Deal Abstract
Marketplace for musicians and artists to show off their portfolio and sell artistic services.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $1500000 |
| 2. Fundraised So Far? | $642995 |
| 3. Pre-Money Valuation? | $20000000 |
| 4. Previous Year's Annual Revenue | $241511 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-173761 |
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: Los Angeles, CA |
| 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: Went from $95k to $241k |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Needs $280k to have 18 months |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Marketplace specifically for musicians to sell their services |
| 2. Timing? | 2 | I could see this being a good time to build a marketplace specifically for musicians and artists |
| 3. Monopoly? | 2 | The number of users seem good but the revenue seems middling |
| 4. People? | 3 | People seem really well fit to build this company |
| 5. Distribution? | 2 | Good users |
| 6. Durability? | 2 | Building a good marketplace for these services is a good defensible niche |
| 7. Secret? | 2 | Building a marketplace and Instagram esque portfolio for artists will be a valuable spigot to the music and media business |
What has to go right for the startup to return money on investment:
1. Figure out ways to get membership dues cause having a million users making $300k is very low; 2. Own more of the value creation and capture, right now this company is solving a problem for a very broke population; 3. Create more revenue opportunities for artists
What the Risks Are
1. Niche but not a market with a lot of spending power; 2. Feature not a company; 3. Just providing a marketplace is sufficient, needs to provide SaaS
Bonus Muhan's Notes
Very interesting company, but the marketplace numbers seem a bit low for a company raising at $20m
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.