Deal Abstract
Instagram meets LinkedIn meets Thumbtack as this company tries to build an artist focused social network.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$149600|
|3. Pre-Money Valuation?|$5850000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-155220|
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: |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: No revenue |
| 5. Notable investors? | False: Not seeing anyone |
| 6. Post-funding, will have 18 months of runway? | True: If they fundraise 270k they'll be at 18 months of runway |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Slightly more tailored LinkedIn but not seeing the engineering as 10x better yet |
| 2. Timing? | 1 | Not sure why now is the right time to start this business |
| 3. Monopoly? | 1 | I don't know many artists using this yet, if anything YouTube, Soundcloud, and Spotify still own this |
| 4. People? | 1 | No previous success building a social network or job board |
| 5. Distribution? | 1 | Not sure how they have an edge in getting artists to sign up |
| 6. Durability? | 1 | Not sure why LinkedIn/something with a larger community wouldn't come in and get traction |
| 7. Secret? | 1 | Artists are not being served by existing social networks (Facebook/YouTube/Soundcloud, etc.) and will make a thriving social network if they can get gigs from their page |
What has to go right for the startup to return money on investment:
1. Monetize; 2. Figure out if it's ads or job board or livestreaming core base; 3. Become the gold standard of networking for artists
What the Risks Are
1. This problem is solved by Instagram; 2. Artists don't pay and going after this niche means there's not enough money to make an ad network; 3. Marginal not a painkiller solution
Bonus Muhan's Notes
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.