|1||Ridesharing Companies & Drivers Are hungry for incremental sources of income. $200B+ Market Size.|
|2||Partnerships with Disney & VIA Ridesharing|
|3||Time Magazine named “Ad Dollars for Uber Drivers” one of the best inventions of 2019|
|4||Over 20,000 rideshare have applied to our waiting list to work with us.|
|5||Startups.com Named VUGO as one of the top 10 startups to watch in 2018|
|6||We won the nation’s largest statewide startup competition for high-tech startups in 2016, at the U of M|
|7||We won the 2016 Eureka Innovation Award for Advertising and Marketing|
|8||The State of Florida has legalized rideshare advertising statewide as of 06/23/2020|
Rideshare is a global trend not going away that will be amplified by autonomous vehicles in the future. In order to drive down costs, and support increasing wages for rideshare drivers and fleet operators. I believe Vugo's business model, contracts, and content can be the game changer to the fleet operator business model and will allow for higher wages to drivers. The multi-pronged revenue stream between in vehicle, exterior advertising is a huge incremental revenue stream that goes straight to the bottom line for fleet operators. Vugo's founders are the most experienced operators in the rideshare advertising industry, are tenacious having fought through several outdated & obsolete regulatory obstacles and a pandemic to get Vugo to where it is, now poised to capitalize on an expected massive market opportunity .
Vugo’s journey started in 2013 when James, one of the founder's moved from Minneapolis to Chicago for a new job at a digital marketing agency. Uber had just launched its now infamous ridesharing platform in Chicago and James saw its potential and signed up to moonlight as one of their earliest drivers.
James quickly recognized that his agency clients would love to be able to contextually target his rideshare passengers en route to their destination. Considering a majority of trips end at a purchasing decision of some sort and many passengers use their time in the car to shop online. As a part-time Uber driver, he saw first hand how Uber continuously cut the earnings of its drivers to compete on price. His realization opened up an unprecedented opportunity to scale targeted advertising in the digital out-of-home advertising space while helping drivers earn more money for work they are already doing.
For rideshare drivers, fleets, and rideshare companies, this means the potential to add incremental income to each trip. For passengers, it means new entertainment and the discovery of new products as part of the emerging passenger entertainment experience that will continue to develop into a passenger infotainment software solution with the adoption of autonomous vehicles.
In the short term, we are helping drivers and ridesharing companies add incremental income to their bottom line.
According to Intel and Strategy Analytics, the "passenger economy" will be worth $200 billion dollars by 2035, a fraction of the $7 Trillion dollars Passenger Economy predicted by 2050. Intel shared 3 pillars to support how the passenger economy will monetize and grow to be worth over two hundred billion dollars by 2035 and VUGO has added Data Monetization to create our 4 pillars of alternative vehicle monetization
As people continue to become passengers more than ever before, we are also answering the question of "What will people do in cars when they are no longer driving?" We believe that people will consume content and would like to do so in an optimal environment for entertainment a strong differentiator for many on-demand transportation services.
Many have described the future of cars as an entertainment space; allowing people to video chat, play video games, spend quality time with their kids or watch the latest episode of The Voice. Our goal is to make the shared rideshare car an extension of a passenger's living room. A place of comfort, entertainment, family memories, and business.
The Vugo Platform is made up of four key components: in-car tablets, digital rooftop displays, exterior wraps, and our backend CMS platform.
These screens are powered by our proprietary TripIntent® technology, which leverages data about trips to build contextual experiences for passengers and optimize advertiser value.
Similar to how Google allows advertisers to bid against specific search terms, Vugo allows advertisers to target types of trips. For example, rideshare heading to a yoga studio would probably have a better experience with health and wellness media played to the passengers.
While the stores and restaurants nearby the yoga studio are relevant from a geolocation perspective – they lack context. Context is everything and builds more engaging experiences for passengers and yields better results for advertisers.
With that said, the digital rooftop display is viewed by a broader audience and not the passenger. For everyone around the rideshare vehicle, showing ads based on geolocation is extremely relevant.
Digital Rooftop Displays
Vugo’s digital rooftop displays are mounted to the top of rideshare vehicles and show targeted geolocation-based advertisements, public service announcements, and information on the vehicles. We can also utilize these screens for data collection in some instances.
