Choose Health Deal Memo (Closing Date: 2021–03–16)

D2C testing company wants to build the subscription wellness platform to help you regularly assess your chronic disease risks.

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

Deal Abstract

D2C testing company wants to build the subscription wellness platform to help you regularly assess your chronic disease risks.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $213097
3. Pre-Money Valuation? $5000000
4. Previous Year’s Annual Revenue: $7418
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-250355

Six Calacanis Criteria

1. A startup that is based in SV? False, Austin, TX
2. Has at least 2 founders? False, One
3. Has product in the market? True, Shipping out test units and such
4. 6 months of continuous user growth or 6 months of revenue? True, Yup, grew from $0 to $7418. Also ‘We are still finalizing year-end accounts but expect that the final number will be close to $250k top line.’
5. Notable investors? True, Capital Factory
6. Post-funding, will have 18 months of runway? True, Needs $375k

Seven Thiel Tests

1. Engineering? 2, Lots of testing solutions at home, but cool that they designed an antibody test
2. Timing? 3, Good timing with pandemic
3. Monopoly? 1, Seems like modest revenue
4. People? 2, People seem fine, but a little thin on teeam
5. Distribution? 2, Doing well with D2C and also Amazon
6. Durability? 2, Big if is whether the software platform will be enough to keep people on
7. Secret? 2, Sensitivity around chronic disease is going to spike, so the company’s focus on insulin, blood sugar, etc. will have venture sized demand

What Has to Go Right

1. Establish strong partnerships with doctors; 2. Probably get things backed by insurance at some point; 3. The market has to happen

What Could Go Wrong

1. The market doesn’t exist and only fitness geeks really test their insulin resistance levels at home; 2. This business needs telehealth to take off before it can get to final stage; 3. What’s stopping testing companies from developing their test directly/plugging into EMR companies to provide results?

Muhan’s Bonus Notes

Very cool, esp since it’s an antibody test offering at home.

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/Choose-Health
3. Want me to cover your startup? Submit your ‘Request for Startup’ (RFS) submission here: https://airtable.com/shrzNK8tguH8qEUF6

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