Marketplace for sellers and buyers of real estate financial instruments. Has nearly $1 million in revenue as of 2019 and in a good position to grow. Valuation at $40mm means I’m auto-out of the deal, but not a bad growth investment for those who like real estate.
Shout out to reader and fellow investor Peter for forwarding me the deal!
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The 6 Calacanis Characteristics (91 161 18)
|1. A startup that is based in SV||Yes: San Francisco, CA|
|2. Has at least 2 founders||No: One|
|3. Has product in the market||Yes|
|4. 6 months of continuous user growth or 6 months of revenue.||Yes: 2018 revenue was $126k, 2019 was $922k|
|5. Notable investors?||Yes: Y-Combinator, Social Capital (and 2018 scandal,) and others.|
|6. Post-funding, will have 18 months of runway||No: Burned $3mm in 2019, raised only $500k.|
The 7 Thiel Questions (ETMPDDS)
- The Engineering question:
- Good: this market exists and is indeed very fragmented.
- The Timing question:
- Good: managed marketplaces for the win.
- The monopoly question:
- Good: Look at that revenue. But I will say, regulatory may slow it down.
- The people question:
- Good: Team seems well positioned to execute. Interesting that founder found and sold RealtyShares. Not sure how the company was, but an exit’s an exit.
- The distribution question:
- Good: Hobnobbing with finance bros.
- The durability question:
- Good: Solid.
- *What is the hopeful secret?:
- Not much secret, there’s definitely a market for digitizing the purchase and selling of digital real estate financial instruments.
What has to go right for the startup to return money on investment:
- Pretty certain this will return money on investment.
What the Risks Are
- Capital Risk: Only raised $502k, which is two months of burn.
Muhan’s Bonus Notes
I think this company will make money. But to put it into perspective, let’s say you put $25k into financing this company. If you invested that same amount of capital in 10 companies at a $4 million valuation, you’d be potentially looking at tripling your money instead of 50%-75%.
- Current Fundraised: $986k
- Valuation: ~$40MM
New round at $55m on May 2021, with new financials.
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
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