Retailer Partnerships

Cardstalk aims to be a single solution to let retailers reduce or eliminate the large square-footage requirements required by traditional card aisles, without sacrificing sales. Because the Cardstalk team handles kiosk deployment and maintenance tasks, there’s no additional effort required on the part of the retailer to keep the kiosk generating sales. In the best case, Cardstalk might even drive sales to retailers with the kiosks, as we expect some customers will seek out retailers with a kiosk in order to purchase specific cards or support a specific artist.

Innovative retail brands, like Earth Fare, who value ecological stewardship and local community relations, have responded positively to the way that Cardstalk differentiates itself from other options available. Many competitor brands use single-use plastics around each card, and there is often no opportunity to feature local community artists in the card aisle with the big brands. We expect our values to continue to resonate with innovative retailers, and to be attractive long-term to mainstream retailers as well.

In the future, we plan to gather the data from card searches and purchases, and to analyze it to deliver practical data information to retailers. This data could be used as part of a retailer’s overall data strategy, that that they might understand trends and customer needs in other areas as well.

Business Model

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Costs

Materials for Cardstalk kiosks, as presently designed, cost ~$5,500 each, which can possibly be reduced to $5,000 when components are purchased in bulk. Our cards are currently listed for $7.00, where $1.50 goes to the retailer and artists receive a base payout of $1.00. During the introductory launch period, while we only have one kiosk, the artist's base payout has been temporarily increased to $3.00, to incentivize artist onboarding. This temporary cost increase will be maintained until we scale out to more print kiosks, as projected in phase 1 (see “Growth Plans” below). Once we’ve reached that point, we plan to let artists customize the pricing of their cards in order to make their desired profit, with Cardstalk taking a percentage.

Target Per-Kiosk Return on Investment (ROI)

After taxes and fees, we expect a total profit of ~$3.00 per card. If cards sell at the estimated 10 cards per-day average, we are targeting for a single kiosk to achieve an ROI in less than 9 months. This ROI calculation includes per-kiosk operating expenses, technician salaries and other projected maintenance costs. Expected lifespan for a kiosk is 5 years, based on warranty and support available for the core printing technology.

Additional Revenue Stream Opportunities

Once Cardstalk kiosks are deployed into brick-and-mortar, we are planning to investigate other revenue streams that do not require additional hardware to implement. For example, there is potential to print additional content within the cards (ie, printing gift cards inside, selling NFTs with the cards, etc.). However, our main focus is on potential services based on card search and sales data.

With our hyperlocal marketplaces for artists and shoppers, aggregated shopping data could be made available as a subscription service for retail partners. This could give them insights into shopper behaviors, such as when they begin shopping for specific occasions, and what content or styles are resonating. Retailers could use this data to tailor other in-store offerings, and potentially reveal underserved card-selling opportunities.

Traction & Growth Plan

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What we've done

✔︎ Spring 2020 - Founded Company

✔︎ Summer 2020 - Won Asheville’s Venture Asheville Grant for MVP Development

✔︎ April 2021 - Won NC IDEA MICRO grant (spring 2021) for funds to artist onboarding costs

✔︎ Fall 2021 - Launched https://cardstalk.ink and onboarded local artists to the online platform

✔︎ November 2021 - Deployed first kiosk into Asheville’s Earth Fare grocery store

What we have planned

In order to truly disrupt the $8 billion USD greeting card, we aim to prove that our print-on-demand kiosk marketplace meets market demand, can generate revenue, and can scale out to dozens and eventually hundreds of kiosks across North Carolina and beyond.

To accomplish our goal, we have identified two distinct phases with their own focus and goals. The first phase is where we begin to expand beyond our MVP kiosk, and establish a small network of kiosks (~10) that the founding team builds and maintains, possibly with the help of an employee. This phase will focus on building out networks of artists and card content, developing operating expertise, improving retailer experience, gathering metrics, and identifying next scale-out targets in regards to target regions and retailers. The second phase is where we expect to prepare to scale to dozens of kiosks in one or two regions. This is where we will begin to develop expertise on card data and analytics, hire a dedicated artist community manager, and begin to build sales relationships with additional retail partners.

Some definitions:

SAFE 

A SAFE stands for Simple Agreement for Future Equity. It allows investors to invest in early-stage companies and receive stock down the road when certain events happen such as a series A round, an acquisition, or an IPO.

Valuation Cap

The maximum valuation at which your investment will convert. This means you'll receive shares at this price, regardless of how high the company is valued in the future. ie: higher valuations mean more shares for the same amount of money.

Discount

This is the discount on the share price that SAFE investors receive upon conversion.

For example: With a 20% discount, if the share price in a trigger event is $1.00, SAFE investors would receive shares at $.80 each.

Notes

1. The SAFE converts by either the Valuation Cap or the Discount depending on which one yields the best return for the investors.

2. An easy way to think about a SAFE investment is that you're buying $X worth of future stock.

3. At a trigger/conversion event, the issuer may continue the terms of the SAFE, issue "shadow shares" of preferred stock or allow you to cash out at the applicable conversion stock price.

4. Once the offering is live, it is important to refer to the subscription agreement and SAFE shares agreement to understand the conversion and termination terms, as well as potential rights of the securities into which the SAFE may convert.

Use of Funds

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The use of funds ties directly to the phases outlined in the growth plans above. If we only receive the minimum funding goal, we expect to spend the next 12 months implementing phase 1 plans, and building a case for a larger raise that will propel us into phase 2 and beyond. If funds raised exceed the minimum, we will use those funds as outlined below to support the development of our larger scale, phase 2 plan. 

Funding Milestones

$300K = 10 kiosks with 12 months of runway (20% discount, 5 million cap)

        ► $55,000 - 10x kiosks for Earth Fare & future partner deployment

        ► $175,000 - Developers salaries (us!)

        ► $70,000 - Business expenses including servers, legal, design, and marketing

$387.5K = The above + Q1 2022 Equipment Manager hire 

Establish a Regional Manager for the first 10 kiosks to begin building service model

$462.5K = The above + Q1 2022 Artist Community Manager hire

Artist management for onboarding and coordinating artists as we expand in the region

$825K = The above + Prepared Q2-Q3 2022 expansion across NC, SC, Atlanta or other regions depending on interested retailers

        ► $222,500 - x40 more kiosks

        ► $75,000 dedicated to Service Technician under Regional Equipment Manager to service new region

        ► $40,000 dedicated to kiosk transportation and storage costs

        ► $25,000 dedicated to co-working/office space

$950K = The above + Q2-Q3 2022 Data Scientist hire 

Begin focusing on aggregating and developing SaaS services to partners and inform our expansion plans

$1M = The above + Kiosk R&D and maturation for next regional expansion

With 50 kiosks deployed, we want to take lessons learned from our Mark 1 kiosk and prepare a final production model that reduces our involvement with future kiosk assembly