Deal Abstract
AI driven insight company wants to help you build a portfolio of fee free equities, using fee-free trading platforms. Can this go head to head against the Public/WeBull/Robinhood's?
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $250000 |
| 2. Fundraised So Far? | $117762 |
| 3. Pre-Money Valuation? | $10000000 |
| 4. Previous Year's Annual Revenue | $53098 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-9048 |
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: Mountain View, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Generating revenue |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: '61% month-over-month revenue increase & 35% month-over-month' |
| 5. Notable investors? | False: None that I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Only needs $15k for burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Maybe the engineering is better, but not sure the AI here is 10x better |
| 2. Timing? | 2 | Lots of people trading now so good time for market |
| 3. Monopoly? | 2 | Good traction in small market |
| 4. People? | 3 | Seems like a strong team with a technical CEO |
| 5. Distribution? | 1 | How is this getting distributed to users? |
| 6. Durability? | 2 | More data better algorithms |
| 7. Secret? | 2 | Charging people money for access to an AI powered trading app is a venture sized business |
What has to go right for the startup to return money on investment:
1. The market for this type of insight has to grow at a venture sized speed; 2. Prep2grow has to outperform the market even during a downturn; 3. This business has to compete against the Public/WeBull's of the world
What the Risks Are
1. Market is not growing at a venture clip; 2. Too little data to see if the recommendations are good; 3. Robinhood/Public/WeBull eat the content business by also owning the trading platform
Bonus Muhan's Notes
Really, really interesting. Feels similar to my business except less person driven and more AI driven.
Updates
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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.