Worth Network Inc Deal Memo (Closing Date: 2021-04-30)

Muhan Zhang -

Deal Abstract

Invest in Worth: Worth uses social media to convert customers into marketers. | Wefunder
Worth uses social media to convert customers into marketers.
Worth on Wefunder

Team is building a competitor to RAD Technologies. What's interesting is this company is taking 50% of ad spend.

Financials (VRB)

Question Notes
1. Fundraising Target? $300000
2. Fundraised So Far? $290458
3. Pre-Money Valuation? $5500000
4. Previous Year's Annual Revenue $4030
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) ~$-176668
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? False: Los Angeles, CA
2. Has at least 2 founders? True: Two
3. Has product in the market? True: Essentially an agency/job board for influencers to make content
4. 6 months of continuous user growth or 6 months of revenue? True: Allegedly $93k in revenue second half of 2020, aiming for 1.3m in 2021
5. Notable investors? False: No one I recognize
6. Post-funding, will have 18 months of runway? True: Done now

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

Question Score Notes
1. Engineering? 2 Not seeing 10x better
2. Timing? 2 I have seen several of these including RAD and Insense, so makes sense
3. Monopoly? 1 See competition above
4. People? 2 Team seems lovely but no obvious wins in influencer marketing
5. Distribution? 2 Fine, selling B2B
6. Durability? 1 Starting to suspect these influencer networks have the multihoming problem e.g. not much defensible
7. Secret? 2 A nice UI/UX will allow this business to charge 50% of all ad spend for influencer content marketing

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

1. Business model has to scale well; 2. Keep building two-sided marketplace; 3. Eventually be able to compete with the SocialNatives of the world

What the Risks Are

1. Influencer marketing blah blah; 2. What's defensible? Why is talent staying on this platform?; 3. Cannibalizing nature of social media marketing

Bonus Muhan's Notes

Looking forward to asking founders my questions

Updates

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