|1||Launched a paid pilot with Wefunder.|
|2||$15K grant from Y Combinator and $20K investment from XX Team.|
|3||Up to 50% more affordable than the competition.|
|4||Automates that first 90% of work so that CPAs can complete their services much faster.|
|5||Niche: Financial statement reviews for equity crowdfunding.|
|6||Bigger picture: The $60B assurance services market.|
|7||2 technical founding members with backgrounds building accounting products.|
As every investor and founder knows, it’s a huge challenge to get consistent and reliable financial information fast. Founders would love to work with CPAs and Bookkeepers to do this, but there is no convenient and streamlined process to help. This is precisely where Soraban comes in! Enoch and his team have developed a software platform that not only allows accountants to manage their books, but also empowers them to free up their time to provide more value-added services. Through their analytics and templates, CPAs can easily automate financial tasks, so insightful and regular information is always given on time. With more than $60B spent on the assurance market last year, Soraban is poised for a considerable growth opportunity with startups and, ultimately, the broader SMB market!
A single business’s financial data is incredibly immense, complex, and often very diverse. In our own experience working with accountants, we realized 90% of their work, whether it’s tax preparation, CFO services, or assurance services (e.g. audit), is just understanding and standardizing the business’s financial data. Only 10% of their efforts actually involves analyzing the data and delivering the service. This and many other reasons make accounting services like financial Statement Reviews and Audits expensive and slow.
A financial statement review, or simply review, is an assurance service that is like a mini-audit and is well known in the accounting industry to be full of painful and manual work, which are currently done by expensive CPAs. Our tool aims to automate that menial work and provide an effective way of communication, providing a better review service at a competitive price.
Our product extracts data from company documents, Quickbooks, Stripe, and various financial institutions and uses templates to quickly draft financial statements along with a dashboard with various information about the company. Once that's done, CPA makes the final checks and adjustments, and adds the footnotes based on the information we provide them.
Financial statement reviews are required for many equity crowdfunding offerings and equity crowdfunding has been growing fast. Since its introduction in 2016, it saw an over 600% increase in total investment raised and gave rise to many new funding platforms.
The SEC recently proposed to raise the ceiling on how much companies can raise through equity crowdfunding per year from $1,070,000 to $5,000,000, making this market much more attractive for startups and small businesses looking to raise capital. A comparable amendment to Regulation A, a similar structure to equity crowdfunding, has increased its number of filings by 10 times and the amount sought by 70 times in 4 years!
Meanwhile, traditional seed deals have been decreasing over the years, but alongside COVID19, seed deals saw a decrease of 43% from 2019. This will push companies to look for alternative funding such as equity crowdfunding.
Recently, we completed our paid pilot with Wefunder, the Internet’s largest equity crowdfunding platform that you’re on right now. We generated $3,000 in revenue from this massively successful paid pilot. With the existing services we provide for businesses, that's about $7,000 in revenue just this month.
In the short-term, we want to make our product as efficient as possible while doing several reviews per month for Wefunder. Next, we plan to scale up gradually to over 40 reviews a month.
In the long-term, we plan to branch out into other assurance services like audit, to make them efficient and affordable. Also, because our product focuses on automatic data extraction and organization, we plan to sell our product to accounting firms as well.
Prior to this product, Enoch and Jaemin built a bookkeeping tool that automated the documentation and reporting process. The tool helped over 30 businesses and generated $2,000 in monthly revenue. Enoch also has extensive first-hand accounting knowledge – he has assisted in preparing over 50 tax returns, helping businesses obtain PPP loans, as well as EIDL loans. Our senior advisor Jun spent over 20 years working in various accounting fields and have worked at two of the biggest accounting firms.
Our ultimate mission is to make business accounting services faster and more affordable by empowering CPAs to focus on higher-value, analytical work rather than manual data entry. Invest as little as $100 today.
Soraban has financial statements ending December 31 2019. Our cash in hand is $41,069.22, as of July 2020. Over the three months prior, revenues averaged $1,811.80/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $3,152.53/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We make financial due diligence fast & affordable.
