Stojo Deal Memo (2021-02-28)

Muhan Zhang -

Deal Abstract

Invest in Stojo
Republic is a startup investing platform where you can invest as little as $10 in impactful startups
Republic

'Earth conscious investment Product that has traction, patents, healthy growth of revenue and profitable soon. Contracts with multiple outlets already in place. Can't find a reason not to invest.'

Financials (VRB)

|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$245906|
|3. Pre-Money Valuation?|$13000000|
|4. Previous Year's Annual Revenue |$6575838|
|5. Previous Year's Annual Burn |~$-430928|

Source

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: Brooklyn, NY
2. Has at least 2 founders? False: Two
3. Has product in the market? True:
4. 6 months of continuous user growth or 6 months of revenue? True: 2018 rev was $2.8m and 2019 rev was $6.6m
5. Notable investors? False: The Seed and WeWork aren't that notable as venture investors.
6. Post-funding, will have 18 months of runway? False: At present would need ~$750k for 18 months and has only raised $200k.
Source

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
1. Engineering? 2 Better than non-recyclables, but the folding aspect doesn't seem like a 10x improvement.
2. Timing? 2 Good time to make eco-conscious cups, but not sure why a better timing wasn't either 5 years ago or 5 years from now.
3. Monopoly? 2 Don't know anyone who has one, that said, good numbers.
4. People? 2 Team seems to have some good D2C brands, but unsure what CEO's previous experience was.
5. Distribution? 2 Good, e-commerce and teaming up with Starbucks and other partners.
6. Durability? 1 This portion I'm the least certain about. Patents are nice, but is this really defensible?
7. Secret? 2 Collapsible reusable thermos' and cups are an enormous untapped market that other cup/bottle makers haven't figured out yet as an enormous market.

What has to go right for the startup to return money on investment:

1. Grow efficiently; 2. Continue to innovate on new high margin products; 3. Become a lifestyle brand that arbitrages a network of high expertise in plastic manufacturing to all forms of CPG

What the Risks Are

1. Market size and growth; 2. Cost and replicability of new product R&D; 3. Large incumbents catching on and becoming competitors if the market proved to be sizable enough.

Bonus Muhan's Notes

The folding function is indeed very cool! I wonder how it's washed?

Updates

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.