Deal Abstract
Battery and charging company wants to be the one company to build charging stations for school buses.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$1001096|
|3. Pre-Money Valuation?|$19200000|
|4. Previous Year's Annual Revenue |$847042|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-129299|
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: Santa Barbara, 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? | False: $813k to $847k from 2018 to 2019 which is essentially no growth |
| 5. Notable investors? | False: Absence of confirmation in this case is as good as confirmation of absence |
| 6. Post-funding, will have 18 months of runway? | True: At this point has a year of runway and then some. |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Builds charging docs for electric vehicles, 'Our Unique Product: Our patented HYDRA-RX is the only charger controller on the market that can work with maximum output AC chargers for electric vans and buses at one-tenth of the cost of a typical DC Fast Charger.' |
| 2. Timing? | 2 | Good time for electric vehicles but why is now a good time to install these? |
| 3. Monopoly? | 2 | Small business like market penetration but no winner take all of micro market perceived |
| 4. People? | 2 | Competent old professionals but mainly a bunch of nerds trying to make a product make money |
| 5. Distribution? | 1 | Has to go B2B with very slow inertia orgs |
| 6. Durability? | 2 | Not sure why someone would keep using LAT after install, they seem just like any other provider |
| 7. Secret? | 1 | Applying mostly commodity technology to a unique vertical (school buses) is the way to get a billion dollars |
What has to go right for the startup to return money on investment:
1. Consistently identify the champion who is going to lobby this technology inside their org; 2. Troubleshoot the stalling in growth; 3. Get really good at fast deployment and probably team up with vendor companies to do mass installations
What the Risks Are
1. This is a hardware technology business and follows a small business growth more than venture growth; 2. Revenue stalled from 2018 to 2019; 3. What happens when Tesla makes a self driving school bus
Bonus Muhan's Notes
Cool company, will be curious to ask questions and get clarity.
Updates
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So, did I invest?
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