Deal Abstract
Innovation in the cycling backpack/apparel market. Founder has bootstrapped a lifestyle brand and raising capital to grow.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$250000|
|2. Fundraised So Far?|$40537|
|3. Pre-Money Valuation?|$3500000|
|4. Previous Year's Annual Revenue |$217841|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-43009|
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? | False: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Revenue decreased from 2018 to 2019 |
| 5. Notable investors? | False: Bootstrapped |
| 6. Post-funding, will have 18 months of runway? | True: $43k annual burn, at 18 months would be ~$75k |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Unique bicycle backpack innovation, as a cyclist, I wonder how this plays with bikeshare |
| 2. Timing? | 1 | Cycling should increase but uncertain if venture backable |
| 3. Monopoly? | 1 | Don't know anyone with one of these bags |
| 4. People? | 3 | Good people to be building this product |
| 5. Distribution? | 3 | Seem to have really figured out distribution |
| 6. Durability? | 2 | Lifestyle brand, fairly defensible |
| 7. Secret? | 2 | The population of city commuting cyclist is about to boom in venture style |
What has to go right for the startup to return money on investment:
1. Partner with bikeshares at some point; 2. Enter into cyclist apparel and other accessories; 3. Keep innovating new products
What the Risks Are
1. Mass market vs high end product; 2. Revenue did not increase 2018 to 2019, concerned if this remains the case; 3. Cycling remains a niche market and doesn't go mainstream
Bonus Muhan's Notes
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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