AKUA Deal Memo (December 2020)

Muhan Zhang -

Deal Abstract

Invest in AKUA
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Kelp based food maker launched kelp jerky and kelp burgers. Great growth and took a product to market in ~2 years with $500k-$1m maybe. Will be curious how they compete against Beyond Meat and Impossible Foods.

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1m|
|2. Fundraised So Far?|$156k|
|3. Pre-Money Valuation?|$7m|
|4. Previous Year's Annual Revenue |$143k|
|5. Previous Year's Annual Burn |~$210k|

Akua Form C.pdf

The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)

Criteria Yes/No
1. A startup that is based in SV? No: Brooklyn, NY
2. Has at least 2 founders? Yes: Two
3. Has product in the market? Yes:: Co-founders as video says
4. 6 months of continuous user growth or 6 months of revenue? Yes
5. Notable investors? No No super angels or VC's, though Blue Bottle Coffee logo is there
6. Post-funding, will have 18 months of runway? Yes: if full round raised

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
1. Engineering? 1 Reviews not looking great
2. Timing? 2 Good time for sustainable food
3. Monopoly? 2 New to market and doesn't seem like a monopoly
4. People? 2 Smart team but no one with food experience before.
5. Distribution? 2 Has to sell to retailers who will then charge them SKUs.
6. Durability? 2 If you build a delicious brand, it will be defensible.
7. Secret? 2 People have been waiting for a kelp brand and no one has been able to crack it yet.

What has to go right for the startup to return money on investment:

  1. Make the product even more delicious
  2. Lock down great B2B partnerships a la Beyond Meat with Dunkin and McDonalds
  3. Vegan market needs to grow, or this company needs to expand beyond Vegan

What the Risks Are

  1. Product Deliciousness vs. Virtue Signaling
  2. Competitors like Beyond Meat
  3. Going Big Via Scaling

Bonus Muhan's Notes

Interesting seeing kelp based meat vs plant-based meat brands

Akua's original kickstarter in 2017.

https://store.drhyman.com/collections/books

"first reaction video of the jerk. does't sound like they like it either[3:16 PM]This product seems more to appeal to vegans and not meat eaters. that instantly drops the addressable market significantly.[3:17 PM]about 1% of regular market."
Founder and CEO responded—focusing on kelp and applications.

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

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.