First Stage Investor

New Pick: Invest in the Next Generation of Medical Masks

New Pick: Invest in the Next Generation of Medical Masks
By Andy Gordon
Date February 11, 2021

Deal Details
Startup: Canopy
Security type: Crowd IPA*
Price per security: $5.61
Valuation (cap): $6.5 million
Minimum investment: $100.98
Where to invest: Republic
Deadline: May 1, 2021

*Crowd IPA (Interests Purchase Agreement) is a simple agreement to acquire membership units of a limited liability company.

The pandemic has created a desperate need for N95 masks. And desperate buyers tend not to be the most discerning.

That explains Envo Mask. It features an exhalation valve — which is banned by the CDC. It’s also poorly designed and expensive to own. Yet the company sells up to 2,000 masks a day. At list price, that comes to a yearly sales rate of nearly $60 million. 

ClearMask is another beneficiary of the market’s forgiving state. It makes a disposable non-N95 surgical mask that allows you to see the face behind the mask. But it doesn’t offer the same protection as N95s. It doesn’t have airtight seams along the sides of the mask. And re-using disposables is dangerous. Throwing them away is also dangerous, further damaging an environment already under duress. But last time I looked, it was on track to hit $40 million in 2020. 

There are a few other N95 masks on the market — but it’s a real mixed bag. Some are more comfortable than others. Some are easier to breathe in. Some offer more protection. The costs vary from one mask to the other, as does the functionality. But all of them have major drawbacks. There’s not a standout among them… not a one that has the potential of dominating the market. We’re looking at a whole bunch of underwhelming mediocrity. 

And to be honest, I’m being kind when I say that. My brother-in-law is an emergency doctor in Seattle. I can’t put in writing what he says about the masks he uses. Suffice it to say, he’s less than pleased. He’s not alone. Front-line workers, nurses, doctors and hospital staff complain emphatically that they don’t like the masks they are forced to wear. 

Is anybody listening? This is a market begging for something better. If there were ever a market willing to reward a superior product, it’s this one. The company that gets the product right still has to jump through all the hoops to get it to market, of course. But selling it and scaling it is much less daunting than for most early-stage startups.

And that’s great news for startup investors. Because if a company nails the product, it should see a steep revenue climb. Going from sales of hundreds of thousands of dollars to millions or tens of millions is not a 100-month journey in this situation. With the right leadership team, 10-to-15 months is very much within the realm of possibility. Again, let me remind you of Envo Mask. It hit the market in late 2019. And in the following year the product — with its banned valve — made $40 million.

So here’s the really exciting news. There was somebody listening. A company named Canopy put together a systematic plan to address all the problems mask wearers hated most. And then, on a tight budget and tighter schedule, it executed that plan.The team at Canopy started with dozens of user interviews — the best way to be sure a product will appeal to its audience. Those interviews led to the decision to develop a one-of-a-kind patented transparent filter with three times the surface area of a standard N95 mask. It then underwent rapid prototyping with clinician feedback and UXR testing (the process of understanding the impact of design on an audience) led by former Fitbit UX designers. It then received more feedback based on clinical use. 

The end result was the most breathable high filtration respirator on the market. It’s essentially an alternative to the N95 — and it’s much better. It comes with a soft and snug, form-fitting silicone seal — and transparent front lens, thanks to a permanent anti-fog coat. Each respirator has easy-to-adjust neck straps and a comfortable headpiece. And the mask’s filtration efficiency is very impressive at up to 99.8%. 

And now Canopy is raising on the Republic website at a valuation of only $6.5 million. The low valuation seals the deal from an investment standpoint. This investment opportunity offers a chance to get in on a startup with a low price, that’s addressing a huge market and that has desperate demand. And Canopy is meeting that demand with a great product that is head and shoulders above other available products. 

Let me be clear here. The low valuation is NOT a mistake. I wouldn’t even call it a bargain. It’s simply part of what you get when you invest this early and the company is still basically pre-revenue (some revenues have just begun). Even though Canopy is making the best respirator on the market, it’s still a month or two away from getting government approval, which large institutional buyers (like hospital systems) prefer… though it’s not required by law. 

Those few months represent risk. It doesn’t matter that Canopy fully expects to get approval. (After seeing the results of Canopy’s latest tests — which it passed with flying colors — I wholeheartedly agree.) Nor does it matter that I can easily see Canopy’s valuation being several-fold higher at this time next year. Risk is still risk. And Canopy — as it should — is offering you a fair price to take on that risk. 

But that hasn’t stopped Canopy from putting all the pieces into place to be a lean, cost-efficient company. It has done everything to make sure when the time comes for sales to begin in earnest, all systems will be ready for a smooth take off. 

The company has displayed the same systematic approach and attention to detail in building its operational capabilities as it’s demonstrated in designing and building its product. It put together an impressive cross-functional team of A-list experts covering the core operational activities of the company. It developed a scalable supply chain where 18 out of the 20 components of the mask are made in the United States. It has signed multi-year agreements with some of the world’s largest OEM medical device and filtration manufacturers. It built a fulfillment and logistics infrastructure which seamlessly integrates highly reputable third-party companies into its operation. Its intellectual property was structured to defend current offerings while allowing for future protected innovation.

And let’s not forget the mask itself. So far, it’s received positive to rave reviews. Big buyers love it. Everything is pointing toward sales taking off once government approval comes. That should be sometime in March or April at the latest. 

Canopy is ready. It has enlisted Access Strategy Partners, Inc. (ASPI), a Boston-based sales organization whose clients spend $1 billion a year on N95s to spur sales. It is inking deals with two of the three biggest Group Purchasing Organizations in the country. And it’s gearing up to drive sales through Amazon. Canopy expects a substantial portion of its sales will come through its own website and direct B2B. 

The company’s production capacity can handle up to $50 million worth of sales in 2021 without additional capex. It may not need all that capacity right away — but Canopy founder Joe Rosenberg is chasing some big orders. He’s in discussions with Saudi Arabia, for instance, for a 15 million unit order. So Joe’s taking no chances.

Joe has done an outstanding job advancing the company on multiple fronts. Joe worked at Google for eight years, picking up valuable experience on the company’s retail e-commerce side. He then founded Grove North Ventures in 2018. It helped develop clients’ strategic partnerships and market strategies — skills he’s put to good use at Canopy. Joe has also built an outstanding team. And his team’s execution so far has been simply excellent. 

That’s a huge deal. Consistent execution done at a high level significantly lessens the risk of investing early. That along with a highly differentiated product and a lean operational cost structure have dramatically de-risked a high-upside investment opportunity. Which makes this a great investment, even for cautious early investors.

How to Invest

Canopy is raising up to $1.07 million on Republic. If you don’t already have a Republic account, you can sign up for one here.

Once you verify your account and are logged in to Republic, visit the Canopy deal page.

Then click the blue “Invest in Canopy” button. Enter the amount you want to invest, starting as low as $100.98, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.


This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. Canopy might need to raise another round of funding in a year or two, if not sooner.

If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid.Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.

All that said, I believe Canopy offers an attractive risk-reward ratio.

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