Envel Deal Memo (Closing Date: 2021–03–18)

Nerds from Boston raised (and burned!) an astounding amount of money to build an app for budgeting. Is this the future of banking?

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

Deal Abstract

Nerds from Boston raised (and burned!) an astounding amount of money to build an app for budgeting. Is this the future of banking?

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $1225313
3. Pre-Money Valuation? $15000000
4. Previous Year’s Annual Revenue: $0
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-1143644

Six Calacanis Criteria

1. A startup that is based in SV? False, Boston, MA
2. Has at least 2 founders? False, One founder
3. Has product in the market? True, Beta online
4. 6 months of continuous user growth or 6 months of revenue? False, No revenue
5. Notable investors? False, Lots of institutional accelerator free competition money
6. Post-funding, will have 18 months of runway? False, Burning a lot of money

Seven Thiel Tests

1. Engineering? 2, Prettier app but nothing fundamentally different
2. Timing? 2, Good timing, but is this the right solution?
3. Monopoly? 1, 20 ratings on App Store, nothing to write home about
4. People? 1, No one with banking experience
5. Distribution? 1, Downloading app to get users?
6. Durability? 2, It is a bank, so once someone starts with them should not switch easily
7. Secret? 1, Building a better UI/UX mobile app will make a superior bank

What Has to Go Right

1. Develop a monetization strategy; 2. Acquire users; 3. Build a platform for tight integration via digital banking

What Could Go Wrong

1. Founders have no experience in banking; 2. What is the proprietary value add; 3. AI budgeting is not that useful of a feature

Muhan’s Bonus Notes

Low-income families are getting terrible financial advice online

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/Envel
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.