Deal Abstract

Online retail platform connecting private investors to real estate debt for single family home real estate entrepreneurs. The platform has provided annual returns of 10.6% to its investors over the last 7 years. Seems like a solid business but uncertain if venture backable.

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Why Investing/Passing

  1. Valuation: $73.9MM valuation means that the company has to become a unicorn to have a chance at 10x my money.
  2. Good Business but Not Venture Backable: Good growth from 2018 to 2019 with revenues going from $2.89MM to $6.4MM but in order to be worth a billion would have to get to $250MM in revenue. If you look at growth curve from 2014, it’s been 6 years and this is not hockey-stick shaped growth.
  3. Scalability: How many applications would this business have to process to do as much loan origination than X number of banks? And more importantly, can it really do it with radically less employees?

The 6 Calacanis Characteristics (91 161 18)

1. A startup that is based in SVNo: Atlanta, GA
2. Has at least 2 founders Yes: 2
3. Has product in the market Yes
4. 6 months of continuous user growth or 6 months of revenue.Yes: Revenue doubled from 2018 to 2019.
5. Notable investors?No: No one that I recognize.
6. Post-funding, will have 18 months of runway No: Only raised $2MM so only has half a year of runway at 2019 burn.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Good: if there is no platform that provides this type of financing, then it’s definitely better than nothing.
  2. The Timing question
    • Good: Convincing argument that investors are flocking to safer assets with more guaranteed returns.
  3. The monopoly question
    • Good: High regulation for other people to enter this market.
  4. The people question: 
    • Good: Team seems strong.
  5. The distribution question

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