Deal Abstract
Thumbtack for grant writers and grant applicants. Good revenue and users, but can it scale?
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $500000 |
| 2. Fundraised So Far? | $128251 |
| 3. Pre-Money Valuation? | $7000000 |
| 4. Previous Year's Annual Revenue | $189000 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$459881 |
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: Sacramento, CA |
| 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: Up and to the right |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Needs roughly $750k |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Managed marketplace for grants application |
| 2. Timing? | 2 | Good time to build marketplaces, but not sure this market is growing venture sized |
| 3. Monopoly? | 3 | Pretty niche space, but good user numbers in small niche |
| 4. People? | 2 | Team seems skilled but no one with a managed marketplace background in a related field |
| 5. Distribution? | 2 | Building the marketplace would benefit from someone who has a lot of sway in the industry |
| 6. Durability? | 3 | Feels pretty defensible |
| 7. Secret? | 1 | Grants and the demand for grant writers/consulting work is about to grow at a venture paced speed |
What has to go right for the startup to return money on investment:
1. At one point, OpenGrants should take a percentage of money it helps organizations secure; 2. Streamlining and processing of all standard grant opportunities into one place, almost like a common app; 3. Figure out who is the real customer, people giving grants or people looking for grants
What the Risks Are
1. Philanthropy doesn't appear to be a venture sized market; 2. There is already a network of grant writers and applicants who connect offline/through other marketplaces; 3. What benefit does the platform add to the process?
Bonus Muhan's Notes
Great mission, but will it make a great investment?
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.