Deal Abstract
Twilio powered SMS SaaS for SMBs. Has a beta product, but no revenue yet. One founder, very early stage ($3m valuation.) Sorry not sorry for all the acronyms.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$107000|
|2. Fundraised So Far?|$51357|
|3. Pre-Money Valuation?|$3000000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$0|
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: Lehi, UT |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | False: 20 beta users and paying but not fully in the market |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Beta users payback period but no revenue |
| 5. Notable investors? | False: Need to ask who the 3 angels are and if they're working with NextView |
| 6. Post-funding, will have 18 months of runway? | True: No burn right now, so by default yes |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 4 | Having worked with contractors (commercial version of home service provider, not exactly the same but similar) can confirm everyone uses SMS and the end-to-end user experience is bad |
| 2. Timing? | 3 | What a time to build B2B SaaS |
| 3. Monopoly? | 1 | 20 beta customers, not bad but not remarkable |
| 4. People? | 2 | Founder has been thinking about these problems for a long time, but doesn't have a full-time team yet. That said, very early. |
| 5. Distribution? | 3 | Founder has experience marketing SMS solutions to SMB. |
| 6. Durability? | 4 | SMS based CRM for SMB, very defensible |
| 7. Secret? | 3 | SMBs use SMS for customer communication already, so building a SMS CRM for SMB is the schelp heavy untapped opportunity. |
What has to go right for the startup to return money on investment:
1. Scale a large sales team that sells to lots of SMBs, 2. Great customer service as these business operators are probably their own CEO/COO/CTO/CFO etc, 3. Build fantastic integrations and become the Shopify for SMBs vs the Thumbtack (one empowers while the other commoditizes)
What the Risks Are
1. Pre-revenue, pre-public launch of product, 2. Team risk, only one person on the team full-time right now, 3. SMBs are luddites as an aggregate market and therefore building a sales team to convert them is cost prohibitive
Bonus Muhan's Notes
Check out https://www.avochato.com/ ($5M Series A) as a benchmark for comps. Met the founder and observed strong SMB traction there. Given the price point and target market, I’d expect a pretty turnkey product and self-serve onboarding process here.
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