Deal Abstract

Artificial intelligence software to increase conversions and reduce returns for the beauty industry

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

Want to read the whole post?

You don't have access to this post on Startup Investing for All by Muhan Zhang at the moment, but if you upgrade your account you'll be able to see the whole thing, including comments, as well as all the other posts in the archive! Subscribing only takes a few seconds and will give you immediate access.