Deal Abstract

Betterment for middle-income Americans, co-founded by Shark Tank celebrity Kevin O’Leary. Has 3000 downloads, $32k in revenue for all of 2019, and is claiming $15M valuation. Uncertain what the differentiation is.

Interested in startup investing? Subscribe to my premium newsletter, Startup Investing, to receive weekly content, exclusively tailored to accompany investors in their venture journey.



Why Investing/Passing

  1. Lack of Differentiation: Besides targeting Americans making $60k-$70k, I’m not seeing much differentiation here.
  2. Timing: I feel the great robo-advisor wars started half a decade ago.
  3. Valuation: Not convinced that a company can be worth $15MM just with brand name, 3k downloads, and little to no revenue.

The 6 Calacanis Characteristics (91 161 18)

1. A startup that is based in SVNo: Boston, MA
2. Has at least 2 founders Yes: 2
3. Has product in the market Yes
4. 6 months of continuous user growth or 6 months of revenue.No: I don’t there are any app-based subscription fees, given that 3000 downloads would be making $15k MRR which is not happening.
5. Notable investors?No: Only Kevin O’Leary who is co-founder.
6. Post-funding, will have 18 months of runway Yes: 2019 burn was $23, so easily will have 18 months

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: identical to competitors
  2. The Timing question
    • Bad: Unconvinced this fight is still happening in 2020.
  3. The monopoly question
    • Sure: Could scale fast, but realistically look at all the other robo-advisors.
  4. The people question: 
    • Good Not Great: No one on payroll means the team isn’t full-time/isn’t very big yet.
  5. The distribution question
    • Bad: O’Leary helps on marketing but CAC will still be high.
  6. The durability question
    • Good: Once people join a robo-advisor, I don’t think it’s likely they hop month to month.
  7. *What is the hopeful secret?: 
    • Charging a fixed fee model for customers making $60k-$70k is a super business model.


Want to read the whole post?

You don't have access to this post on Startup Investing for All by Muhan Zhang at the moment, but if you upgrade your account you'll be able to see the whole thing, including comments, as well as all the other posts in the archive! Subscribing only takes a few seconds and will give you immediate access.