Deal Abstract
B2B SaaS company for managing portable benefits and contributions for gig workers. Founders have the right credentials, but the product is very early and needs more traction.
Financials (VRB)
| Question | Notes |
|---|---|
| 1. Fundraising Target? | $500000 |
| 2. Fundraised So Far? | $155638 |
| 3. Pre-Money Valuation? | $5000000 |
| 4. Previous Year's Annual Revenue | $0 |
| 5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) | ~$-30276 |
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: Palo Alto, CA |
| 2. Has at least 2 founders? | True: Two |
| 3. Has product in the market? | True: Paid pilot is bulk of customers |
| 4. 6 months of continuous user growth or 6 months of revenue? | False: 'Our revenue is minimal as we have been experimenting with different Per Employee Per Month (PEPM) rates and how that grows with more benefits.' |
| 5. Notable investors? | False: No one I recognize |
| 6. Post-funding, will have 18 months of runway? | True: Only needs ~$50k for 1.5 years of burn |
The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)
| Question | Score | Notes |
|---|---|---|
| 1. Engineering? | 2 | Seems like a nice feature, but not sure that this is that much better than other contribution software, also hard to figure out what category of SaaS this is |
| 2. Timing? | 2 | Seems reasonable that there is huge growth in this customer segment, but not sure people are going to contribute at high rates to this |
| 3. Monopoly? | 1 | Very little market share |
| 4. People? | 4 | Cofounders seem very strong |
| 5. Distribution? | 2 | Distribution through small businesses a work in progress |
| 6. Durability? | 1 | Not sure how durable this is, given that it's a feature that directs contributions |
| 7. Secret? | 2 | The cost of providing benefits to part-time workers and hourly workers was too high for people to contribute before |
What has to go right for the startup to return money on investment:
1. Refine business model; 2. Get more customers; 3. Deepen value proposition
What the Risks Are
1. Feature not a company; 2. Vitamin not a painkiller; 3. Is the main customer the workers who get and keep the benefits after they leave the company, or the employer?
Bonus Muhan's Notes
I personally found this to be a bit confusing as a B2B SaaS company, is isn't payroll, but it doesn't fit into the stuff that I'm used to seeing for a company
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?
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