Deal Abstract
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Husband/wife duo are teaming up to build a marketplace and business management platform for nail salonz. B2B SaaS marketplace, but can they scale fast enough to be venture backable?
Financials (VRB)
Question | Notes |
---|---|
1. Fundraising Target? | $1070000 |
2. Fundraised So Far? | $193931 |
3. Pre-Money Valuation? | $10000000 |
4. Previous Year's Annual Revenue | $69932 |
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-889968 |
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? | True: Revenue more than doubled from $28k to $69k |
5. Notable investors? | False: No one I recognize |
6. Post-funding, will have 18 months of runway? | True: If they raised $1mm, but it doesn't look likely at present |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
Question | Score | Notes |
---|---|---|
1. Engineering? | 2 | Better than nothing, but is it 10x better than Booksy or HellaBella? |
2. Timing? | 2 | Good time to make marketplaces |
3. Monopoly? | 4 | Credit where credit is due, has gone deep on Manhattan and has 20% of market |
4. People? | 3 | Husband and wife together, harder to get incentives more aligned :) |
5. Distribution? | 2 | No clear advantage to onboarding new customers, though the quantity is impressive |
6. Durability? | 3 | If they can build it, I could see this being the Grubhub of nails for the East Coast (Grubhub vs Eat24 vs the reset of the food wars) |
7. Secret? | 2 | Millennial beauty customers are expecting a digital first booking and reservation system, and Snailz is going to build that marketplace |
What has to go right for the startup to return money on investment:
1. Control spend and scale more efficiently, I believe it's at 176k in revenue for 2020 but need to see costs; 2. Grow more rapidly, the business has been around since June 2017, has 350 salons for 1.3m in bookings (20% of Manhattan network,) 3. Take learnings from Manhattan expertise and bundle it up in a faster go to market strategy
What the Risks Are
1. Fragmented marketplace, Booksy is already tackling this market and has Series C funding; 2. Adoption speed not fast, uncertain how ready nail salons are in adopting SaaS (though to be fair, as owners turn younger, I'm sure this will change,) 3. Pricing structure, 13% is not cheap for a small business and services industry at this level already have a lot of costs
Bonus Muhan's Notes
Very cool to see this; I know nails and salons are an industry but have not had personal experience with them.
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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
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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.