Subscription clothing for baby clothes! Fixed monthly fee to get high quality baby clothes delivered to doorstep. Wants to become the Rent the Runway for baby clothes
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$67676|
|3. Pre-Money Valuation?|$8000000|
|4. Previous Year's Annual Revenue |$51568|
|5. Previous Year's Annual Burn |~$13064|
The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)
|1. A startup that is based in SV?||True: San Francisco, CA|
|2. Has at least 2 founders?||****: Two|
|3. Has product in the market?||True:|
|4. 6 months of continuous user growth or 6 months of revenue?||True: 'We currently have more than 750 customers in about 180 US cities across 40 states. We've been able to grow Monthly Recurring Revenues (MRR) 10x over the last 5 quarters and total revenues grew 300% year-to-date compared to last year. We have seen a 70-75% retention rate after 6 months for our subscription service. We also currently have a pipeline of 17K+ qualified sign-ups.'|
|5. Notable investors?||****: Mostly bootstrapped, 'The founder has personally invested $100K+, with a friends & family investment of $25K. We also received a $25K grant from Levi's. Since then, we've focused on building a unique service and vibrant customer base. We have used our revenue and non-dilutive capital from Stripe Capital and Clearbanc to fund our growth in the past 12 months.'|
|6. Post-funding, will have 18 months of runway?||True: Pretty lean shop|
|1. Engineering?||4||Subscription baby clothes, brilliant!|
|2. Timing?||3||Great time for subscription, COVID friendly distanced e-commerce, etc.|
|3. Monopoly?||2||Not a parent but don't know anything similar|
|4. People?||2||Strong solo founder but no other cofounders/first venture of a corporate professional|
|5. Distribution?||3||Direct to consumer, e-commerce|
|6. Durability?||2||On the one hand, this seems great and durable. On the other hand, does this mean customers churn every few years due to babies growing up?|
|7. Secret?||3||Baby clothes is the beachhead for any subscription based cloth company (think renting graduation gowns, marriage, etc.)|
What has to go right for the startup to return money on investment:
1. Keep costs low and scalable; 2. Grow fast and like a weed; 3. Leverage trust with consumer to provide other services, either double down on baby or go wider into apparel.
What the Risks Are
1. Costs of shipping back and forth at a low margin makes this a modest business, 2. High churn e.g. high customer acquisition cost with low lifetime value, 3. Market size, though to be honest I concede that just baby clothing is a very sizable market
Bonus Muhan's Notes
I'd easily use this service if I had a child right now.
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Review these deal memos every time the startup raises a new round
Test if original thesis still applies
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