Nvstr Deal Memo (Closing Date: 2021–04–05)

Two Harvard alums are teaming up to make a subscription model Robinhood. Can they build the media strategy to pull off a third commission free brokerage?

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

Deal Abstract

Two Harvard alums are teaming up to make a subscription model Robinhood. Can they build the media strategy to pull off a third commission free brokerage?

Financials

1. Fundraising Target? $1000000
2. Fundraised So Far? $1000
3. Pre-Money Valuation? $10000000
4. Previous Year’s Annual Revenue: $54660
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-874369

Six Calacanis Criteria

1. A startup that is based in SV? False, New York, 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, 2019 revenue went from $17k to 2020 revenue $54k
5. Notable investors? False, No one I recognize
6. Post-funding, will have 18 months of runway? False, Burn really high

Seven Thiel Tests

1. Engineering? 2, How is this better than Public.com?
2. Timing? 1, I fear that it’s late
3. Monopoly? 1, 20k users is impressive, but not a large amount compared to RH and Public
4. People? 2, People are fine but not much entrepreneurial experience
5. Distribution? 2, Can get users, as they already got 20k
6. Durability? 1, Fee free trading as a platform, even with social aspects, is not durable without star power/network effects of influencers
7. Secret? 1, Charging $5/mth is enough to beat Robinhood’s or Public’s business model

What Has to Go Right

1. Stop the hemorrhaging of cash; 2. Get influencers on the platform; 3. Provide consistent actionable content that is worth the $5/mth subscription fee

What Could Go Wrong

1. Vitamine, not a painkiller feature of social aspect; 2. Too late with RH and Public already taking this market very far; 3. Not doing ‘pay for order flow’ or ‘media business’ well so therefore being stillborn business

Muhan’s Bonus Notes

Will be curious to see content strategy

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/Nvstr
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.