Investment Memo: Quae

In a collaboration with LaunchPad@Stevens, Rocket Fuel Ventures wrote investment memos to help analyze LaunchPad’s in-house/incubated startups. Ultimately, LaunchPad used the investment memos to help distribute funds to their startups. In this investment memo, the Rocket Fuel Ventures team analyze Quae.

Quae’s mission is to put the power back into people’s voices and allow everyone to be represented. With Quae people can vote on topics and issues in their city, gain support from their citizens, and improve the lives of people in their community.

COMPANY DESCRIPTION

FOUNDERS: Brendan Probst and Samuel Schmitt (Co-Founders)

HEADQUARTERS: Hoboken, NJ

MEMO CREATED BY: Frankie Pinnola, Bryan Kyritz, Brian Li, Mark Kanevsky, Alexis McKelvey, Eda Erdemci

PRODUCT:

Quae’s core product is an app that is available, free to download, on all mobile platforms. The app is designed as a social media platform in which users can either be a part of a small group, a large organization, or the local community. When a user is in a small group they can create a poll that shows up in a feed. When users see the poll on their feed they can vote yes or no and leave a comment. These polls can be set up to either have anonymous or not anonymous voting.

The creators of these polls can then analyze the results from the poll and make decisions based on them. When in a large organization, the heads of the company can make polls and allow only their employees to vote and because of the asynchronous nature of the feed, it makes it significantly easier to host a poll this way than many other ways. Where quae shines is how it handles voting in local government. A feature unique to Quae is the ability to “verify” your account with a driver’s license. They use this driver’s license to prove that you belong to a specific local government which allows the local government to create polls that only their citizens can vote on. This makes it very easy to have asynchronous communications between local government officials and their citizens.

MARKET AND PAYING CUSTOMERS:

Quae’s product market is social media, SaaS, and political activism. Quae has a variety of services for different customers. Their potential customers include but are not limited to schools, local governments, big businesses, and large clubs. Any form of large group that could benefit from an anonymous voting system is also a potential customer. The market size for politics TAM is $1.7 billion and the market size for the private industry is $17.3 billion.

FREE, ADVERTISEMENT BASED PLATFORM:

Quae’s main platform is free, and all of its revenues are generated through advertisements. For its ad-supported model, Quae is currently unsure of its revenues that will be generated from the advertising.

SUBSCRIPTION, AD-FREE PLATFORM:

For large corporations, local government, and educational institutions Quae offers an ad-free premium platform that generates $24.99 a month for up to 750 voters. Qaue offers plans for more than 750 but the price is determined upon contacting Quae.

MANAGEMENT TEAM

Brendan Probst (Co-Founder): Brendan Probst is the co-funder and a sophomore software engineering student at Stevens. Brendan is head of business operations and helps with some of the coding.

Samuel Schmmit (Co-Founder): Samuel Schmmit is the co-founder and a sophomore computer engineering student at Stevens.. Samual is head of technology but also assists Brendan with the business side

COMPETITION:

Competitors within this sector include companies such as ElectionBuddy, Election Runner, VotoSocial, and ActiVote. ElectionBuddy is a platform-oriented for users to create their elections to participate in, with up to 20 voters per election. Similarly, Election Runner is also designed for a similar purpose. On the other hand, competitors such as VotoSocial have their goals more closely aligned to Quae. VotoSocial also uses an identification secured voting system to aid participation in local to national level elections. ActiVote is more focused on creating consistently informed voters; they do not provide a direct platform for making your vote heard outside of test polls. This polling can then be used as feedback for candidates running in the given election. From this, it can be concluded that Quae’s most similarly aligned competitor would be VotoSocial.

EXIT STRATEGY

We see a couple of potential exit strategies for an investment into Quae. The most appealing and likely would be an acquisition by a larger SaaS company to integrate into a corporate product. Another possible exit would be an IPO or a direct listing but Quae would need to prove profitability whereas our conclusion is their product may not be highly profitable unless they can rapidly break into a large number of local government contracts.

INVESTMENT MERITS, RISKS, AND CONSIDERATIONS

INVESTMENT MERITS:

Political Activism through social media and online platforms has increased

• Through the 2020 election, the influence of politics in social media has increased exponentially
• Twitter and other social media platforms have come under fire for not regulating and verifying accounts
• Quae’s platform has more actionable steps that can be taken and uses verification

Little to no competition can create a political influence monopoly

• One major advantage that Quae has is the little amount of competition they face in their industry. Online voting and specifically local engagement are not yet widely adopted but will see more widespread implementations around the world especially given the effects of the COVID-19 pandemic and the concerns of voting integrity from foreign attacks.
• Quae is focusing very heavily on the security and openness of their product which is exactly what the market is asking for.

Potential customers and beta testing sites create unique opportunities for Quae.

• They have begun to validate their product in discussions with potential customers including the City of Hoboken, where residents frequently express their displeasure with the minimal engagement between the community and the City.

Strong prototype and development with product focused founders

• Brendan Probst and Samuel Schmmidt are both software oriented and can improve the prototype and pivot with ease
• Their strong zero-to-one prototype creates opportunities to launch faster and deploy into the Tri-State

Quae is implanted in high growth markets with large exits

• Quae is in the SaaS industry that has experience tremendous growth and potentials for a large IPO

INVESTMENT RISKS:

Quae must complete heavy user verification processes that could damage customer traction

• Requiring users to go through extensive verification before engaging on the platform will provide a unique challenge as most social media applications aim to reduce the onboarding friction. Quae is looking to revolutionize our democratic processes which justifies the intense verification process but will remain a challenge which they must overcome by aiming to reduce friction in the process.

In-person events and political campaigns will be back in person following the pandemic

• Currently remote work and the effects of COVID-19 restrictions on team meeting and development are slowing down the team. This should be alleviated in the coming months as COVID-19 restrictions are loosened and the team can safely work together in person. Also as the semester comes to an end, the team will have increased time to focus on product development before they launch.

CONCLUSION AND RECOMMENDATION

Quae is a promising company that has shown rapid product development and is building a new market. The team will have to prove product traction as they launch beta testing. They will also need to onboard their first customers and show growth to prove product market fit. We believe that they are deserving of support over the summer to develop their product for launch and would hope to see a finished deployed product before the end of Q3.