Mobile In-Car Tablet Screens
Vugo’s in-car tablets are mounted on the rear headrest in the vehicle for passengers to interact with. This includes watching media, playing interactive games, and engaging with advertisements.
This isn’t the same type of setup you see in Taxicabs that show the same content on a "loop" or "reel" but uses our TripIntent technology to build contextual experiences unique to each trip.
Of course, we still give the passenger control of the experience, so they can pick and choose the content they want to watch. Vugo partners with some of the largest media companies in the world, like Disney, to provide a rich set of content for the platform.
Product Road Map
We built the Vugo Platform to become the marketplace of the car, as passenger infotainment and media which can then be consumed in the car similar to how people travel on airlines like Delta today. Airline passengers don’t typically think about the plane's manufacturer (“Is this a Boeing or an Airbus?”) but instead, they make buying decisions based on the passenger experience, thus correlating the corresponding services and value-added by the operator (and instead think “This is Delta, United, or American”).
Those service differentiators like in-flight entertainment, are paramount to the future passenger experiences that Vugo is already building. This includes entertainment content from professional content creators like Disney, in-car purchases, and mobile commerce - being able to buy services related to your trip, as an example ordering movie tickets and popcorn ahead of time to pick up at the movie theater you are about to go see so you don't have to wait in line. It includes continuously creating a better passenger experience with media content from top creators in addition to creating a marketplace to enable third party applications in the car without undue hurdles like what is often experienced in the Apple Store today by app developers.
Allowing new content and entertainment to be introduced to consumers on a common platform that passengers already engage with and trust. These factors, and more, play into the future of Vugo and the passenger experience.
Our first three areas of future product expansion will be payments for in-car commerce, the Vugo app marketplace and developer tools, and data monetization.
Vugo has a huge international opportunity outside the United States through licensing the platform in a Software-as-a-Service subscription model. We have already begun testing this process in Mexico with a local partner.
We expect additional opportunities to emerge in Europe, Asia, Canada, and South America and have ongoing conversations to begin our next licensing deal in Germany. Ridesharing is a global phenomenon and can help add additional income to drivers worldwide thus we believe rideshare advertising belongs everywhere.
In 2013 it was illegal to advertise on Uber and Lyft vehicles in the City of Chicago - unless you were one of a small handful of super-wealthy taxi fleet owners. We felt that was silly so we decided to do something about it. We tried talking to the city, we tried talking to the mayor's office, and we even sought out help from the startup community in Chicago. Despite the startup communities' best efforts, we were not able to make progress. It seemed as though nothing would work. That left us with only one choice, to defend our 1st Amendment rights and challenge Chicago's unconstitutional municipal ordinance in Federal Court. This got us a LOT of press, and we ultimately prevailed when the City of Chicago decided to voluntarily write new municipal rules that created a path towards operating in the city without government censorship. This allowed the case to be dismissed and for Vugo to get an early win without going to trial.
We also challenged a ban on rideshare advertising in New York City, which was similar to the Chicago ban, and we won in Federal District Court in February of 2019. The first cars driven by over 7,000 rideshare drivers who partnered with us hit the streets of NYC after having won our lawsuit against NYC.
NYC ultimately appealed to the appellate court and we continued to challenge and even brought our case to the Supreme Court of the United States, who declined to see the case. This resulted in our focusing our operations in California with the backing of The Florida Funders in 2019.
After "winning" in Chicago by getting Chicago's City Hall to amend the ordinance, we decided to form the Rideshare Advertising Association to further the interests of the industry and defend the 1st amendment from government censorship nationwide. Over the summer of 2019, Governor Ron DeSantis for Florida signed House Bill 1029 into law legalizing rideshare advertising statewide.
Shortly afterward we announced that we would relocate from Minnesota to Florida in 2020 to focus on this new market opportunity. We also received a leading investment from the most active VC fund in Florida, the Florida Funders. Florida Funders was named the top venture capital firm in the State of Florida, according to a CB Insights report in both 2019 and 2020.
We are raising via Wefunder to assist with initial CAPEX and operations expenditures before we deploy new markets in Florida and Texas. We are working on replicating the success we have seen in Florida in NYC via the Rideshare Advertising Association. While most markets are not regulated, we are initially focusing on markets that have cleared a pathway for growth or where we have been able to partner with municipalities like Arlington, TX.
