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|

Source

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

Source

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

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

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.