COI Energy Deal Memo (Closing Date: 2021–03–31)

SaaS company wants to sell an energy monitoring solution to businesses to help reduce their utility bill.

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

Deal Abstract

SaaS company wants to sell an energy monitoring solution to businesses to help reduce their utility bill.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $453209
3. Pre-Money Valuation? $18000000
4. Previous Year’s Annual Revenue: $191935
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-793777

Six Calacanis Criteria

1. A startup that is based in SV? False, Tampa, FL
2. Has at least 2 founders? False, One founder
3. Has product in the market? True, Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? False, Revenue dropped from 2018 to 2019
5. Notable investors? False, No one I recognize
6. Post-funding, will have 18 months of runway? True, At a mil will have 18 mths runway

Seven Thiel Tests

1. Engineering? 2, Platform that helps understand energy spikes better
2. Timing? 1, Not sure why now is the perfect time to build this business
3. Monopoly? 2, Has a good number of high profile customers, but declining revenue
4. People? 2, Strong founder but no other major teammates
5. Distribution? 2, Selling B2B requires connections
6. Durability? 3, If can be built, very durable
7. Secret? 1, Energy costs are enough of a pain point that large businesses will pay for a SaaS platform to help them manage and save energy costs

What Has to Go Right

1. Get growth back on track; 2. Scale out a B2B sales playbook; 3. Demonstrate consistent return on investment for monitoring energy savings

What Could Go Wrong

1. Is a third party SaaS business the right entity to build this? 2. High costs and not corresponding high revenue; 3. Vitamin not a painkiller

Muhan’s Bonus Notes

Very cool business, need to see founder’s vision for scaling

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

Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.