Deal Abstract

Two Harvard alums are teaming up to make a subscription model Robinhood. Can they build the media strategy to pull off a third commission free brokerage?

NOTE: this company appears to have been pulled. Not sure what's going on, but will update when I see any.

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1000000|
|2. Fundraised So Far?|$1000|
|3. Pre-Money Valuation?|$10000000|
|4. Previous Year's Annual Revenue |$54660|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-874369|

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: New York, NY
2. Has at least 2 founders?	True: Two
3. Has product in the market?	True: Revenue generating
4. 6 months of continuous user growth or 6 months of revenue?	True: 2019 revenue went from $17k to 2020 revenue $54k
5. Notable investors?	False: No one I recognize
6. Post-funding, will have 18 months of runway?	False: Burn really high

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question	Score	Notes
1. Engineering?	2	How is this better than Public.com?
2. Timing?	1	I fear that it's late
3. Monopoly?	1	20k users is impressive, but not a large amount compared to RH and Public
4. People?	2	People are fine but not much entrepreneurial experience
5. Distribution?	2	Can get users, as they already got 20k
6. Durability?	1	Fee free trading as a platform, even with social aspects, is not durable without star power/network effects of influencers
7. Secret?	1	Charging $5/mth is enough to beat Robinhood's or Public's business model

What has to go right for the startup to return money on investment:

1. Stop the hemorrhaging of cash; 2. Get influencers on the platform; 3. Provide consistent actionable content that is worth the $5/mth subscription fee

What the Risks Are

1. Vitamine, not a painkiller feature of social aspect; 2. Too late with RH and Public already taking this market very far; 3. Not doing 'pay for order flow' or 'media business' well so therefore being stillborn business

Bonus Muhan's Notes

Will be curious to see content strategy

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?

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.