Deal Abstract
Former early PayPal employee and team are building title services for crypto holder institutions. Pre-product, pre-revenue.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1070000 |
| 2. Fundraised So Far? | $662220 |
| 3. Pre-Money Valuation? | $6000000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$0 |
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: Manhattan Beach, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | False: Only beta |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: Def no revenue |
| 5. Notable investors? | True: Founders Fund & Peter Thiel?? Also 500 Startups |
| 6. Post-funding, will have 18 months of runway? | True: I mean, $0*18=$0 |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 1 | Product doesn't exist yet |
| 2. Timing? | 2 | Timing could be right, as crypto as surged recently as this writing |
| 3. Monopoly? | 1 | No revenue and only 4 firms using it |
| 4. People? | 3 | People are strong, but notably, no founding CTO for a crypto based tech company |
| 5. Distribution? | 3 | Via PayPal mafia connections, definitely can be introduced to right people at firms |
| 6. Durability? | 3 | Probably pretty heavily regulated firm so legislation as a moat |
| 7. Secret? | 2 | Investment funds that need to have crypto title services will need a tech startup like Transitnet to help them solve regulatory burden |
What has to go right for the startup to return money on investment:
1. Develop product; 2. Monetize product; 3. Scale product into compliance platform
What the Risks Are
1. Does the market exist; 2. Can the product solve it; 3. Is Peter Thiel really invested in this company with $$$ vis a vis Facebook?
Bonus Muhan's Notes
Very cool. May have to check out the CEO's book and see how his thinking is. Also hard to believe it's been two decades since PayPal!
https://www.amazon.com/PayPal-Wars-Battles-Media-Planet/dp/1936488590
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
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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.