We initially selected California to launch our market there and we were making great traction, we had signed a deal with Disney for content and an ad sales partnership which included key markets in California. However, there was one big challenge coming around the bend. When COVID-19 started to make headlines advertising budgets dried up, and both drivers and passengers stopped using ridesharing services while the majority of Californians sheltered-in-place. During this time we decided it was best to temporarily suspend services and start shifting our team and equipment to Florida which had announced that it would be opening up earlier than other states. At the time we were also concerned with how AB5 could affect our business and viewed this as a blessing in disguise. However, as of the election, proposition 22 passed which excludes gig workers, like rideshare drivers from AB5's regulations. We have decided to continue to focus on building the Florida market due to the recent statewide legislation protecting our interests while waiting for further guidance post-proposition 22 to re-launch in California.
We got a lot of press for winning our lawsuit in the 2nd Circuit's federal court in NYC, and Rob, our CEO was even interviewed on CNBC's Squawk Alley to discuss our long term goal of making ridesharing free for some trips, similar to how you can get free validated parking at many retail locations.
This can only happen once the cost per mile per passenger reaches marketplace liquidity with the amount of revenue we can generate from alternative sources like advertising, content distribution, and data. Once self-driving car companies are able to reduce the average cost per mile/passenger we could subsidize this cost with ads from businesses as many destinations include a point of sale. Now, it makes a lot more sense why Google/Waymo is leading the self-driving car industry, doesn't it?
It has been a long journey since starting VUGO back in 2015, the video below was our explainer video, it still rings true today. If our team can be defined by a single word it would be unstoppable. From taking on cities like Chicago and New York to defending the 1st amendment or bouncing back from a global pandemic you can count on us.
The Vugo team simply doesn't know how to give up or surrender in our unflappable mission to improve the passenger entertainment experience as people become passengers more than ever before. Join us on our journey, we would be proud to have you become part of the team as an investor.
VUGO has financial statements ending December 31 2019. Our cash in hand is $8,000, as of November 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $2,000/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.
VUGO uses software and digital screens to place advertising and entertainment content on top of and inside rideshare vehicles dispatched by rideshare companies like Uber and Lyft.
We want to improve the world through democratizing on-demand shared transportation helping people have more affordable have access to affordable transportation options by adding incremental income to rideshare companies and drivers pockets. In 5 years, we hope to create enough value from advertising revenue and data to help make ridesharing free or nearly free for most short trips increasing access to transportation for millions of Americans once self-driving cars reach the market. Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Vugo, Inc was incorporated in the State of Delaware in May 2015.
Since then, we have:
Ridesharing Companies & Drivers Are hungry for incremental sources of income. $200B+ Market Size.
Time Magazine named “Ad Dollars for Uber Drivers” one of the best inventions of 2019 (We invented it)
Commercial Agreements with Disney & VIA Ridesharing.
Over 20,000 rideshare have applied to our waiting list to work with us.
Startups.com Named VUGO as one of the top 10 startups to watch in 2018
We won the nation’s largest statewide startup competition for high-tech startups in 2016, at the U of M
We won the 2016 Eureka Innovation Award for Advertising and Marketing
The State of Florida has legalized rideshare advertising statewide as of 06/23/2020
Historical Results of Operations
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $200,000 in equity, $525,000 in convertibles, and $620,000 in SAFEs.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 months before we need to raise further capital. In tandem with the raise or shortly after, we are anticipating taking out a $25,000 SBA loan.
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 3 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
Vugo, Inc cash in hand is $7,390, as of November 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $2,778/month, for an average burn rate of $2,778 per month. Our intent is to be profitable in 6 months. This assumption relies more on the overall economic climate than our fund requirements as we have available inventory to sell in our active markets, but have been unable to sell inventory due to COVID.
Vugo paused operations in March/April of 2020 due to COVID as Out of Home Advertising doesn’t do well when everyone is sheltered in place at home. Plus, ridesharing was also hit hard as ridership dropped. We felt that was the best thing to do considering the circumstances at the time. We believe this decision has helped us weather the storm that has been COVID19.