Next 5 years, we want to become the Intuit for financial reviews & audits. By starting in a rapidly growing niche of companies that are looking to raise money through equity crowdfunding, we believe it's a great way to wedge into this massive, and lucrative market.
We want to help accountants to do their work that is more value-focused rather than manual, error-prone work so that their services are more affordable for businesses.
Soraban, Inc. was incorporated in the State of Delaware in February 2019.
Since then, we have:
Historical Results of Operations
Our company was organized in February 2019 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
To-date, the company has been financed with $20,000 in SAFEs.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 12 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 18 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Soraban, Inc. cash in hand is $41,069.22, as of July 2020. Over the last three months, revenues have averaged $1,811.80/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $3,152.53/month, for an average burn rate of $1,340.73 per month. Our intent is to be profitable in 9 months.
Since the date of our financials, we have received a $15,000 Grant (non-dilutive) from Y Combinator, and an $20,000 investment from XX. We expect to raise some funding through equity crowdfunding. Received $4,000 from EIDL as well as $1500 loan from SBA.
We expect the revenue to be in between $10,000/month and $15,000/month in the next 3-6 months as we scale up our business however it's not guaranteed. As for expenses we expect it to be between $12,000/month and $ 18,000/month in the next 3-6 months as we hire one more full-time employee.
Capital in Enoch's personal bank account, investment from angel investors, and business loans can be used for additional capital if needed.
Breaches of the Company's platform and systems may materially affect client adoption and subject the Company to significant negative reputational, legal, or operational consequences. Our user privacy has never been compromised to date due to a focus on encryption and security, but 100% security cannot be guaranteed. Cyber-crimes are becoming increasingly common and aggressive which brings a parallel increase in risk.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits, and have no voting rights or ability to direct the Company or its actions.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
The success of the Company will depend on its ability to compete for and retain additional qualified key personnel to enhance the growth. The Company's business would be adversely affected if it were unable to recruit qualified personnel when necessary or if it were to lose the services of certain key personnel and it was unable to locate suitable replacements in a timely manner. Finding and hiring such replacements, if any, could be costly and might require the Company to grant significant equity awards or incentive compensation, which could have a material adverse effect on the Company’s financial results and on your investment. The loss, through untimely death, unwillingness to continue or otherwise, of any such persons could have a materially adverse effect on the Company and its business.
In terms of revenue, it could be that our financial projections are not accurate or that it takes longer (if at all) to meet projections. If this is the case, our investors may experience a lengthy period on their rate of return or lack of return that is well below that of other investment opportunities.
Although a team is experienced in the accounting and review process, the founder has not been involved in the audit. There is also limited proof of the margins of the business model.
In order to respond to market changes, the Company’s management may from time to time make changes to the business of the Company. There are certain risks associated with such changes. As a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service or marketing decisions or business combinations that could have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company relies on Amazon Web Services for hosting and other third-party technology vendors such as Stripe, Braintree, Google, Plaid, Quickbooks, and Paypal for integrations and financial services. Any interruption in the availability of these services could have a material negative impact on our ability to deliver service to users, as well as the profitability of these operations. Interruptions could occur due to both Internet outages as well as policy changes or terms violations according to these third parties. The prospect of increased regulation and/or Internet censorship may create access challenges to our users and service offerings. Our long-term vision is to extract all third-party hosting requirements in order to become independently sustainable.
We intend to add new services on our websites, such as bookkeeping and tax return preparation. These or other new services could result in new costs of doing business. There could be new expenses associated with tackling new and different competition, meeting new infrastructure requirements, and solving new legal and regulatory challenges. We can’t guarantee revenues earned from providing new services will cover potential expenses.
Temporary Rule 201(z)(2) provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance of Temporary Rule 201(z)(2) and, as a result, the following must be disclosed: (i) the financial information that has been omitted is not otherwise available and will be provided by an amendment to the offering materials; (ii) the investor should review the complete set of offering materials, including previously omitted financial information, prior to making an investment decision; and (iii) no investment commitments will be accepted until after such financial information has been provided.
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