Deal Abstract
Uganda based startup is using financing for motorcycles as beachhead to build a credit score, loan origination platform, and eventually BEYOND.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $250000 |
| 2. Fundraised So Far? | $144746 |
| 3. Pre-Money Valuation? | $10000000 |
| 4. Previous Year's Annual Revenue | $166003 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-391364 |
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: Emeryville, CA |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: Generating revenue |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Grew from $126k to $166k |
| 5. Notable investors? | True: 500 Startups and Social Capital |
| 6. Post-funding, will have 18 months of runway? | False: Needs $600k, but only raised $250k |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Yesss, building loan origination and digital finance for a market with large banking opps |
| 2. Timing? | 3 | Mobile finance, good timing |
| 3. Monopoly? | 3 | Strong revenue, and focusing really niche in motorcycle financing |
| 4. People? | 3 | Team seems really strong with work experience and finance experience |
| 5. Distribution? | 3 | Boots on the ground distributing to the lenders, this is a hard advantage to replicate |
| 6. Durability? | 3 | Financial infrasturcture as a service |
| 7. Secret? | 3 | Starting with motorcycles/mopeds to build an embedded financial credit platform to then become a loan origination and financing marketplace for Uganda and similar growth stage African markets |
What has to go right for the startup to return money on investment:
1. Continue to keep high quality loan as scale; 2. Find other lucrative loans to make that compete against the finance thugs; 3. Make sure to keep good regulatory cooperation
What the Risks Are
1. What type of competition does Kiva look like? 2. If this platform grows large enough, is it possible that the country will want to nationalize/support a home grown solution to protect critical financial structure? 3. Banks that Asaak work with might want to go down the value chain and compete
Bonus Muhan's Notes
Phenomenal. This exactly the type of the on-the-grounds financial entrepreneurship and innovation investors like to see. The company filled out its round 2 months in advance of deadline.
Updates
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Review these deal memos every time the startup raises a new round
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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.