Deal Abstract
Beverage company founded by MD, MBA, and Sommelier (in one person) is using plant compounds to make performance enhancement drinks. Has an interesting D2C subscription model.
Financials (VRB)
|Question|Notes|
|---|---|---|
|1. Fundraising Target? |$1070000|
|2. Fundraised So Far?|$111201|
|3. Pre-Money Valuation?|$10000000|
|4. Previous Year's Annual Revenue |$448058|
|5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) |~$-2162110|
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: New York, NY |
| 2. Has at least 2 founders? | False: Two |
| 3. Has product in the market? | True: Revenue generating |
| 4. 6 months of continuous user growth or 6 months of revenue? | True: Revenue from 2018 to 2019 grew from $197k to $448k |
| 5. Notable investors? | True: AJ Vaynerchuk and CircleUp |
| 6. Post-funding, will have 18 months of runway? | False: Won't even have a month at this rate |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 3 | Using plant chemicals and elements for improving performance, though nothing proprietary |
| 2. Timing? | 2 | Especially drawn to the d2c model |
| 3. Monopoly? | 2 | Good advisors and early revenue |
| 4. People? | 4 | Doctor and MBA with beverage (sommelier) background, as well as team and advisors, very strong team |
| 5. Distribution? | 4 | Love that they have 50% of customers on recurring subscription |
| 6. Durability? | 2 | Basically the barriers to entry for a competitor are capital costs and supply chain |
| 7. Secret? | 2 | Direct to consumer, plant compound focused beverages are going to take over the gatorade and other wellness drink choices |
What has to go right for the startup to return money on investment:
1. Product has to be 10x better in efficacy; 2. Support research to show why this stuff is good; 3. Develop proprietary logistics relationships like Trader Joe's
What the Risks Are
1. Risk of being a fad; 2. Just repackaging natural ingredients and nothing defensible; 3. This market isn't winner take all and will remain fragmented
Bonus Muhan's Notes
Very cool to see business model innovation in beverage
Updates
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