Deal Abstract

Invest in Cannabox
Republic is a startup investing platform where you can invest as little as $10 in impactful startups

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?

Financials (VRB)

|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)

Criteria Yes/No
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!

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
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.


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

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