LoraDiCarlo Deal Memo (Closing Date: 2021-07-01)
Deal Abstract
Sexual wellness brand and manufacturer. Had $7m in seed funding from founder and has a star-studded team.
Financials (VRB)
Question | Notes |
---|---|
1. Fundraising Target? | $1070000 |
2. Fundraised So Far? | $488484 |
3. Pre-Money Valuation? | $40000000 |
4. Previous Year's Annual Revenue | $7402729 |
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-4194526 |
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: Bend, OR |
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: Fantastic revenue |
5. Notable investors? | False: No one I know |
6. Post-funding, will have 18 months of runway? | False: Needs $7.5m in venture funding |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
Question | Score | Notes |
---|---|---|
1. Engineering? | 2 | Engineering seems fine but branding seems key differentiator here |
2. Timing? | 3 | Good time for wellness and sex tech |
3. Monopoly? | 3 | $7m in sales is hard to refute |
4. People? | 5 | Super star team |
5. Distribution? | 3 | Again, check out the $7m in revenue |
6. Durability? | 3 | Good brand, revenue, and investors, super durable, though I believe there are other brands coming for this market too |
7. Secret? | 2 | Building a lifestyle brand around sexual wellness is going to return venture style returns |
What has to go right for the startup to return money on investment:
1. Succeed in destigmatizing sexual wellness; 2. Build a very well known brand like My Lola; 3. Get celebrities and famous people repping the brand
What the Risks Are
1. Growing at normal e-commerce scale; 2. Destigmatizing the market and demand for this is more of a macro issue than one that the company can meaningfully accelerate; 3. Competitors and knock offs/need to build moat
Bonus Muhan's Notes
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.