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

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

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

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