Deal Abstract

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 SVYes: 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)

  1. The Engineering question:
    • Good: this market exists and is indeed very fragmented.
  2. The Timing question
    • Good: managed marketplaces for the win.
  3. The monopoly question
    • Good: Look at that revenue. But I will say, regulatory may slow it down.
  4. 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.
  5. The distribution question
    • Good: Hobnobbing with finance bros.
  6. The durability question
    • Good: Solid.
  7. *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:

  1. Pretty certain this will return money on investment.

What the Risks Are

  1. 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

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