Deal Abstract
Managed marketplace for inspections. Has good revenue, vendor pool, and contracts, but makes one wonder will this market grow fast enough to be venture backable.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $41000 |
| 3. Pre-Money Valuation? | $10000000 |
| 4. Previous Year's Annual Revenue | $55548 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-456243 |
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: Brooklyn, NY |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Grew from 0 to $55k |
| 5. Notable investors? | True: Y-Combinator and Urban.us |
| 6. Post-funding, will have 18 months of runway? | True: Yes, but needs $750k roughly |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Managed marketplace a la a16z |
| 2. Timing? | 2 | Is this a time when demand for this service goes exponential? |
| 3. Monopoly? | 2 | 150 inspections with 1000 inspectors generating $150k in rev, not bad |
| 4. People? | 2 | People seem fine |
| 5. Distribution? | 2 | See the 150 inspections, $150k in revenue |
| 6. Durability? | 3 | Very durable, assuming this managed marketplace is important |
| 7. Secret? | 3 | As leaders at organizations age out and younger leaders come in, the marketplace for inspections and inspectors will become increasingly more digital |
What has to go right for the startup to return money on investment:
1. Scale revenue; 2. Consistently identify and find the right decision maker at companies that need inspections; 3. Navigate the marketplace/SaaS model correctly
What the Risks Are
1. Market is too niche/not growing fast enough; 2. Other networks will also start developing and you'll end up getting regional networks; 3. SaaS is being competed against on other side as well a la https://muhanzhang.com/optelos/
Bonus Muhan's Notes
Very cool company, though it makes me wonder how venture backable this sector is.
Updates
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