OVERVIEWGasCap is a web-based financial platform that lets smaller truck fleets cap their fuel costs using a mobile app or website. By capping their fuel prices, they
stabilize their costs and can more effectively manage their budget, save money, and get peace of mind. We are raising $300K to boost our sales and marketing efforts and to advance product development.
THE PROBLEMFluctuating fuel prices mean that transportation companies cannot effectively plan their business. Fuel accounts for up to third of a typical truck fleet's operating costs and up to 40% of their costs on a $/mile basis, so fuel costs are always on the mind of the fleet owner. Investment banks, trading houses, and risk management consultants provide fuel price hedging services to large customers, such as UPS or airlines, but small- and mid-sized truck fleets do not have this option. As a result, they can be negatively impacted both by swings in prices and by price increases. There were nearly
800 trucking bankruptcies in 2019, and we estimate that
the economic cost of a 30¢ / gal upward move in diesel fuel prices on the U.S. mid-sized truck fleet is $5.3 billion.THE SOLUTIONGasCap helps solve this problem by providing price certainty. We provide customers with a low-cost tool that helps them stabilize their one of their biggest costs, introducing greater certainty to their budget.
We enable our customers to cap their fuel price, thereby allowing them to plan their business without worrying about poorly-timed increases at the pump.
We created GasCap because we realized trucking and transportation firms were facing rising fuel prices during a time when our country needed them the most in the wake of the COVID-19 pandemic: our service has the additional benefit of helping to provide economic security to this critical segment of the economy. Truck drivers are
CISA (Cybersecurity and Infrastructure Security Agency)-designated essential critical infrastructure workers and deliver vaccines, therapeutics, and other medical supplies during this public health crisis. Our company provides transportation fleets with financial protection so that they can continue serving those in need.
WEBSITEhttps://gas-cap.com/
PITCH DECKhttps://drive.google.com/file/d/1-TiguwPgemeqL8rGhLVlHaQjYi1Jt7JZ/view?usp=sharing
CUSTOMER VALUE PROPOSITIONOur customers get value from being able to budget more accurately AND save money on fuel costs in adverse price environments. We estimate that using fuel price caps over the past 5 years would have saved a typical mid-sized (40 truck fleet) an average $45K or 2.5% per year in diesel costs per year before fees. Such caps would save the same fleet almost $80K over a single quarter on an upward diesel price move of 50¢/gal after fees.
Secondary value propositions include ease of use and little change of behavior on the part of the customer. We are not selling physical fuel, and we are not tied to any particular fuel chain or station. Instead, fleets have complete freedom to fill up anywhere they like and still benefit from a capped fuel price using their GasCap protection.
HOW IT WORKS – CUSTOMER JOURNEY - After logging onto our mobile app or website, a customer selects a monthly period and volume of fuel. This period can be a month, a quarter, or up to a year
- The customer then pays GasCap an upfront, per-gallon fee to cap its retail fuel price for the given period
- Afterwards, the customer's drivers fill up their tank and drive as they normally would
a. If at the end of the period, retail prices rise above a customer's capped level, the customer pays the higher price at the pump, but GasCap rebates the difference to their bank account
b. On the other hand, if prices fall below a customer's capped price, they benefit FULLY by paying the cheaper fuel price
In either case, the customer is protected by knowing the absolute maximum amount that they will spend on fuel for the time period chosen.
HOW IT WORKS – ON GASCAP’S END
How do we cover ourselves and make money for our investors? On our end, after collecting a customer's nominal fee, we cover ourselves by using a portion of the fee to immediately purchase an offsetting hedge in the wholesale institutional market. We use the payoff from the hedge to rebate the customer in the event that retail prices rise during a given period. If retail prices fall, we do not pay a rebate. In all cases, we retain the balance of the fee not used for purchasing a hedge to cover our expenses. We expect that about half of the initial fee we collect will go towards hedging costs.
WHAT MAKES GASCAP UNIQUE
- GasCap recognizes that not every company with a line item for fuel expenses is Walmart; we let smaller, mid-sized customers who are currently shut out of the commodities market stabilize their costs
- We also let smaller companies manage their price risk without prepaying for fuel, like some competitors.
- As mentioned above, customers are not bound to any specific fuel station chain, as they might be with a fuel card program. With GasCap, customers are free to fill up anywhere they like and still benefit from a capped price
- Lastly, unlike traditional and costly advisory models, GasCap provides customers with the benefits of an easy-to-use mobile app and website.
TARGET CUSTOMER AND ADDRESSABLE MARKET
Our initial target customer segment is mid-sized truck fleets. There are approximately 23K mid-sized truck fleets in the U.S., with fleet sizes ranging between 20 and 100 trucks. The average fleet size of 40 trucks. These fleets consume 1.4 billion gallons of diesel per month. Decision makers in this segment include fleet managers, VPs of Operations, or COOs.
A typical long-haul truck consumes 1,600 gallons of diesel each month, so monthly fuel consumption for a mid-sized fleet will range between 32K and 160K gallons per month. Our target market share is twenty mid-sized trucking firms by the end of our second year of operations. Assuming our customers are of average size, this in turn equates to 1.3 million of diesel hedged each month.
Under current market conditions, GasCap plans to charge a 10¢/gal cap fee to its customers. Our target market share of twenty firms would therefore yield monthly revenue of $130K. As mentioned above, GasCap plans to use a portion of the upfront fee to purchase an offsetting hedge in the wholesale market. Expected hedging costs at this point are about 5¢/gal, with the balance going towards company expenses. On an annual basis this equates to revenue of $780K after hedging costs before other expenses.
KEY TEAM MEMBERS
Matt McKenzie, Co-founder, and CEO. Matt provides leadership and direction to the company’s team, with an ultimate goal of helping transportation providers stabilize their most volatile costs via a low-cost technology platform. Matt has thirteen years of experience in energy commodity markets and has helped clients in industries ranging from power generators and retail providers to oil and gas producers manage their commodity price risk.
Ed Hayes, Co-founder, and CTO / CRO. Ed has held numerous senior roles during his 20+ years in financial services with special focus on quantitative analysis, risk management, and software development. His areas of expertise encompass global energy, foreign exchange, interest rates, and emerging economies. He held leadership roles at AIG, RBS Sempra, Société Générale Energy, and GE Capital before moving to the energy technology group at Citadel.
Ryan Connors, Business Development. Ryan is an experienced financial services professional with a proven track record in project management, operational and strategic planning, and financial management. He began his career as an options trading assistant at AIG Trading. Prior to Gas Cap, he held senior roles at Société Générale and Calyon Financial. He has also worked in business development at startup ventures within Chapdelaine and Priceline.com.
THE ASK
GasCap is in the pre-revenue stage and has boot-strapped the company so far. We are asking for $300K to secure our 12-month company objective, which is signing up and commencing business with to eight mid-sized truck fleet customers. Eight customers would mean about 160 trucks whose diesel demand needs to be hedged, for a monthly gallon total of 512K. Revenue would then be $51K, assuming a 10¢/gal hedge fee. Use of proceeds goes to the following:
- Sales and Marketing ($100K)
- Founders’ Salaries ($100K)
- Product Development ($50K)
- G&A ($50K)
For more information, contact Matt McKenzie at
[email protected] or 1 (412) 496-7448.
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