Deal Abstract
HP alum engineers have a patented ability to mesh wireless speakers together at scale. Pre-revenue, product not yet commercial, but glowing reviews and heavyweight investors.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$237730|
|3. Pre-Money Valuation?|$8000000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-262839|
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: Atlanta, GA, and if I recall correctly, in the same building as Mailchimp/Kabbage (JK it's just a UPS) |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | False: No revenue |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: 'We have 1 licensable patent granted, 2 patents pending, and are in early discussions with a Global 500 competitor about licensing our technology. We also established B2B partnerships with Moor Productions in Miami, and PBE in Las Vegas to refine and execute our scalable business model.' |
| 5. Notable investors? | True: Charles Huang and Andy Rachleff, both are impressive angel investors |
| 6. Post-funding, will have 18 months of runway? | True: Has nearly a year of runway, should be able to hit 18 months. |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 4 | Bonafide technology innovation. Longer battery life, mesh network syncing. |
| 2. Timing? | 2 | I see the argument about this being exquisite timing for COVID, but not completely convinced. |
| 3. Monopoly? | 1 | Have heard of some product like this, but it may have been Audios back in the day. That said, raving customer reviews. |
| 4. People? | 4 | Founder is an absolute go-getter. Co-founder has shared HP experience. |
| 5. Distribution? | 2 | eCommerce and big box retailer. Not great but not bad. |
| 6. Durability? | 4 | Patents and technology, interesting what Charles Huang said about licensing this technology to smart home applications |
| 7. Secret? | 3 | Connection and meshing via non bluetooth/non-Wifi methods is good enough for production grade sound performance. |
What has to go right for the startup to return money on investment:
1. Technology needs to work and at scale; 2. Clarify what business they're in (hardware leasing? patent leasing?); 3. Make large scale free/subsidized trials accessible to all music performers then be sticky.
What the Risks Are
1. Unit economics of hardware business are not like software; 2. Is the technology novel and irreplicable; 3. Is the engineering 10x better just via meshing and cableless for it to displace JBLs and other legacy manufacturers.
Bonus Muhan's Notes
Listen to the podcast to understand how Young got Rachleff as an advisor, impressive stuff:
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?
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