Deal Abstract
Image analysis peeps are tackling foundation color identification to assist the ecommerce beauty transition. Pre-revenue and will be interesting to see growth trajectory.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1500000|
|2. Fundraised So Far?|$20000|
|3. Pre-Money Valuation?|$7000000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-159640|
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: Vancouver, WA |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: Increased a leading online beauty retailer's foundation purchase conversion rate by 5x in a 20-day period (from the retailer's reported 2.3% YTD average to 13.16%) |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: No revenue |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Likely to raise 18 months of runway |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 4 | Not sure if perfect perfect, but targeted image recognition def better than existing solutions imo (though I'm not the market) |
| 2. Timing? | 2 | Good time to build this technology with smartphone cameras and ecommerce |
| 3. Monopoly? | 2 | Has adoption but customers aren't paying for it yet |
| 4. People? | 2 | Engineering heavy team which is good but no obv experience selling SaaS to big beauty companies |
| 5. Distribution? | 2 | B2B sales and no unfair advantage from what I can see |
| 6. Durability? | 3 | If can be built, very, very defensible |
| 7. Secret? | 3 | The convergence of image recognition, smart phone sensors, and ecommerce makes this the best time to build this company. |
What has to go right for the startup to return money on investment:
1. Product has to be accurate in the skin tone matching; 2. Generate additional sales and get rev share agreement; 3. Sell innovation to beauty companies, which I don't historically find as very tech forward.
What the Risks Are
1. Product not a business; 2. What happens if Amazon with Amazon Look and wardrobe enter this and do the same thing; 3. Partners are not eager adopters
Bonus Muhan's Notes
Very cool to see this company. Will be curious if the solution can find a problem.
Updates
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