Deal Abstract
![](https://uploads.republic.co/p/offerings/seo_images/default/000/000/672/672-1600277958-f596b1f30b84273f6d92290d27b61390bc81cd34.jpg)
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.
Financials (VRB)
|Question|Notes|
|---|---|---|
|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|
![](https://muhanzhang.com/content/images/2020/11/image-11.png)
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
Criteria | Yes/No |
---|---|
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. |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
Question | Score | Notes |
---|---|---|
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!
![](https://muhanzhang.com/content/images/2020/11/image-12.png)
![](https://muhanzhang.com/content/images/2020/11/image-13.png)
![](https://muhanzhang.com/content/images/2020/11/image-14.png)
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
![](https://muhanzhang.com/content/images/2020/10/image-13.png)
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.