Deal Abstract
Solo technical founder is building a marketplace to buy/sell digital goods. Will have to solve platform challenges of what the value add is platform-wise.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$81769|
|3. Pre-Money Valuation?|$5000000|
|4. Previous Year's Annual Revenue |$0|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-317|
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: Middletown, DE |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: 🏬 Marketplace is up and running with 3300+ users and 3650+ listings created |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Revenue sketchy |
| 5. Notable investors? | False: No one that I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Super early stage so no meaningful costs |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Marginally butter than gumtree and other digital goods marketplaces? |
| 2. Timing? | 2 | Not a bad time but also not a ground breaking time to start this business |
| 3. Monopoly? | 1 | Very little users, not sure what the small market is |
| 4. People? | 2 | Technical founder but no experience in marketplaces or monetizing this |
| 5. Distribution? | 1 | Online marketplace |
| 6. Durability? | 1 | Unsure how this is defensible against Amazon regifting their own cards, Gumtree reselling their own assets, etc. |
| 7. Secret? | 1 | There's a massive amount of goods that aren't being served in the digital marketplace and Toffee is going to build a $1bn biz serving this market |
What has to go right for the startup to return money on investment:
1. Find a niche and go deep; 2. Build something defensible on the platform; 3. Eventually provide white label services for digital goods producers who want to incorporate second hand selling
What the Risks Are
1. Not a defensible solution; 2. Unsure who the use case is for; 3. What is the value add
Bonus Muhan's Notes
Very, very interesting business.
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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