Deal Abstract
Founders (spouses?) team up to make CBD dog treats. Subscription economy, CBD, and dogs/spending on pets during recession, lots of attractive components together.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$500000|
|2. Fundraised So Far?|$47382|
|3. Pre-Money Valuation?|$5000000|
|4. Previous Year's Annual Revenue |$175092|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$2373|
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? | True: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Tripled revenue |
| 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? | 3 | Haven't heard of CBD treats for dogs explicitly |
| 2. Timing? | 3 | Hemp, pets, anxiety... |
| 3. Monopoly? | 2 | Profitable and good revenue |
| 4. People? | 3 | Strong results. No special advantage, but founders have good results. |
| 5. Distribution? | 3 | D2c and that SUBSCRIPTION economy |
| 6. Durability? | 3 | Subscription subscription subscription |
| 7. Secret? | 3 | Subscription weed treats + dogs + economic recession = $$$ |
What has to go right for the startup to return money on investment:
1. Scale and go big; 2. Develop other high margin weed related products, maybe for cats/other pets?; 3. Keep building that subscription economy and potentially enter marketplace
What the Risks Are
1. Incredibly small business, is it venture backable; 2. Is the business a food company, weed company, or lifestyle brand?; 3. What if this isn't defensible?
Bonus Muhan's Notes
Stunning business for a vertical I have no personal experience in (sorry readers, I don't own pets.)
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.