Deal Abstract

https://www.seedinvest.com/gatsby/series.a

Robinhood for options trading. Has lots of brand name investors, but raising on a $25MM valuation with no revenue. Uncertain what the defensible secret is.

Shout out to reader DK for forwarding me the deal!


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The 6 Calacanis Characteristics (91 161 18)

CheckYes/No
1. A startup that is based in SVNo: New York, NY.
2. Has at least 2 founders Yes: Two.
3. Has product in the market Yes
4. 6 months of continuous user growth or 6 months of revenue.Yes: growing at 10%/week in usage. Acquired over 7,000 accounts since launch with an average funded account balance of over $1,100
5. Notable investors?Yes: Barclays, Techstars, Rosecliff Ventures, SWS Ventures, Irish Angels and Plug & Play Ventures
6. Post-funding, will have 18 months of runway Yes: 2019 burn was $1.1M, targeting $5MM in funding so coming in right around 60 months.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: Not seeing how it’s 10x better than Robinhood.
  2. The Timing question
    • Good: Robinhood has proven the appeal of commission-free trading among millennials.
  3. The monopoly question
    • Good: Can scale quickly.
  4. The people question: 
    • Fine: Team seems fine, but no experience in options startups or fintech businesses.
  5. The distribution question
    • Good: Direct to consumer.
  6. The durability question
    • Bad: This is my perennial concern: what’s to stop Robinhood doing to Gatsby what Facebook does to any of its competitors? (Instagram Stories for Snapchat, Reels for TikTok, etc.)
  7. *What is the hopeful secret?: 
    • There is a superior business model that Gatsby will have that can make it more lucrative and successful


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