Deal Abstract

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

Financials (VRB)

|Question|Notes|
|---|---|---|
|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|

Source

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: 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

Source

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question	Score	Notes
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.

Updates

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