Deal Abstract
Financing company wants to help contractors pass 0% interest split payments to their customers.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $56317 |
| 3. Pre-Money Valuation? | $12000000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$0 |
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: Dover, DE |
| 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: No revenue |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: No burn so infinite runway |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 1 | This is Affirm/financing for construction contractors |
| 2. Timing? | 2 | Lots of these financing platforms showing up |
| 3. Monopoly? | 1 | Very little market share |
| 4. People? | 2 | Team seems fine with good experience, but no financials online |
| 5. Distribution? | 3 | Working with contractors to offer the solution to customers |
| 6. Durability? | 1 | Not sure how another finance company wouldn't come in and swoop this opportunity if it's this lucrative |
| 7. Secret? | 1 | Offering financing to customers who couldn't afford to budget and save for big repairs is a venture backable business |
What has to go right for the startup to return money on investment:
1. Assess the credit and ability of people to pay accurately; 2. Build recurring revenue from contractors being able to consistently book new revenue; 3. Expand to more than just contractors as the number of contractors isn't a fast growing market
What the Risks Are
1. Contractors is not a fast growing market; 2. The category of customers who can't save and manage money for rehab is not a particularly lucrative market; 3. Construction management is also not growing at a venture speed
Bonus Muhan's Notes
Very curious to see more of the financials here.
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.