Deal Abstract

https://wefunder.com/fancy

Another “virtue” aspirational competitor to Amazon. Company has existed for a decade and burned $100m in capital. Compare to DoneGood two years ago. Revenue decreased in last year, Jet.com was an acquihire, Fancy’s Founder and CEO has been replaced, and I’m skeptical that a16z (https://a16z.com/portfolio/) among others have invested in this company.

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The 6 Calacanis Characteristics (91 161 18)

Check	Yes/No
1. A startup that is based in SV	No: New York, NY
2. Has at least 2 founders	Yes (3)
3. Has product in the market	Yes
4. 6 months of continuous user growth or 6 months of revenue.	No: 2018 to 2019, revenue went from 2.16M to $877k.
5. Notable investors?	Allegedly: General Catalyst, a16z, Jack Dorsey, Will Smith, and Carlos Slim.
6. Post-funding, will have 18 months of runway	No: 2019 burn was $4.2m and only fundraised $436k so far. This is 1.2 months of runway.

The 7 Thiel Questions (ETMPDDS)

The Engineering question (Can you create breakthrough technology instead of incremental improvements?):
- Bad: Don’t see this as better than Amazon.com
The Timing question (Is now the right time to start your particular business?):
- Bad: Jeff Bezos has made nearly $100 BILLION (that’s b as in baller, b as in bazonkers, b as in Bezos…) since the pandemic (source.) Not convinced this is a good time to go against Amazon. Maybe it’ll never be a good time to compete against Bezos lol.
The monopoly question (Are starting with a big share from a small market?):
- Bad: Never heard of this company before today.
The people question (Do you have the right team?):
- Average: The founders of Jet.com had Marc Lore (founder of Diapers.com who sold to Amazon under capitalism extortion.) If Jet.com was just an acquisition against Walmart, I’m not convinced this team has unfair advantage.
The distribution question (Do you have a way to deliver your product?):
- Average: Online commerce.
The durability question (Will your market position be defensible 10 and 20 years into the future?):
- Bad: See diapers.com being extorted being sold to Amazon.
*What is the hopeful secret? (Have you identified an unique opportunity that others don’t see?):
- Virtue will finally matter in markets. See this related post from Thiel and Zero-to-One: “Tesla knew the secret that people care more about showing off their virtue than actual virtue.”

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

Not convinced startup will make money on investment

What the Risks Are

Amazon

Muhan’s Bonus Notes

Hope they prove me wrong but not holding my breathe.

Financials (References)

Current Fundraised: $436k
Valuation: ~$12MM

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

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