Deal Abstract
Innovega
Smart contact lenses and glasses that deliver high-performance AR/VR experiences
Indie company wants to solve the VR/AR problem with contact lens.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $15000000 |
| 2. Fundraised So Far? | $1571832 |
| 3. Pre-Money Valuation? | $54269000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-1745437 |
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: Spokane, WA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | False: No revenue |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Decreased from 2018 to 2019 |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: If they complete the round |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Engineering first product and business |
| 2. Timing? | 2 | Unambiguous, Google tried with Google Glass, Microsoft tried with HoloLens, Snap tried with Specs, Magic Leap tried with Leap 1, Facebook tried with Oculus |
| 3. Monopoly? | 1 | No market presence |
| 4. People? | 2 | Team seems fine but no unfair advantage in hardware optical product development |
| 5. Distribution? | 1 | Direct to consumer? |
| 6. Durability? | 2 | Not convinced they can defend against the big tech giants |
| 7. Secret? | 1 | Now is the time for an indie tech company to fund a VR headset when other tech companies have failed to do so |
What has to go right for the startup to return money on investment:
1. Launch product; 2. Monetize; 3. Figure proprietary moats and applications
What the Risks Are
1. Tons of failure in this space; 2. Hardware despite being cap intensive is also less defensible than software; 3. How to generate revenue
Bonus Muhan's Notes
I'm passionate about this space but need to get more clarity to see if this team can pull it off.
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
Notice trends in how you think
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.