Deal Abstract
Two cofounders bought a struggling farm business and are now revamping it. Strange inconsistent financials that I need clarity on.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$376416|
|3. Pre-Money Valuation?|$18500000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$0|
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: Belvidere, NJ |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | False: No revenue |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: See above |
| 5. Notable investors? | False: Bootstrapped |
| 6. Post-funding, will have 18 months of runway? | True: No burn because no operations |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 1 | Not sure where the engineering difference is |
| 2. Timing? | 1 | Why is now the opportune time to start this business? |
| 3. Monopoly? | 1 | No revenue |
| 4. People? | 2 | Cofounders have worked before but no prior obvious success |
| 5. Distribution? | 2 | Seems to have good distribution |
| 6. Durability? | 2 | High capex to break into business but otherwise a commodity |
| 7. Secret? | 1 | Now is the time to start a technology enabled unicorn business in growing produce? |
What has to go right for the startup to return money on investment:
1. Generate revenue; 2. Build out distribution that is directly with consumers; 3. Enter other higher margin businesses
What the Risks Are
1. Financial structure; 2. Commodity no innovation; 3. Not venture backable
Bonus Muhan's Notes
Lettuce learn more :)
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.