Deal Abstract
B2B2C SaaS company for martial art schools and students. Has a product and modest revenue, but is the market venture backable?
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $50000 |
| 2. Fundraised So Far? | $13501 |
| 3. Pre-Money Valuation? | $2500000 |
| 4. Previous Year's Annual Revenue | $2250 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-2883.47 |
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: Miami, FL |
| 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: Revenue increased from 2019 to 2020 |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Low burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Pretty and specialized for martial arts |
| 2. Timing? | 2 | Digital transformation applied to martial arts |
| 3. Monopoly? | 3 | Good number of users, but low revenue |
| 4. People? | 2 | Founder is a product designer and has built the process |
| 5. Distribution? | 2 | Got to 4k martial art schools and 18k users, so decent distribution |
| 6. Durability? | 3 | If can be built, essentially a CRM/POS/all in one business management SaaS for martial arts |
| 7. Secret? | 2 | Martial arts is growing, the managers of these businesses are looking for digital transformation to revitalize their businesses |
What has to go right for the startup to return money on investment:
1. Drive more consistent revenue; 2. Understand who are the new proprietors of martial arts school; 3. Build a platform, when does Dojoplus start hosting nationwide competitions?
What the Risks Are
1. Thin market that doesn't have a high willingness to pay; 2. Unlike Yoga or Crossfit, I don't see any adults starting martial arts; 3. Good product bad market
Bonus Muhan's Notes
Very cool, given that I was introduced to the company through a warm intro.
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.