Automatic Deal Memo (Closing Date: 2021–04–30)

Fintech platform that connects independent auto dealers and lenders.

Want to see the complete rich format deal memo? Read the original post at: https://muhanzhang.com/Automatic

Deal Abstract

Fintech platform that connects independent auto dealers and lenders.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $557154
3. Pre-Money Valuation? $13000000
4. Previous Year’s Annual Revenue: $24790
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $4495

Six Calacanis Criteria

1. A startup that is based in SV? False, Vernon, CT
2. Has at least 2 founders? True, Two
3. Has product in the market? True, Modest revenue and profit
4. 6 months of continuous user growth or 6 months of revenue? False, Also, very modest revenue
5. Notable investors? False, David Weisburd from The Boardroom, but ¯_(ツ)_/¯
6. Post-funding, will have 18 months of runway? True, Profitable!

Seven Thiel Tests

1. Engineering? 2, Fintech platform for brokering financing for car loans
2. Timing? 2, Good timing, brokering financial services makes sense
3. Monopoly? 2, Good adoption
4. People? 2, Good team, though no obvious wins
5. Distribution? 3, Selling b2b to car sellers
6. Durability? 3, Network of auto loan lenders and providers is defensible
7. Secret? 2, The money to be made to brokering auto loan providers and takers is going to be a $1bn business

What Has to Go Right

1. Scale to meaningful revenue; 2. Provide value add either through enriched leads, or more efficiency; 3. Car companies don’t enter the financing game e.g. Tesla

What Could Go Wrong

1. Lots of competitors who probably want to enter this lucrative space of brokering car loans including manufacturers; 2. Lack of meaningful revenue; 3. Fragmented industry that might make it hard to scale

Muhan’s Bonus Notes

So, did I invest?

1. Subscribe to https://muhanzhang.com/ to see my final investment decisions, keep track of my portfolio, and receive ongoing updates on my journey to investing in 50 startups as an unaccredited investor.
2. Read the rich format deal memo here: https://muhanzhang.com/Automatic
3. Want me to cover your startup? Submit your ‘Request for Startup’ (RFS) submission here: https://airtable.com/shrzNK8tguH8qEUF6

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