Deal Abstract
SaaS company is selling AI to recognize threats in CCTV security systems. Strong revenue but what is the greater vision for becoming a big security company?
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $150000 |
| 2. Fundraised So Far? | $78435 |
| 3. Pre-Money Valuation? | $4000000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-6375 |
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: New York, NY |
| 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? | True: MRR in Nov 2021 was $11.7k |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Very low burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Selling SaaS to upscale CCTV systems |
| 2. Timing? | 1 | Not sure why this is the right timing for this business |
| 3. Monopoly? | 3 | Impressive revenue growth |
| 4. People? | 2 | Team seems fine but not sure why they are building this business |
| 5. Distribution? | 2 | Good revenue, but does this business have an unfair advantage in accessing their customers? |
| 6. Durability? | 1 | Not sure what's stopping another business from taking a simple computer vision AI and applying it to CCTV |
| 7. Secret? | 1 | SaaS to upgrade CCTV systems to automatic detection is a billion dollar business |
What has to go right for the startup to return money on investment:
1. Identify what is the pattern behind all the customers they're getting; 2. Team up with hardware providers to sell trials and discounts; 3. Get a vision for what this company is trying to become
What the Risks Are
1. What is the vision for this company to become a billion? 2. What is stopping camera companies from getting their own SaaS solutions? 3. Is this is a security company or a security feature?
Bonus Muhan's Notes
Updates
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.
Review these deal memos every time the startup raises a new round
Test if original thesis still applies
Notice trends in how you think
So, did I invest?
Click here to find out.Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.