BuildStream Deal Memo (Closing Date: 2021–05–01)

Managed marketplace for inspections. Has good revenue, vendor pool, and contracts, but makes one wonder will this market grow fast enough to be venture backable.

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

Deal Abstract

Managed marketplace for inspections. Has good revenue, vendor pool, and contracts, but makes one wonder will this market grow fast enough to be venture backable.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $41000
3. Pre-Money Valuation? $10000000
4. Previous Year’s Annual Revenue: $55548
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-456243

Six Calacanis Criteria

1. A startup that is based in SV? False, Brooklyn, NY
2. Has at least 2 founders? True, Two
3. Has product in the market? True, Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? True, Grew from 0 to $55k
5. Notable investors? True, Y-Combinator and Urban.us
6. Post-funding, will have 18 months of runway? True, Yes, but needs $750k roughly

Seven Thiel Tests

1. Engineering? 2, Managed marketplace a la a16z
2. Timing? 2, Is this a time when demand for this service goes exponential?
3. Monopoly? 2, 150 inspections with 1000 inspectors generating $150k in rev, not bad
4. People? 2, People seem fine
5. Distribution? 2, See the 150 inspections, $150k in revenue
6. Durability? 3, Very durable, assuming this managed marketplace is important
7. Secret? 3, As leaders at organizations age out and younger leaders come in, the marketplace for inspections and inspectors will become increasingly more digital

What Has to Go Right

1. Scale revenue; 2. Consistently identify and find the right decision maker at companies that need inspections; 3. Navigate the marketplace/SaaS model correctly

What Could Go Wrong

1. Market is too niche/not growing fast enough; 2. Other networks will also start developing and you’ll end up getting regional networks; 3. SaaS is being competed against on other side as well a la https://muhanzhang.com/optelos/

Muhan’s Bonus Notes

Very cool company, though it makes me wonder how venture backable this sector is.

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/BuildStream
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