Hearo.Live Deal Memo (December 2020)

Muhan Zhang -

Deal Abstract

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

CTO of the Sims is switching positions to CEO and pioneering a livestreaming app/technology that allows non-gamers replicate the gamer livestreaming experience. No revenue, but has notable investors and relevant industry experience.

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1m|
|2. Fundraised So Far?|$550k|
|3. Pre-Money Valuation?|$12.5m|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Burn |~$419k|

Hearo Live Form C.pdf

The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)

Criteria Yes/No
1. A startup that is based in SV? Yes: San Francisco, CA
2. Has at least 2 founders? No: One founder
3. Has product in the market? No: couldn't find in the app store "Hearo.live" for iOS
4. 6 months of continuous user growth or 6 months of revenue? No: see above.
5. Notable investors? Yes: 500 Startups, some famous names but nothing that blew me away
6. Post-funding, will have 18 months of runway? Yes: If can raise $1m, then will have runway.

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

Question Score Notes
1. Engineering? 2 Can't evaluate as video had no recordings, but how is this better than Discord/Twitch?
2. Timing? 2 Good timing for livestreaming, not sure this is good timing for mass mutual livestreaming/watching of television?.
3. Monopoly? 2 I've heard of this company but don't know anyone who owns one, that said, I'm not the market?
4. People? 2 I like that the CEO has tech experience but wish the VP was a co-founder so incentives were more equal.
5. Distribution? 2 Good in that it's digital distribution, but no unfair advantage to get users..
6. Durability? 2 See competitive defense against Discord/Twitch, etc..
7. Secret? 2 Gamers were the first to figure out constant on audio/livestreaming bonding and the rest of us will want to follow.

What has to go right for the startup to return money on investment:

  1. Deploy app to iOS and Android
  2. Monetize the network
  3. Probably enter exclusive media

What the Risks Are

  1. No market
  2. Features, not a business
  3. Transferability of gamer habits to non-gamer population

Bonus Muhan's Notes

Will ask questions to team and see what they say.

Updates

This is where I’ll post updates about the company. This way all my notes from offering to post-offering updates will be on one page.

Review these deal memos every time the startup raises a new round

Test if original thesis still applies

So, did I invest?

Click here to find out.

Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.