Deal Abstract
Social impact entrepreneurs are building a marketplace for women wellness ecommerce and education. Big question is are they focusing on the platform, the goods, or the education of the community.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$89534|
|3. Pre-Money Valuation?|$6000000|
|4. Previous Year's Annual Revenue |$62755|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-141781|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
| Criteria | Yes/No |
|---|---|
| 1. A startup that is based in SV? | True: Oakland, CA |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: Marketplace |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Revenue grew from $36k to $62k |
| 5. Notable investors? | True: Former CEO of Lancome, seems like a big deal |
| 6. Post-funding, will have 18 months of runway? | False: At present looks like it's going to miss the goal |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Is a curated marketplace focusing on a niche |
| 2. Timing? | 2 | Good time to build a marketplace |
| 3. Monopoly? | 2 | Has 100k users, which is strong organic growth, but what's the revenue look like? |
| 4. People? | 2 | Team has good experience and brand building sensibilities, but no work experience at previous large marketplaces like this (Thrive market as comp?) |
| 5. Distribution? | 3 | Building a marketplace so solving for distribution/got 100k users |
| 6. Durability? | 3 | Marketplace kind of reminds me of The Honest Company, though that company did fall into scandal |
| 7. Secret? | 3 | Womens care products with sketchy ingredients filtered out is an enormous market that has been underserved by other marketplaces due to taboo of empowering women |
What has to go right for the startup to return money on investment:
1. Convert community members to purchases; 2. Master whether is going for the marketplace advantage, goods advantage, or education advantage; 3. Establish recurring revenue, maybe through subscription
What the Risks Are
1. Community members don't convert to purchases; 2. the advantage to marketplaces is sourcing and verification, which may lend supply chain advantage to other marketplaces; 3. Needs more capital to deploy the network benefits of a marketplace that a customer needs e.g. how to compete with Amazon customer service
Bonus Muhan's Notes
Very cool to review this deal, and eager to see how they progress in the coming months.
Updates
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Review these deal memos every time the startup raises a new round
Test if original thesis still applies
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So, did I invest?
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