Deal Abstract

https://www.seedinvest.com/coursalytics/seed

Calacanis LAUNCH approved two-sided marketplace company builds a platform for selling excess capacity at brand name universities selling executive education courses. Founders have been in HR space since 2009, then MOOC in 2015.

Coursalytics is an online marketplace for executive education that makes it easier for corporate learning officers and executives to find, compare, and book thousands of open enrollment programs globally.

Decision

Yes. (Hypothetically.)

Why Investing/Passing

  1. Raising $600k at $2.5MM valuation is very reasonably priced for a company that has doubled revenue in one year. Granted, COGS has also gone up, but a two-sided marketplace is definitely scalable once it finds its place in the market.
  2. Notable investors, partnering with Education institutions which have a defacto monopoly on brand and also distribution, means aligned incentives with incumbents.
  3. Seem like the right founders for this team, though they are unlikely to make this a unicorn within 3-5 years. That said, getting to a cashflow positive healthy business and building something defensible in the EdTech space is not a bad move at all.

The 11 Calacanis Characteristics (91 161 18)

Passed on 5/6.

CheckPass/Fail
1. A startup that is based in SVFail: (Philadelphia, PA & Washington, D.C. based on LinkedIn searches of the team)
2. Has at least 2 founders Pass
3. Has product in the market Pass
4. 6 months of continuous user growth or 6 months of revenue.Pass
5. Notable investors?Pass
6. Post-funding, will have 18 months of runway Pass: burn rate is $14k/mth, at $300k raise this is 23 months.

Burn for 2018 was 169k (revenues less COGS and operating expenses.) Monthly burn is therefore 14k/month. At the minimum of a $300k raise, they’d have 23 months of burn. Salaries combined are $95k, which seems extremely reasonable for now.

Courselytics Financial Summary (Hosted link.)

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Good: so much as aggregator marketplaces are always 10x better than individual providers and their sites, yes.
  2. The Timing question: 
    • Good: not the best, not sure why 2019 June is the precise time EdTech exec education will take off, but all the macro stuff is together. Two-sided marketplaces that sell under utilized capacity is a great move, and we’ve seen the growth of MOOCs, accelerators, etc.
  3. The monopoly question: 
    • Good: If this becomes the one last platform to aggregate all brand-name education for execs, this is very good.
  4. The people question: 
    • Good: the founders seem well positioned to execute on this.
  5. The distribution question: 
    • Bad: needs to partner with a lot of juggernauts to finally get to revenue.
  6. The durability question: 
    • Good: sales cycles with education and universities is probably very durable. As long as you get the trust, this is very durable.
  7. *What is the hopeful secret?: 
    • The “executive” education market is much larger from a demand side than one expects/this market can then expand to other lucrative markets very quickly.

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

  1. Rinse lather repeat with many universities, building something defensible.
  2. High realization of value with executives and building of relationships to organization decision makers (chief learning officers.)
  3. After dominating and establishing monopoly profits in the space for American executive education, they identify a series of other lucrative markets and quickly expand.

What the Risks Are

  1. Market risk: what if the TAM of executive education taps out, and there are no big secret lucrative markets to tap into. This is a barbell risk: either not a risk at all, or existential.
  2. Has experienced a down-round, and this round is technically a down-round. Took a while for the founders to find their footing in the last three years.
  3. What do the Ivy leagues/prestigious universities think about having their professors taken? Think EdX. That said, because incumbents are more well-resourced, their ability to move fast may be tampered.

Financials (References)

  • Total Amount Raised: US $105,000
    Total Round Size: US $600,000
    Raise Description:  Seed
    Minimum Investment:  US $1,000 per investor
    Security Type:  Crowd Note
    Valuation Cap:  US $2,500,000
    Offering Type:   Side by Side Offering
  • Target Minimum:US $300,000

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