Deal Abstract
![](https://d15lpsnkiz3586.cloudfront.net/uploads/2020/10/14/1602710794/SeedInvest2copy.jpg)
AI company wants to help you see what a piece of clothing looks like on you before you buy. Pretty ambitious stuff, indie version of Amazon Look.
Financials (VRB)
Question | Notes |
---|---|
1. Fundraising Target? | $1500000 |
2. Fundraised So Far? | $215300 |
3. Pre-Money Valuation? | $15000000 |
4. Previous Year's Annual Revenue | $0 |
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-1387330 |
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: Los Angeles, CA |
2. Has at least 2 founders? | True: Two |
3. Has product in the market? | True: Deployed at a top-10 (USA) retailer's select site (Target Corp) |
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? | False: Would need 1.95m of burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
Question | Score | Notes |
---|---|---|
1. Engineering? | 4 | Seriously impressive engineering between body scan, CAD to scan, fitting and draping, and visualization of fit |
2. Timing? | 3 | Very good time to be optimizing e-commerce given COVID |
3. Monopoly? | 1 | Not many people using nor revenue |
4. People? | 2 | Strong team of nerds but don't see them with retail/sales experience |
5. Distribution? | 2 | This is my biggest concern, getting people to adopt this product requires B2B connections. That said, they already piloted with Target, which helps. |
6. Durability? | 5 | If this company can get adoption, as the model gets more data about fit, CAD, and return rates, it will only get better. |
7. Secret? | 3 | AI visualization of clothing fits will help customers buy clothing more confidently and scalably in the world of e-commerce |
What has to go right for the startup to return money on investment:
1. Monetize; 2. Algorithm gets consistently better; 3. Balance helping customers keep data while aggregating intelligence from data
What the Risks Are
1. Business model; 2. Feature not a business; 3. Distribution risk selling to large apparel companies
Bonus Muhan's Notes
Need to learn more about business model
![](https://muhanzhang.com/content/images/2021/02/image-27.png)
![](https://muhanzhang.com/content/images/2021/03/image-1.png)
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
![](https://muhanzhang.com/content/images/2020/10/image-13.png)
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.