Deal Abstract
Father daughter Latino family is teaming up to make an English/Spanish interactive reading adventure app.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$91433|
|3. Pre-Money Valuation?|$5000000|
|4. Previous Year's Annual Revenue |$3370|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-25397|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
| Criteria | Yes/No |
|---|---|
| 1. A startup that is based in SV? | True: San Jose, CA |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: 2018 to 2019 was nominal growth, we'll see about this 2020 revenue |
| 5. Notable investors? | False: No one I know from the LatAm world |
| 6. Post-funding, will have 18 months of runway? | False: Would need $400k for that type of runway |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 1 | No novel technology |
| 2. Timing? | 1 | Not sure why now is the right time to build an interactive digital book |
| 3. Monopoly? | 2 | Never heard of it, but to be fair, has 1m downloads |
| 4. People? | 2 | Father, daughter, the pair have no previous experience in this space |
| 5. Distribution? | 2 | All app store but no unfair free advantages |
| 6. Durability? | 2 | I do wonder why Amazon Kindle/Audible wouldn't do something similar |
| 7. Secret? | 1 | Interactive engagement is the lever that will get people reading more |
What has to go right for the startup to return money on investment:
1. Thesis has to be right; 2. Monetization has to go according to scale; 3. Licensing rights with authors and establish true partnerships with authors
What the Risks Are
1. Vitamin not a painkiller; 2. Monetization very modest; 3. Nothing defensible
Bonus Muhan's Notes
Updates
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Review these deal memos every time the startup raises a new round
Test if original thesis still applies
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So, did I invest?
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