- Sold 50+ units to customers in California, Utah and New Mexico (from Q2 2019 - May 2021) equating to over $5 million in sales (unaudited)
- Potential $250+ Billion market with positive regulatory tailwinds, in California alone (Based on UC Berkeley Center for Community Innovation's ADUs in CA 2020 report)
- Chairman & CEO was the former CEO of Standard Pacific Homes and Executive Chairman of CalAtlantic Homes, the fourth largest U.S. homebuilders
- 1,325% YoY Revenue Growth from FY 2019 to FY 2020 (unaudited)
- Total Amount Raised: US $892,891
- Total Round Size: US $3,200,000
- Seed :
- Minimum Investment: US $1,000 per investor
- : Crowd Note
- Side by Side Offering
- : US $12,500,000 Final
- Valuation Cap Schedule: See Full Schedule
Cofounders Colin Jube and Dallin Jolley recognized that despite new zoning changes which allow accessory dwelling units (ADUs), ADUs were inaccessible to homeowners due to difficulties navigating permitting and managing construction. Modal provides a turn-key service to take the complexity out of construction to make ADUs accessible to everyday homeowners.
Modal is helping to address the housing crisis by adding sustainable and affordable housing units to existing neighborhoods. Modal enables individual homeowners to increase their wealth by generating passive income and maximizing the value of their property. In addition to backyard homes, Modal offers home offices to address the growing needs of our customers who are increasingly working from home.
Modal units are built modular, meaning they’re constructed off-site in a controlled environment, so customers don’t have to deal with the headaches of months-long, on-site construction. Modular construction enables high-quality construction within a scalable business model. Coupled with our turnkey service, Modal makes ADUs accessible to ordinary homeowners.
- Over $1mm Q1 2021 revenue and profitability projected in Q4 2021 (See data room for detail regarding the assumptions underlying these assumptions)
- With over 50 units sold and an established, repeatable process, we believe Modal is at inflection point and is ready to scale
- Growing market supported by consumer demand and positive regulatory tailwinds
Network of manufacturing partners, contractors and consultants to enable expansion to new markets with limited fixed costs
A Side by Side offering refers to a deal that is raising capital under two offering types. Investments made through the SeedInvest platform are offered via Regulation CF and subject to investment limitations further described in the Form C and/or subscription documents. Investments made outside of the SeedInvest platform are offered via Regulation D and requires one to be a verified accredited investor in order to be eligible to invest.
US $542,891 (under Reg CF only)
US $12,500,000 Final
Investors who invest less than $50,000 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.
Investors that contribute between $2,500 and $4,999 are eligible for ADU Discounts ($750 off unit plus $500 in free upgrades) and/or $500 off the Modal Pod (Home Office)
Investors that contribute between $5,000 and $9,999 are eligible for ADU Discounts ($1,500 off unit plus $1,000 in free upgrades) and/or $750 off the Modal Pod (Home Office)
Investors that contribute between $10,000 and $49,999 are eligible for ADU Discounts ($3,000 off unit plus $2,000 in free upgrades) and/or $1,000 off the Modal Pod (Home Office)
Investors that contribute over $50,000 are eligible for ADU Discounts ($7,500 off unit plus $10,000 in free upgrades) and/or $5,000 off the Modal Pod (Home Office)
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
Please note that due to share price calculations, some final investment amounts may be rounded down to the nearest whole share - these will still qualify for the designated perk tier. Additionally, investors must complete the online process and receive an initial email confirmation by the deadline stated above in order to be eligible for perks.
The market size for ADUs has grown significantly over the past 3-5 years as state and local zoning laws removed barriers for ADUs to address the housing affordability crisis by increasing housing supply.
The most notable legislation came in 2019, through California State Assembly Bills 881, 68 and 1069, which mandates ADUs at the state level and supersedes all municipal zoning regulations. This legislation creates ADUs eligibility for all 8 million single family homes in California. Updates are continuing to be made to eliminate restrictions and barriers.
In addition to California, legislation at the municipal level is expanding significantly as the following major municipalities currently allow ADUs: Seattle, Portland, Phoenix, Denver, Orlando, Honolulu, Minneapolis, Charlotte, Philadelphia, Pittsburg, Austin, Houston, San Antonio and Salt Lake. Our team expects continued market growth for the foreseeable future.
Modal currently serves Southern California, the Bay Area, Greater Salt Lake and New Mexico – we have sold to multiple customers in each of these geographies.
Based on our analysis, the aggregate obtainable market size in California equates to ~$75 billion and will exceed $100 billion by 2025. Even capturing a small portion of the California ADU market would provide a significant business opportunity.
The development and commercialization of the Company’s products and services are highly competitive. It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The Modular ADU market is an emerging industry where new competitors are entering the market frequently. Many of the Company’s competitors have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.
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 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 projects aggressive growth. If these assumptions are wrong and the projections regarding market penetration are too aggressive, then the financial forecast may overstate the Company's overall 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 Company has not prepared any audited financial statements. Therefore, investors have no audited financial information regarding the Company’s capitalization or assets or liabilities on which to make investment decisions. If investors feel the information provided is insufficient, then they should not invest in the Company.
The outbreak of the novel coronavirus, COVID-19, has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus pandemic and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the novel coronavirus. Nevertheless, the novel coronavirus presents material uncertainty and risk with respect to the Funds, their performance, and their financial results.
Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live could reduce the demand for homes and, as a result, could adversely affect our business, results of operations, and financial condition. Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our homes live have had and may in the future have a negative impact on our business. Adverse changes in employment levels, job growth, consumer confidence, interest rates, perceptions regarding the strength of the housing market, and population growth, or an oversupply of homes for sale may reduce demand or depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes. This, in turn, could adversely affect our results of operations and financial condition.
Recent trends away from home ownership in favor of home rentals and co-living arrangements could adversely affect our results. Over the past 10 years we have dedicated our resources and grown our business primarily through relationships with individual homeowners and more recently through a dedicated outreach to developers and builders. A significant part of our strategy is to actively grow sales to builders and developers of high end new homes and we intend to make significant expenditures in the near term to further this strategy. To the extent that trends towards rentals and co-living increase significantly, we would not see returns on our investment and could see increase losses. It would take significant time and resources to pivot our business model to attract builder of rental and co-living properties.
Our lack of geographic diversity subjects us to increased volatility and higher risks of events affecting those markets. To date, our operations are only in California, Utah and New Mexico. These areas have historically experienced severe wildfires, mudslides and earthquakes, and climate change may increase the frequency of natural disasters in these areas. In addition, their economies are founded on more narrowly defined industry segments compared to the country as a whole, and these industries could experience downturns affecting the health of the economy in the state or in the metro areas of Los Angeles or San Francisco. Property tax rates, which have a significant effect on housing demand, are determined by local municipalities and may increase in the future, whether to address increasing funding needs, to compensate for a shortfall in federal of state funding or otherwise. Any such disasters or other negative events affecting our target markets would adversely affect the demand for, and our ability to supply, our products and services to a much greater extent than other companies with a national market presence.
Housing development is highly sensitive to the availability of financing and interest rates. A general reduction in construction financing from lenders or increases in interest rates could cause a material decrease in our sales. Furthermore, we benefit from our customers having access to the same construction financing terms as traditional site-built homes, in contrast to traditional modular or pre-fabricated homes. If our homes were instead treated as modular homes by lenders or if lenders subjected our homes to stricter lending standards or increased requirements, it would have an adverse impact on our sales and our ability to grow our business.
The reviewing CPA has included a “going concern” note in the reviewed financials. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $4,337,351, an operating cash flow loss of $2,154,911 and liquid assets in cash of $342,650, which less than a year worth of cash reserves as of December 31, 2020. The Company’s situation raises a substantial doubt on whether the entity can continue as a going concern in the next twelve months.
The Company has entered into Promissory Notes and Loans. The summary of the Company’s loans, notes, and the terms is as follows:
- Capital Thirteen LLC Revolving Loan: Principal Amount of $3,000,000, Borrowing period of 6/10/2020, Maturity Date of 6/10/2025, Interest Rate of 8%
- Capital Thirteen LLC Promissory Note: Principal Amount of $1,000,000, Borrowing period of 6/19/2019, Maturity Date of 6/10/2020, Interest Rate of 12%
- Modal Investor: Principal Amount of $1,000,000, Borrowing period of Fiscal Year 2019, Repaid, Interest Rate of 12%
- PPP Loan: Principal Amount of $148,758, Borrowing period of 4/20/2020, Maturity Date of 4/20/2022, Interest Rate of 1%
The Company has engaged in Related Party Transactions. In April 2021, Modal Services (the related entity) provided a $50k loan to Modal Living for working capital purposes. This loan was provided interest free as a bridge until the capital raise is complete.
In Q1 2020, Modal sold an ADU to co-founder Dallin Jolley, who was one of the first 6 customers. The sales price was discounted because Dallin agreed to handle much of the project logistics and there was no sale commission paid. Modal was paid in full in Q2 2020.
One of the owners, Capital Thirteen LLC, approved revolving loan in the amount of $3,000,000 to the company. The loan bears 8% per annum has maturity date as of October 6, 2022. As of December 31, 2020, the outstanding balance of the loan was $2,673,838.
One of the owners, Capital Thirteen LLC, entered into Promissory Note agreement with the company in the amount of $1,000,000. The loan bears 12% and matured on June 19, 2020. As of December 31, 2020, the outstanding balance of the loan was $489,000.
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 theseshares 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 \u2014 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.
Frequently Asked Questions
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.
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.
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.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $5 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.
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 Modal Living. Once Modal Living accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Modal Living in exchange for your securities. At that point, you will be a proud owner in Modal Living.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Your accredited investor status
- Social Security Number or passport
- ABA bank routing number and checking account number (typically found on a personal check or bank statement) or debit card information, unless paying via a Wire transfer.
Non-accredited investors are limited in the amount that he or she may invest in a Reg CF offering during any rolling 12-month period:
- If either the annual income or the net worth of the investor is less than $107,000, the investor is limited to the greater of $2,200 or 5% of the greater of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $107,000, the investor is limited to 10% of the greater of his or her annual income or net worth, to a maximum of $107,000.
Separately, Modal Living has set a minimum investment amount of US $1,000.
Accredited investors do not have any investment limits.
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:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- 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.
Currently there is no market or liquidity for these securities. Right now Modal Living does not plan to list these securities on a national exchange or another secondary market. At some point Modal Living 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 Modal Living either lists their securities on an exchange, is acquired, or goes bankrupt.
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.
This is Modal Living'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 Modal Living's Form C. The Form C includes important details about Modal Living's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours prior to the offering end date or an earlier date set by the company. You will be sent a notification at least five business days prior to a closing that is set to occur earlier than the original stated end date giving you an opportunity to cancel your investment if you have 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.
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.