Lil Bucks Deal Memo (Closing Date: 2021-04-23)

Muhan Zhang -

Deal Abstract

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Female entrepreneur brings back Buckwheat superfood culture from Australia to the U.S. Working with the Hatchery in Chicago.

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$250000|
|2. Fundraised So Far?|$56000|
|3. Pre-Money Valuation?|$4000000|
|4. Previous Year's Annual Revenue |$25522|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-46919|

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: Trout Valley, IL
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? True: Revenue increased from 2018 to 2019
5. Notable investors? True: Sort of: https://thehatcherychicago.org/
6. Post-funding, will have 18 months of runway? True: Call it $75k to have 1.5 years, very close
Source

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

Question Score Notes
1. Engineering? 1 Not an engineering innovation, just application of existing technology
2. Timing? 1 Not sure why buck superfoods at this point is about to be venture backable
3. Monopoly? 1 Don't know anyone eating it
4. People? 2 Good founder but would have preferred more experience in food innovation
5. Distribution? 1 eCommerce is nice but getting into the retailers will be a pain
6. Durability? 1 Not sure what is durable about this
7. Secret? 2 Starting with buck foods is a beachhead for building a super food company

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

1. Get into retailers; 2. sell sell sell; 3. expand into other superfoods and not just be a one product company

What the Risks Are

1. Food doesn't scale fast; 2. Concerned about defensibility; 3. Ongoing R&D costs of new superfood procurement

Bonus Muhan's Notes

Updates

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