Deal Abstract

Platform for mediating divorces. The technology is based off of eBay’s ODR, or online dispute resolution technology, which resolves 80-90% of disputes online. CMO is formerly LegalZoom. Hilarious and educational First Round spoof music video and a goldmine for legal tech ideas in this deal memo.

Shoutout to M.H. for the tip!



Why Investing/Passing

  1. Pre-Revenue: I don’t fund anything pre-revenue. Bringing things to market has a great deal of uncertainties that normally are quite expensive.
  2. I Hope My LTV, is More Than, CAC”: Phenomenal hat tip to First Round capital. This venture capital fund’s content is consistently killing it. Popular music spoofing aside, LTV = Lifetime Value and CAC = Customer Acquisition Cost, and my concern is that if BlissDivorce’s LTV is $3k (at present,) and CAC could be $1.8k (benchmarking off of Nada) then that’s a healthy, niche business that I need more growth from.
  3. Raising Too Little Capital, Part-Time CMO: This is my weakest reasoning for not investing, but if you’ve got the former CMO of LegalZoom and some strong founders, it should be clear that getting to revenue is an incredibly large milestone that should have been achieved with the last $400k in funding. Especially with burn at $40k and having only 3 months of runway left/being about to launch, I’m concerned that they’re not raising enough capital to be conservative with all the things that go wrong in going to market.

Honestly, I really liked the company. If this company raised again in 6-12 months with financials, I’d probably have invested.

The 6 Calacanis Characteristics (91 161 18)

1. A startup that is based in SVPass: Los Altos, CA
2. Has at least 2 founders Pass: 3
3. Has product in the market Fail (in testing phase)
4. 6 months of continuous user growth or 6 months of revenue.Fail
5. Notable investors?Fail: None.
6. Post-funding, will have 18 months of runway Fail: Burn is $47k/mth and targeting $50k to $245k in fundraising. Means they think they can get to revenue/profitability in 1-5 months.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Good: Very interesting, liked the ODR technology.
  2. The Timing question
    • Good: Building platforms for resolving complex transactions like divorce, assisting counselors, is good timing. See the Squillions post.
  3. The monopoly question
    • Good: Can scale quickly.
  4. The people question: 
    • Good: Team is small but seems fine. Concerned that the CMO is part-time, but she is a powerhouse.
  5. The distribution question
    • Good: Probably online ads, targeting people who are looking up marriage problems/divorce problems. There might be a business/partnership teaming up with counseling services (TalkSpace?) and building referrals for when people ultimately decide to divorce.
  6. The durability question
    • Good: I see this like the Visor, Thumbtack, Managed by Q for divorces. Namely, it’s a platform building a trusted reputation that uses automation and concierge help to reduce cost centers (laywers,) and deliver similar/superior results at lower costs.
  7. *What is the hopeful secret?: 
    • Divorce is the beachhead into a large market that can be solved by platforms and managed marketplaces.

What has to go right for the startup to return money on investment:

  1. Achieve Recurring Revenue: receiving one-time revenue of $3k for a divorce is great, but the customer acquisition cost could be high as well. For context, Nada‘s cost for finding people who are buying a house is $1.8k. How else can BlissDivorce make money after the divorce is done?
  2. Build Good Partnerships for Lead Generation: Who are the people who have access to people pre-divorce? Are these couple counseling providers? Though it may seem grim, paying a commission to therapists who can suggest BlissDivorce before a divorce lawyer may be an effective distribution channel.
  3. Become a Marriage/Matrimony Platform: Divorce alone isn’t a bad business, but is there a bigger play platform play for large, important, one-time/few-time transactions? I’m imagining a platform for weddings, divorces, births, deaths, wills, inheritance, etc. Dreaming out loud here, but hey, that’s what angel investors do. Bonus startup idea in Muhan’s notes.

What the Risks Are

  1. Raising Too Little Money: I like companies that are raising 18 months of runway since you never know what goes wrong, especially when going to market. What’s the budget for launch?
  2. High CAC no Recurring Revenue: The difference between the Visor/Thumbtack/Managed by Q’s is that those are platforms for recurring transactions, namely, taxes, project work, and office management. How does this company not become a one-and-done-then-never-again platform?
  3. Why is the Product Not Monetized Yet: It seems like the company get just short of going public and having revenue. I like that they have a product but don’t like that they are raising a round just short of a big business goal aka becoming revenue generating.

Muhan’s Bonus Notes

*BONUS STARTUP IDEAS*: What services does LegalZoom provide that are good, not great? What bundle of services can we unpack from LegalZoom, add in a care team a la, SmileLove, and BlissDivorce, for a more peaceful, self-guided, and better UI/UX?

Again, see the most amazing paper (and my less-amazing blog post) from a16z about managed marketplaces.

Again, hat tip for phenomenal educational and content from First Round. Oldie but a goodie.

09/16/20 update

Financials (References)

  • Current Fundraised: $240k
  • Valuation: 8MM


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. Also, somewhat of a dearth of materials (whose the team? where are the comments? why are the financials so opaque?)

Review these deal memos every time the startup raises a new round

Test if original thesis still applies

Notice trends in how you think