Algae farming for cost-competitive, eco-friendly crude oil replacement. Has a founder that has operational and academic experience. Needs to figure out how to solve distribution, go-to-market, and scaling risk if they want to become a billion dollar company.
|1. Fundraising Target? |$1m|
|2. Fundraised So Far?|$135k|
|3. Pre-Money Valuation?|$6m|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Burn |~$169k|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
|1. A startup that is based in SV?||No: Owings Mill, MD|
|2. Has at least 2 founders?||No: One CEO founder, and co-founder who is now advisor|
|3. Has product in the market?||No|
|4. 6 months of continuous user growth or 6 months of revenue?||No|
|5. Notable investors?||Yes: US DOE grant, State of Maryland, etc.|
|6. Post-funding, will have 18 months of runway?||Yes: Likely but costs may go up when trying to bring product to market.|
|1. Engineering?||4||Though I'm not that prepared to evaluate the engineering product, it claims to be better.|
|2. Timing?||2||Good in that the world is more eco-conscious, negative points in that it may be wrong timing as world transitions to EVs.|
|3. Monopoly?||1||No, only sold to beta customers.|
|4. People?||3||Founder has good practical and academic experience, but will be curious if he can commercialize the tech with team.|
|5. Distribution?||2||Not bad, not great. How do you distribute fuel like this? Fuel stations? Wholesale?|
|6. Durability?||2||If they can build it, the technology is proprietary, but then asks questions what happens if someone comes up with another fuel.|
|7. Secret?||2||The timing is not right for full consolidation into EVs yet, and the remaining market will be serviced by more green friendly energy sources.|
What has to go right for the startup to return money on investment:
- Bring Product to Market: Selling to one customer good, but still need to get recurring purchases of products from a market.
- Scale and Go Industrial: Producing in small batches one thing, mass production something else.
- Find Niche Applications not EV-able: EV is disrupting natural fuels for consumer vehicles, needs to find where companies aren't doing this and build a defensible distribution channel.
What the Risks Are
- Too Small: Selling an alternative fuel for niche applications may not be a billion dollar business.
- Wrong Thesis: In addition, what happens if the technology for EV gets better so that even niche applications of any noteworthy size don't use fuel?
- Distribution Risk: Do they have to build Manta fuel stations to distribute this?
Bonus Muhan's Notes
Algae and sustainable fuel, who would've thought!
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