Deal Abstract

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

Facebook for ex convicts, making money by getting them jobs.

Financials (VRB)

Question Notes
1. Fundraising Target? $371055
2. Fundraised So Far? $4775
3. Pre-Money Valuation? $10000000
4. Previous Year's Annual Revenue $464874
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) ~$-671480
Source

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: Los Angeles, CA
2. Has at least 2 founders? False: Two
3. Has product in the market? True: Market stalled due to Covid - launched social network component during down cycle.
4. 6 months of continuous user growth or 6 months of revenue? True: Revenue grew 5 times in a year
5. Notable investors? True: YC and Founders Fund
6. Post-funding, will have 18 months of runway? False: Raising too little money
Source

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

Question Score Notes
1. Engineering? 3 Don't know of another Facebook for cons
2. Timing? 2 COVID timing really kicked them in the butt
3. Monopoly? 3 Again, I know few social networks for this community that are venture backed
4. People? 3 Founder has financial services background and has been in prison
5. Distribution? 3 Word of mouth I presume
6. Durability? 3 Durable
7. Secret? 2 Building a social network and services for cons is a venture backable business

What has to go right for the startup to return money on investment:

1. Go deep on the jobs revenue by identifying employers most likely to hire; 2. Build strong brand that actually makes cons who are certified by Commissary more safe to hire; 3. Become as essential as Amazon Prime to ex-cons

What the Risks Are

1. Market is not growing at venture speed; 2. Perception of cons is not growing at venture speed; 3. Rich people problems being solved here is employers, and as a backup, cons are not a great market due to limited purchasing power

Bonus Muhan's Notes

Really inspirational business here. On the fence. Need to ask questions.

Responded via email and published with permission.

Updates

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

Test if original thesis still applies


So, did I invest?

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.