Subscription box for cannabis paraphernalia. Solo founder and teammate bootstrapped a business to $2m in revenue with $140k in profit. The entrepreneurial dream, but is it the investor's dream?
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$6700|
|3. Pre-Money Valuation?|$8500000|
|4. Previous Year's Annual Revenue |$2396800|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$151140|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
|1. A startup that is based in SV?||False: Phoenix, AZ|
|2. Has at least 2 founders?||False: Two|
|3. Has product in the market?||True: Subscription!|
|4. 6 months of continuous user growth or 6 months of revenue?||True: Grew from $2m to $2.3m in 2018 to 2019|
|5. Notable investors?||False: Bootstrapped!|
|6. Post-funding, will have 18 months of runway?||True: Profitable!|
|1. Engineering?||2||Not an engineering play, but a recurring distribution play|
|2. Timing?||2||Good time for subscription and cannabis|
|3. Monopoly?||2||Will check in with weed smoking friends, haven't heard of it but hard to argue with revenue|
|4. People?||2||Small team of two, but bootstrapping to this level on two is incredibly impressive|
|5. Distribution?||3||Direct to consumer subscription!|
|6. Durability?||2||Owns the relationship with the user, though no barrier to entry for someone else to come in|
|7. Secret?||2||Cannabis use and growth is going to make a subscription box for this business venture backable|
What has to go right for the startup to return money on investment:
1. Grow faster; 2. Become more vertically integrated; 3. Develop product further not just to newbies but regular smokers
What the Risks Are
1. Growing too slow, esp the 2018 to 2019 revenue; 2. Subscription box is not a technology play, why can't a competitor show up and split the market; 3. This is selling pick axes to the goldminers (smokers?), so it risks fundamentally being a widgets market fundamentally
Bonus Muhan's Notes
Gotta love the subscription economy.
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.
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