Deal Abstract
Star studded clientele for Ayurvedic spa is pivoting into mass consumer wellness products. Revenue grew modestly and needs to see hockey stick growth.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$76418|
|3. Pre-Money Valuation?|$15000000|
|4. Previous Year's Annual Revenue |$1276151|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-928674|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
| Criteria | Yes/No |
|---|---|
| 1. A startup that is based in SV? | False: Santa Monica, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Though revenue barely grew |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | False: Would need $1.5m and only raising a few hundred k's |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Ayurveda spa, applying traditional medicine |
| 2. Timing? | 2 | People are into alternative medicine, but this is still a spa |
| 3. Monopoly? | 2 | Popular among clients |
| 4. People? | 2 | Good team not slam dunk |
| 5. Distribution? | 1 | It's a spa, as far as I can tell |
| 6. Durability? | 3 | Hard asset and location, with high cap ex to start business |
| 7. Secret? | 2 | Building a luxury brand via a spa will then cause a beachhead into traditional medicine brand |
What has to go right for the startup to return money on investment:
1. Expand into products business; 2. Get more premium margins than companies like Aavrani, 3. Proprietary product and supply chain
What the Risks Are
1. Transferability of brand to d2c; 2. Is this business defensible; 3. High fixed costs
Bonus Muhan's Notes
Updates
This is where I’ll post updates about the company. This way all my notes from offering to post-offering updates will be on one page.
Review these deal memos every time the startup raises a new round
Test if original thesis still applies
Notice trends in how you think
So, did I invest?
Click here to find out.Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.