The Closest I’ve Ever Been to Changing the World (6) — What is this Round For？

Continuing from the last post, I asked, “So are you still pre-revenue, or do you already have some revenue?”

He said, “We do have revenue right now, but very little. Our R&D took about seven to eight years, and our first excavation system was only officially commercialized three months ago, which is why we just started to generate revenue. So far, we’ve generated around $500K in revenue, all from smaller projects. We’re currently bidding on seven projects, and one of them is in San Francisco, and another in Europe for one of the largest tech companies in the world (everyone can probably guess which one😂). Even if we win just half of these bids, that would add about $2M–2.5M in new revenue, and the odds of winning are pretty high, since all these bids require vibration-free, contact-free, environmentally safe technology — something almost no one else has except for us.”

I asked, “So this isn’t a SaaS model, right? Not ARR revenue?”

He said, “we have two models. The bidding projects I just mentioned are indeed not SaaS — they fall under our Badass model, where others hire us to dig tunnels. We provide the tunneling capability as a service, and once the project’s done, that’s the end of it. But the Boom model I mentioned earlier is the true ARR model — because we build and operate our own tunnels, then just collect tolls afterward. That’s pure ARR.”

He said, “If the first Boom project starts in early 2027, by the end of 2027 or early 2028, our monthly revenue could reach tens of millions, ranging from tens of millions up to over a hundred million. These contracts are long-term — 10, 20, 25, even 50 years — meaning long-term, stable, and abundant ARR, you can’t get better passive income than that.”

Then he added, “Oh right — Bank of America (and Morgan Stanley) have already talked with us. They said once our first Boom project is completed and the cash flow scales up, they’d like to underwrite our IPO, probably around 2028–2029.”

I said, “That’s a clear timeline. So what’s the situation with this current funding round? What do you need, and have you put in your own money?”

He said, “For the first five years, we didn’t take any external capital — it was all my own money. I bootstrapped for five years; my family office invested about $13M, all used for early-stage development. The major technical hurdles are now solved. Later, institutional investors came in. So far, we’ve raised around $51M in equity. This current round is Series A — we already have two lead investors: one is a leading specialist in tech and energy, and the other in military and heavy industrial space. They also have an LP who’s the largest tunneling contractor in North America. This round actually isn’t very large — target is $7M, with a pre-money valuation of $95M, about $1.05 per share. Every previous round was oversubscribed, and this one likely will be too. Within three weeks of announcing the round, we already received ~$2M, so it will probably oversubscribe to around $10M, bringing post-money valuation to roughly $105M.”

I said, “That’s a pretty high valuation.”

He said, “Yeah, but we’re the only company in the world that can do this. Our IP moat is extremely deep — if anyone tries to dig horizontal or diagonal tunnel underground, or excavate anything using plasma, they’ll infringe on our patents. And this really is revolutionary technology. If I execute like I did before, we’ll become the No.1 in the world in this field, and a monopoly. From that perspective, this valuation isn’t expensive at all — I mean, I’ve built a Decacorn before, and that company’s now worth $35B. So if I don’t hit at least $1B this time, that would actually be surprising 😂.”

I asked, “So that $13M you put in — that was very early-stage money, right? With all the later rounds, hasn’t your ownership been diluted a lot?”

He said, “Yes, right now I hold about 16%–17% equity, but I have a lot of stock options. If I complete certain milestones, I can exercise them and increase my ownership to over 30%. That further aligns my interests with those of the shareholders.”

I asked again, “Then why were you willing to give up so much equity?”

He said, “It was mainly a liquidity issue at the time. Most of my other assets are in hard assets and private equity — I didn’t want to sell, so I brought in institutional money. Yes, they negotiated really hard, but for me, I’d rather own 30% of a $100B company than see the company fail to execute because of lack of capital.”

I asked, “So is this a down round or an up round?”

He said, “The previous round had a $75M pre-money valuation, this one is $95M, so it’s an up round, up by $20M. As long as funding closes and the robots go into mass production, we’ll reach break-even within 18 months.”

I asked again, “So what’s your view on future valuation?”

He said, “We have three investment banks, including Bank of America, all giving similar outlooks (classic, right — always get three quotes 😂). The first milestone is signing big contracts; the second is completing the robot tunneling field test. Once those two are done, they can help us raise at least $100M Series B, with valuation projected at $300M–$500M — that’s a 3×–5× increase. Next stage, all three banks hope to lead our IPO, with a target valuation of $2B–$4B. Compared to our current valuation, that’s a 20×–40× increase.”

I asked, “Do you think that projection is realistic?”

He said, “I’m confident. After all, I’ve built a Decacorn before — after being acquired, that company became a division of an Italian energy giant, now worth around $35B. So achieving a $2B–$4B IPO is completely reasonable for me. In this industry, capital always chases reliable developers — and we’re the only team in the world with both the technology and deep hands-on experience.”

I asked, “So where do you see the main risks in this project?”

Till next time!