Hotels by Day Deal Memo (Closing Date: 2022-02-28)

Muhan Zhang -

Deal Abstract

Invest in Hotels By Day: Hourly hotel services: Work, Live, Play. For the day. 🌞 | Wefunder
Hourly hotel services: Work, Live, Play. For the day. 🌞
Hotels By Day on Wefunder

WeWork + Daycation = DayWork, ergo, a company wants to let you rent hotel conference rooms and amenities like a coworking space by the hour.

Financials (VRB)

Question Notes
1. Fundraising Target? $1070000
2. Fundraised So Far? $67000
3. Pre-Money Valuation? $15000000
4. Previous Year's Annual Revenue $241940
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) ~$-116804
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? False: New York, NY
2. Has at least 2 founders? False: Two
3. Has product in the market? False: Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? False: Declined in COVID
5. Notable investors? False: No one I'm seeing
6. Post-funding, will have 18 months of runway? True: Needs around $200k

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

Question Score Notes
1. Engineering? 1 Creating a platform to combine WeWork + Daycation
2. Timing? 2 I guess it makes sense with COVID
3. Monopoly? 1 Not a lot of market share
4. People? 2 Team seems fine
5. Distribution? 2 Two sided marketplace means they need to get day travelers to use Hotel By Day for amenity services
6. Durability? 2 Not easy to build this supply of services
7. Secret? 1 Due to changes brought about by COVID, office workers are going to rent hotel amenities by the hour

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

1. Get hotels to start promoting these services; 2. Hotels by Day should probably team up with Airbnb; 3. Increase loyalty among power users and figure out why they stay

What the Risks Are

1. Competing against WeWork isn't easy; 2. Seasonal business as demonstrated by declining revenue; 3. Nice to have not a painkiller

Bonus Muhan's Notes

Feels like WeWork meets Daycation

Updates

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

Test if original thesis still applies

So, did I invest?

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