Deal Abstract

Invest in Gumroad
Republic is a startup investing platform where you can invest as little as $10 in impactful startups

Mature startup is kicking off the $5m new SEC raise limits. Almost finished round within 24 hours of launching. Marketplace for digital goods trying to enter the subscription economy.

Financials (VRB)

Question Notes
1. Fundraising Target? $5000000
2. Fundraised So Far? $4891362
3. Pre-Money Valuation? $100000000
4. Previous Year's Annual Revenue $4923912
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) ~$288092
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? True: San Francisco, CA
2. Has at least 2 founders? False: Two
3. Has product in the market? True: Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? True: Grew by 1.6m in revenue from 2019 to 2020, so nearly 50%
5. Notable investors? True: Greatest hits, so many famous inveestors
6. Post-funding, will have 18 months of runway? True: Profitable, so interesting that they're raising
Source

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

Question Score Notes
1. Engineering? 2 Engineering is good, but not 10x better. Stripe, Ghost, Substack, Patreon, etc. all offer recurring revenue for subscription.
2. Timing? 3 Creator economy definitely flourishing, but as someone in the creator economy, I didn't really think of Gumroad when building my subscription business
3. Monopoly? 2 Has a good amount of marketshare, but again, as someone in the creator/digital goods space, I don't know anyone using Gumroad
4. People? 2 Founder seems good but not noticing much of a team
5. Distribution? 3 Very good, heavy weight investors and strong brand
6. Durability? 3 Once creators are on the platform and the fees are reasonable, inertia is high. Switching from WP to Ghost for me was a pain.
7. Secret? 3 Taking the sales of digital courses and e-products and pivoting to subscription will take Gumroad to unicorn


Want to read the whole post?


You don't have access to this post on Startup Investing for All by Muhan Zhang at the moment, but if you upgrade your account you'll be able to see the whole thing, including comments, as well as all the other posts in the archive! Subscribing only takes a few seconds and will give you immediate access.