BabyQuip Deal Memo (Closing Date: 2022-01-31)
Deal Abstract
Airbnb for baby equipment, helping young parents travel without baby equipment.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $5000000 |
| 2. Fundraised So Far? | $1700000 |
| 3. Pre-Money Valuation? | $18000000 |
| 4. Previous Year's Annual Revenue | $490991 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-1475057 |
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: Santa Fe, NM |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Revenue declined |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Needs $2.1m in revenue to having 1.5 years of runway |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | No Airbnb for baby equipment yet |
| 2. Timing? | 2 | Could see the argument with the sharing economy, but I'm curious if demand for this would be hockey shaped |
| 3. Monopoly? | 3 | Has done really well with great reviews in the market |
| 4. People? | 3 | Wow, the CEO is one of the former co-founders of Match.com, but that business had a poor exit |
| 5. Distribution? | 3 | Good traction |
| 6. Durability? | 3 | Network based business |
| 7. Secret? | 2 | Demand for baby stroller services and equipments is set to enjoy hockey stick growth due to young parents who don't want to carry stuff |
What has to go right for the startup to return money on investment:
1. Recover from the 2020 dip; 2. Build a platform that becomes two sided marketplace for other baby needs; 3. Can Babyquip eventually move into the subscription baby needs business model?
What the Risks Are
1. Sort of like Daycation, a service the exists as an addendum to other main hospitality businesses; 2. Growth speed is limited as it's a hardware network; 3. LTV for customers is limited by how quickly the child grows
Bonus Muhan's Notes
Really interesting business, right on the fence about this one.
Updates
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