Envel Deal Memo (Closing Date: 2021-03-18)

Muhan Zhang -

Deal Abstract

Invest in Envel 🚀: 🏦 Building the World’s Smartest Bank Account | Wefunder
See why 1230 Wefunder investors invested in us. Read up on our mission, team, and traction.
Envel 🚀 on Wefunder

Nerds from Boston raised (and burned!) an astounding amount of money to build an app for budgeting. Is this the future of banking?

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$1225313|
|3. Pre-Money Valuation?|$15000000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-1143644|

Source

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: Boston, MA
2. Has at least 2 founders? False: Two
3. Has product in the market? True: Beta online
4. 6 months of continuous user growth or 6 months of revenue? False: No revenue
5. Notable investors? False: Lots of institutional accelerator free competition money
6. Post-funding, will have 18 months of runway? False: Burning a lot of money
Source

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
1. Engineering? 2 Prettier app but nothing fundamentally different
2. Timing? 2 Good timing, but is this the right solution?
3. Monopoly? 1 20 ratings on App Store, nothing to write home about
4. People? 1 No one with banking experience
5. Distribution? 1 Downloading app to get users?
6. Durability? 2 It is a bank, so once someone starts with them should not switch easily
7. Secret? 1 Building a better UI/UX mobile app will make a superior bank

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

1. Develop a monetization strategy; 2. Acquire users; 3. Build a platform for tight integration via digital banking

What the Risks Are

1. Founders have no experience in banking; 2. What is the proprietary value add; 3. AI budgeting is not that useful of a feature

Bonus Muhan's Notes

Low-income families are getting terrible financial advice online
A recent Reddit thread shows some common misconceptions about poverty
MarketWatchMaria LaMagna

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

So, did I invest?

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.