Dope Dog Deal Memo (Closing Date: 2021–03–18)

Founders (spouses?) team up to make CBD dog treats. Subscription economy, CBD, and dogs/spending on pets during recession, lots of attractive components together.

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

Deal Abstract

Founders (spouses?) team up to make CBD dog treats. Subscription economy, CBD, and dogs/spending on pets during recession, lots of attractive components together.

Financials

1. Fundraising Target? $500000
2. Fundraised So Far? $47382
3. Pre-Money Valuation? $5000000
4. Previous Year’s Annual Revenue: $175092
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $2373

Six Calacanis Criteria

1. A startup that is based in SV? False, Los Angeles, CA
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, Tripled revenue
5. Notable investors? False, Bootstrapped
6. Post-funding, will have 18 months of runway? True, Profitable!

Seven Thiel Tests

1. Engineering? 3, Haven’t heard of CBD treats for dogs explicitly
2. Timing? 3, Hemp, pets, anxiety…
3. Monopoly? 2, Profitable and good revenue
4. People? 3, Strong results. No special advantage, but founders have good results.
5. Distribution? 3, D2c and that SUBSCRIPTION economy
6. Durability? 3, Subscription subscription subscription
7. Secret? 3, Subscription weed treats + dogs + economic recession = $$$

What Has to Go Right

1. Scale and go big; 2. Develop other high margin weed related products, maybe for cats/other pets?; 3. Keep building that subscription economy and potentially enter marketplace

What Could Go Wrong

1. Incredibly small business, is it venture backable; 2. Is the business a food company, weed company, or lifestyle brand?; 3. What if this isn’t defensible?

Muhan’s Bonus Notes

Stunning business for a vertical I have no personal experience in (sorry readers, I don’t own pets.)

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/Dope-Dog
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.