Deal Abstract

https://www.startengine.com/liquidpiston

Creating a new type of piston engine. Uncertain who the customer is, nor when the technology will be finalized, never mind what the strategy for going to market in scale will be. Large valuation, pre-revenue from main product, and mainly run by a team of academics. Compare to Graze, Piestro, and Miso Robotics.

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The 6 Calacanis Characteristics (91 161 18)

Check	Yes/No
1. A startup that is based in SV	No: Bloomfield, CT
2. Has at least 2 founders	Yes (2)
3. Has product in the market	No
4. 6 months of continuous user growth or 6 months of revenue.	No: 2018 to 2019, revenue went from $2.8m to $1.9m.
5. Notable investors?	No:
6. Post-funding, will have 18 months of runway	yes: Burned $1,205,366 in 2019 and raised only $5m at present.

The 7 Thiel Questions (ETMPDDS)

1. The Engineering question (Can you create breakthrough technology instead of incremental improvements?):
   • Good: If it works, but at least the aspiration is there.
2. The Timing question (Is now the right time to start your particular business?): 
   • Bad: Not a particularly amazing time to make a new combustion engine.
3. The monopoly question (No?): 
   • Bad: No customers nor market dominance.
4. The people question (Do you have the right team?): 
   • Average: Bunch of nerds. Helpful for product, bad for business.
5. The distribution question (Do you have a way to deliver your product?): 
   • Average: Building a piston engine, would have to work with vehicle manufacturers? Complex B2B relationships?
6. The durability question (Will your market position be defensible 10 and 20 years into the future?): 
   • Good: Like the engineering question, this would be a good product if built, but not easy.
7. *What is the hopeful secret? (Have you identified an unique opportunity that others don’t see?): 
   • Their liquid piston engine is valuable enough that the unit economics and sales will be enough to rapidly displace the conventional piston engine.

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

1. Product
2. More funding
3. 10x better engineering

What the Risks Are

1. Quixotic pursuit for engineering feat with no commercial application
2. Time to market takes forever
3. Even once the engine is done, the process of manufacturing in lab to deployment is a problem of an entirely new magnitude

Muhan’s Bonus Notes

Hope they prove me wrong but not holding my breathe.

Financials (References)

• Current Fundraised: $5.2M
• Valuation: ~$56.8MM

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

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