OpenGrants Deal Memo (Closing Date: 2022-02-28)

Muhan Zhang -

Deal Abstract

Invest in OpenGrants: A grant search engine and marketplace of independent grant consultants | Wefunder
A grant search engine and marketplace of independent grant consultants
OpenGrants on Wefunder

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
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: 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
Source

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

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