Deal Abstract
Medspoke/Axuall for non-medical employers. Pre-revenue and built on blockchain solution for verifying documents for employers.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $150091 |
| 3. Pre-Money Valuation? | $8000000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-252 |
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: Newark, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Can sign up online |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: No revenue |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: No significant burn yet |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Blockchain stored database |
| 2. Timing? | 1 | Not sure why blockchain helps this company dramatically helps HR companies |
| 3. Monopoly? | 2 | Has partners but no customers |
| 4. People? | 2 | No experience selling credentials softwares to businesses |
| 5. Distribution? | 2 | This is a huge b2b sales need and neither comes from a strong corporate background |
| 6. Durability? | 2 | If built, durable |
| 7. Secret? | 2 | Large businesses are going to pay for document verification due to the increased amount of false documents in the wake of COVID |
What has to go right for the startup to return money on investment:
1. Sell large contracts; 2. Generate revenue; 3. Sell to firms that acutely need this solution
What the Risks Are
1. The threat of false documents isn't that high; 2. Long sales cycles with large corporations; 3. Blockchain doesn't meaningfully improve the situation
Bonus Muhan's Notes
My friend is working at Axuall, which is using Blockchain to solve this problem for doctor professionals. I also previously invested in company called Medspoke that ran out of capital before they could solve this problem: https://www.bizjournals.com/sanantonio/news/2020/03/19/local-medical-tech-startup-shuts-down-operations.html. This is not an easy problem to solve and will check with the company to see how they're thinking about it.
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
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.