Deal Abstract
Invest in Sentry AI
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Team of nerds and MBAs are selling SaaS to security camera companies to automate the watching of security cameras.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $393564 |
| 3. Pre-Money Valuation? | $12000000 |
| 4. Previous Year's Annual Revenue | $71100 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-626900 |
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: Sunnyvale, CA |
| 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? | True: Rev grew from 2019 to 2020 |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Needs $750k |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Facial recognition, applied to a novel industry |
| 2. Timing? | 2 | What's making it so distribution of this product is set to explode? |
| 3. Monopoly? | 2 | Has revenue but modest |
| 4. People? | 3 | Team seems fine but no experience selling to the hardware companies that would buy this |
| 5. Distribution? | 1 | Biggest weakness imo |
| 6. Durability? | 3 | Very defensible |
| 7. Secret? | 2 | The customers of security companies will buy more/retain more if those security companies included AI monitoring with their hardware sales |
What has to go right for the startup to return money on investment:
1. Gain distribution chops; 2. Security has to go SaaS model; 3. The innovation is not just on the facial recognition but other AI integration and automation
What the Risks Are
1. Facial recognition technology isn't that novel and therefore value prop ambiguous; 2. Distribution very hard, players of hardware companies need B2B nepotism to buy; 3. Market for home security systems not venture backable
Bonus Muhan's Notes
Updates
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Review these deal memos every time the startup raises a new round
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So, did I invest?
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