information by the due date. In addition, even if though the Company has confirmed that it has filed an extension, if it underestimated its taxes, the IRS could penalize it. Potential tax consequences could adversely affect the Company’s results of operations or financial condition.

    The company has a large number of convertible notes that may convert in this or future rounds. Because of this, there is a risk that investors could be subject to additional dilution, that the Company’s operations could be restricted, or that the company or investors may relinquish rights on unfavorable terms. The Company may seek additional capital through a variety of means, including through public or private equity, debt financings or other sources, including up-front payments and milestone payments from strategic collaborations. To the extent that the Company raises additional capital through the sale of equity or convertible debt or equity securities, an investor’s ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect shareholder rights. Such financing may result in dilution to stockholders, imposition of debt covenants, increased fixed payment obligations, or other restrictions that may affect the Company’s business.

    The Company has received $250,000 of debt financing to date for which the Company issued Flow Capital US Corp (“Flow Capital”) a warrant to purchase 354,661 shares of Common Stock and entered into a security agreement. The Company could draw down up to an additional $1,250,000 under a royalty purchase agreement (subject to additional warrant coverage) and the security agreement will terminate and Flow Capital’s security interest in the Company’s assets will be released upon the conversion of the outstanding convertible notes, which will occur if the Company raises at least $700,000 in the Combined Offering. If the security agreement is not terminated, Flow Capital will have a senior right to assets of the Company, such as in the bankruptcy or liquidation.

    The reviewing CPA has included a “going concern” note in the reviewed financials. The Company has incurred losses from inception of approximately $1,117,465 which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the issuance of debt or the sale of stock, its ability to commence profitable sales of its flagship services, and its ability to generate positive operational cash flow. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.

    The Company has engaged in related party transactions. During the years ended December 31, 2018 and 2017, shareholders of the Company advanced funds to be used in operations. These advances are non‐interest bearing. At December 31, 2018 and 2017, the amount of advances outstanding is $7,105 and $14,858, respectively, and are recorded under ‘Accounts payable – related parties’ on the consolidated balance sheets.

    The Company has not prepared any audited financial statements. Therefore, you have no audited financial information regarding the Company’s capitalization or assets or liabilities on which to make your investment decision. If you feel the information provided is insufficient, you should not invest in the Company.

    General Risks and Disclosures

    Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.

    Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a "liquidation event" occurs. A "liquidation event" is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.

    The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.

    Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.

    You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events — through continuing disclosure that you can use to evaluate the status of your investment.

    Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.

    Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.

    Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.

    Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors") Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC ("SI Advisors"). SI Advisors is an exempt investment advisor that acts as the General Partner of SI Selections Fund I, L.P. ("SI Selections Fund"). SI Selections Fund is an early stage venture capital fund owned by third-party investors. From time to time, SI Selections Fund may invest in offerings made available on the SeedInvest platform, including this offering. Investments made by SI Selections Fund may be counted towards the total funds raised necessary to reach the minimum funding target as disclosed in the applicable offering materials.

    DirecTech Labs's Form C

    The Form C is a document the company must file with the Securities and Exchange Commission, which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.

    Download DirecTech Labs's  Form C

    Frequently Asked Questions

    About Side by Side Offerings
    What is Side by Side?

    A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.


    What is a Form C?

    The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.

    Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.


    What is Rule 506(c) under Regulation D?

    Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.


    What is Reg CF?

    Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $1 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.


    Making an Investment in DirecTech Labs
    How does investing work?

    When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by DirecTech Labs. Once DirecTech Labs accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to DirecTech Labs in exchange for your securities. At that point, you will be a proud owner in DirecTech Labs.


    What will I need to complete my investment?

    To make an investment, you will need the following information readily available:

    1. Personal information such as your current address and phone number
    2. Employment and employer information
    3. Net worth and income information
    4. Social Security Number or passport
    5. ABA bank routing number and checking account number (typically found on a personal check or bank statement)

    If you are investing under Rule 506(c) of Regulation D, your status as an Accredited Investor will also need to be verified and you will be asked to provide documentation supporting your income, net worth, revenue, or net assets or a letter from a qualified advisor such as a Registered Investment Advisor, Registered Broker Dealer, Lawyer, or CPA.


    How much can I invest?

    An investor is limited in the amount that he or she may invest in a Reg CF offering during any 12-month period:

    • If either the annual income or the net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of his or her annual income or net worth.
    • If the annual income and net worth of the investor are both greater than $100,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to a maximum of $100,000.

    Separately, DirecTech Labs has set a minimum investment amount of US $1,000.

    Accredited investors investing $20,000 or over do not have investment limits.


    After My Investment
    What is my ongoing relationship with the Issuer?

    You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.

    In certain circumstances a company may terminate its ongoing reporting requirement if:

    1. The company becomes a fully-reporting registrant with the SEC
    2. The company has filed at least one annual report, but has no more than 300 shareholders of record
    3. The company has filed at least three annual reports, and has no more than $10 million in assets
    4. The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
    5. The company ceases to do business

    However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.


    How can I sell my securities in the future?

    Currently there is no market or liquidity for these securities. Right now DirecTech Labs does not plan to list these securities on a national exchange or another secondary market. At some point DirecTech Labs may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when DirecTech Labs either lists their securities on an exchange, is acquired, or goes bankrupt.


    How do I keep track of this investment?

    You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.


    Other General Questions
    What is this page about?

    This is DirecTech Labs's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the DirecTech Labs's Form C. The Form C includes important details about DirecTech Labs's fundraise that you should review before investing.


    How can I (or the company) cancel my investment under Regulation CF?

    For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours before a closing occurs or an earlier date set by the company. You will be sent a reminder notification approximately five days before the closing or set date giving you an opportunity to cancel your investment if you had not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your account's portfolio page by clicking your profile icon in the top right corner.


    What if I change my mind about investing?

    If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your account's portfolio page by clicking your profile icon in the top right corner.