Vugo won a major contract, which will result in significant revenue opportunity starting in Q1 2021. We have started operations back up with our fleet agreement with VIA and are re-installing our equipment in their vehicles in Texas and other markets. However, it does require additional capital expenditure for additional equipment procurement and operations.
Short term revenues are difficult to predict with accuracy due to COVID-19 and impact on the ride sharing and advertising industries - both economically and with shutdowns.
We will continue to explore additional capital options as we grow into newly won business opportunities including equipment leasing to reduce burden of capital expenditures.
One of the risks to this industry is employer-like control of independent contractors, for example, if Uber and Lyft drivers are deemed employees, Uber would be able to exercise employer-like control over their drivers and select an advertising partner for all vehicles.
This was a possible outcome in California due to AB5. However, as of the time of this publication Proposition 22 passed in California. Prop 22 excludes gig workers from AB5's regulations. If for some reason this does become a threat again in California or elsewhere, our business strategy has always had a preference for fleet relationships like the one we have formed with VIA, and we would continue our process of securing fleet agreements with other ridesharing companies as well.
The majority of rideshare drivers in the US and the rest of the world will remain, independent contractors.
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.
For us to reach the future growth goals we've set, we need to have capable high impact partners, drivers, fleet owners, vendors, suppliers, and equipment providers to build the infrastructure, inventory, and keep vehicles on the road for our customers.This creates external dependencies that may be out of our control for rollout timing in some markets among other operational challenges.
Risks associated with the regulatory framework applicable to the Company. The for-hire transportation space is highly regulated at both local and state levels. Rideshare advertising operations sometimes require licenses, permits, and approvals in a few select areas of the United States. Most of the United States does not have regulations for rideshare advertising. Delays and failures to obtain or the future loss of any required licenses, permits, or approvals could negatively affect the Company’s operations. Any change in legislation could impact in markets that the Company may operate in. Also, new regulations or requirements or increases in transportation taxes or other fees could materially adversely affect the Company’s business, financial condition, and results of operations. New York City as an example, remains unavailable to Vugo due to city ordinances. While Vugo intends to push for ordinance changes, it is unknown if or when the city will create a pathway for rideshare advertising.
Leo Yanchuk is a part-time officers. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Advertising rates change with volatility in market conditions, which could hurt revenue or future looking revenue if the economy slumps.
Relative size of the team compared to future opportunity with key partners could impact scaling if unable to hire qualified talent.
Pandemics, such as the current global COVID-19 virus, outbreaks of communicable infections or diseases, or other public health concerns in the markets in which operate live and/or in which we or our advertisers, vendors, partners, and suppliers operate. Disease outbreaks and other public health conditions could result in disruptions and damage to our business caused by potential negative consumer travel behavior as well as disruption to our supply chains, sales processes, and operations. Consumer behavior may be impacted by reduced travel as many may not be able to leave home or otherwise travel in a normal manner as a result of quarantines or other cancellations of public events and other opportunities to view our screens, from bar and restaurant closures, or from a reduction in consumer discretionary income due to reduced or limited work and layoffs or the continued normalization of working from home. Operations disruptions may result from restrictions on the ability of employees and others in the supply chain to travel and work, such as caused by quarantine or individual illness, or which may result from border closures imposed by governments to deter the spread of communicable infection or disease, or determinations by us or our suppliers or distributors to temporarily suspend operations in affected areas, or other actions which restrict the ability to distribute our products or which may otherwise negatively impact our ability to operate, or for our suppliers to provide us our equipment. Transportation of our screens within a region or country may be limited if workers are unable to report to work due to travel restrictions or personal illness. Our operations and the operations of our suppliers may become less efficient or otherwise become negatively impacted if our executive leaders or other personnel or consumers critical to our success are unable to work or if a significant percentage of the workforce is unable to work or is required to work from home. Our cyber-security could be compromised if persons who are forced to work from home do not maintain adequate information security. A prolonged quarantine or border closure could result in temporary or longer-term disruptions of sales patterns, consumption and trade patterns, supply chains, production processes, and operations. A widespread health crisis, such as the COVID-19 pandemic, could negatively affect the economies and financial markets of many countries resulting in a global economic downturn which could negatively impact demand for our products and our ability to borrow money. Any of these events could have a material adverse effect on our business, advertising sales, revenue, liquidity, financial condition, and/or results of operations.
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