Deal Abstract

https://www.seedinvest.com/vinty/seed

Two-sided marketplace for renting luxury classic cars. Founded in 2016, totally bootstrapped, Vinty caters primarily to B2B clients seeking classic cars for various professional events. The main use cases include: corporate event display and tours, advertising production, movie/TV production, wedding transportation, and leisure rentals.

Decision

Not yet.

Why Investing/Passing

  1. I love the idea of this business—bootstrapped, experienced entrepreneurs, solid valuation, tackling a niche that is B2B and defensible—but there are enough deterrents that I’d want to wait.
  2. Is the business a SaaS marketplace (coordination costs?) or vertically integrating to maintaining cars? The latter is expensive and I never see those costs coming down.
  3. At 27% and avg transaction of $925, the profit margins are pretty good at $250. However, how would you expand outside this category? Turo already does luxury car rentals. In addition, waiting until there are 2 months of runway to raise money raises some alarms about cashflow management.

The 6 Calacanis Characteristics (91 161 18)

Passed on 4/6.

CheckPass/Fail
1. A startup that is based in SVFail: (Oceanside, CA)
2. Has at least 2 founders Pass
3. Has product in the market Pass
4. 6 months of continuous user growth or 6 months of revenue.Pass
5. Notable investors?Fail
6. Post-funding, will have 18 months of runway Pass: burn rate is $4.3k/mth, at $250k raise this is 58 months.

Burn for 2018 was ($51,484). Monthly burn is therefore 4.3k/month. At the successful raise of a $250k raise, they have 58 months of burn. Running a very lean ship. 2017 was profitable, 2018 the G&A, COGS, and Sales all went up. Two cofounders are full time right now, so call that ~40k per founder.

Vinty Financial Summary (Hosted link.)

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Good: Definitely a 10x improvement for businesses on the business of finding vintage rental cars.
  2. The Timing question: 
    • Bad: not sure why this is a great time to start a rental car agency. Costs of maintenance are not dropping, Turo has been in business from 2009.
  3. The monopoly question: 
    • Bad: At best Vinty is the Lyft to Turo’s Uber. That being said, not a bad way to roll.
  4. The people question: 
    • Good: the founders seem well positioned to execute on this.
  5. The distribution question: 
    • Good: seems to be to have a lot of good traction from customers including Cartier, Nordstrom, 76, Netflix, and Marriott. Inventory can be seen in campaigns for Yves Saint Laurent, L’Oreal, and General Motors.
  6. The durability question: 
    • Good: the market is definitely there and this is a solid business. The problem is whether this industry is growing at a large enough rate.
  7. *What is the hopeful secret?: 
    • After figuring out how to nail the very fickle needs of luxury car rentals for businesses, Vinty can figure out how to focus on the platform side. If they could figure out how to dive into the leasing of all props for event companies and such, maybe there’s a billion dollar company in there.

What has to go right for the startup to return money on investment:

  1. Solid growth and great margins from existing and healthy growing customers.
  2. The company either gets the costs of fixing and maintaining cars to stay relatively fixed, or shed this operational cost entirely.
  3. Honestly, this company will be either a great lifestyle/small tech-enabled business, or an acquisition target. I could easily see a GM/Chevrolet/Ford trying to enter the mobility space acquiring this company for the platform and as a stepping point into the mobility space.

What the Risks Are

  1. Market risk: is this market growing? What markets are this thing tangential to that it can grow rapidly with?
  2. Margin risk: definitely want to limit/keep a pulse on COGS as sales go up.
  3. Competitor risk: though I see the likelihoods of this happening low, if Vinty really continued to do well in the B2B space, what prevents Turo from getting some white glove service and higher margins for its luxury car rentals?

Financials (References)

  • Total Amount Raised: US $73,621
    Total Round Size: US $750,000
    Raise Description:  Seed
    Minimum Investment:  US $1,000 per investor
    Security Type:  Preferred Equity
    Pre-Money Valuation:  US $3,000,000
    Offering Type:   Side by Side Offering
  • Security Type:Preferred Equity
  • Share price:US $0.25585
  • Pre-money valuation:US $3,000,000
  • Option pool:10.0%
  • Liquidation preference:1.0x
  • Target Minimum:US $250,000

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