Deal Abstract
Another proptech company trying to digitize the construction industry. This one has solid revenue on a fair valuation with a suitable CEO, but can it break through where others have not?
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $80700 |
| 3. Pre-Money Valuation? | $6500000 |
| 4. Previous Year's Annual Revenue | $57000 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-75878 |
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 City |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Grew from 2019 to 2020 |
| 5. Notable investors? | True: Metaprop.vc, MIT sandbox fund |
| 6. Post-funding, will have 18 months of runway? | True: Needs ~$100k and has already exceeded that comfortably |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Not sure this is a 10x better solution, need to clarify |
| 2. Timing? | 2 | Construction is super resistant to innovation |
| 3. Monopoly? | 2 | Good revenue but hardly a monopoly |
| 4. People? | 4 | Strong team, esp CEO with carpenter, civil engineer, and construction background |
| 5. Distribution? | 3 | This will be the key question |
| 6. Durability? | 4 | If it can be built, very durable |
| 7. Secret? | 2 | TracFlo can incentivize adoption via unfair advantages CEO has in selling this |
What has to go right for the startup to return money on investment:
1. Become 'Construction Payment Platform Like venmo for construction', 2. Scale sales and continue to have key decision makers buy into value prop; 3. Overcome challenges that other proptech companies have had e.g. PlanGrid, DigiBuild, etc.
What the Risks Are
1. Adoption; 2. Market growth is not venture speed; 3. Differentiation
Bonus Muhan's Notes
$57k on $6.5mm valuation for a company is a solid ratio and team seems promising. Need to do more due diligence.
Updates
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