Deal Abstract

Pre-revenue fintech company for emerging companies wants to be the PayPal/Square/Venmo/Braintree. Burned $1.1MM in 2018 and 2019, each, raising money at a $30MM valuation. Will only raise ~7 months of runway at present fundraising terms.

Shout out to reader John for forwarding me the deal!

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The 6 Calacanis Characteristics (91 161 18)

1. A startup that is based in SVNo: New York, NY
2. Has at least 2 founders No: 1 (CEO holds 86.2% of the equity.)
3. Has product in the market Yes
4. 6 months of continuous user growth or 6 months of revenue.Yes: Users grew from 688 to 3239 in six months.
5. Notable investors?No
6. Post-funding, will have 18 months of runway No: Burned $1.1MM in 2018 and 2019, each, currently raising max $700k which is 7.6 months of runway.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: not seeing fundamentally any new technology.
  2. The Timing question
    • Uncertain: Good for fintech but this company is trying to be PayPal/Square/Venmo/Braintree for emerging markets and I’m not sure they’d do it besides better than the OGs.
  3. The monopoly question
    • Good: if they could actually build it, this would be great. But the level of capital to build this is far exceeding their non-existent revenue.
  4. The people question: 
    • Eh: Not seeing anyone with fintech experience prior.
  5. The distribution question
    • Bad: Marketing to consumers is straightforward, but getting businesses onboard not easy.
  6. The durability question
    • Good: if they could build it.
  7. *What is the hopeful secret?: 
    • They can bootstrap a multi-prong fin-tech company that does peer-to-peer payments, vendor payments, and API integration when these technologies took decades to take root in the United States among several different players.

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

  1. Revenue
  2. Novel technology to

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