Deal Abstract
Startup selling analytics as a form of content and retention increasing for fantasy sports gamblers.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $5000000 |
| 2. Fundraised So Far? | $653173 |
| 3. Pre-Money Valuation? | $19000000 |
| 4. Previous Year's Annual Revenue | $743753 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-28906 |
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: Carlsbad, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Making money |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Growth is barely there, need to ask about it |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Low burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Data analytics in mobile app compelling |
| 2. Timing? | 3 | Indeed, sports betting is getting legalized once |
| 3. Monopoly? | 3 | Good traction |
| 4. People? | 2 | Seem good but don't see any previous experience with massively successful gaming/analytics apps |
| 5. Distribution? | 2 | Good traction but CAC is not stronger than others |
| 6. Durability? | 3 | Quite sticky and should continue drawing customers |
| 7. Secret? | 2 | Analytics and guidance for sports bets is going to grow at a venture clip |
What has to go right for the startup to return money on investment:
1. Troubleshoot the stalled growth; 2. Continuing launching hits for different gambling markets and have proprietary ways to get data; 3. Reward people for staying in Fantasy Sports co ecosystem and not lose to DraftKings
What the Risks Are
1. What's to stop the Draftkings of the world from doing this at some point? 2. Cost of R&D in churning out these apps = more churn; 3. At best, this is a Venture Studio model and not a venture backable business model unless fantasy sports goes big in a big way
Bonus Muhan's Notes
Updates
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Review these deal memos every time the startup raises a new round
Test if original thesis still applies
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So, did I invest?
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