Perfitly Deal Memo (Closing Date: 2021–03–22)

AI company wants to help you see what a piece of clothing looks like on you before you buy. Pretty ambitious stuff, indie version of Amazon Look.

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Deal Abstract

AI company wants to help you see what a piece of clothing looks like on you before you buy. Pretty ambitious stuff, indie version of Amazon Look.

Financials

  1. Fundraising Target? $1500000
  2. Fundraised So Far? $215300
  3. Pre-Money Valuation? $15000000
  4. Previous Year’s Annual Revenue: $0
  5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-1387330

Six Calacanis Criteria

  1. A startup that is based in SV? False, Los Angeles, CA
  2. Has at least 2 founders? True, Three
  3. Has product in the market? True, Deployed at a top-10 (USA) retailer’s select site (Target Corp)
  4. 6 months of continuous user growth or 6 months of revenue? False, No revenue
  5. Notable investors? False, No one I recognize
  6. Post-funding, will have 18 months of runway? False, Would need 1.95m of burn

Seven Thiel Tests

  1. Engineering? 4, Seriously impressive engineering between body scan, CAD to scan, fitting and draping, and visualization of fit
  2. Timing? 3, Very good time to be optimizing e-commerce given COVID
  3. Monopoly? 1, Not many people using nor revenue
  4. People? 2, Strong team of nerds but don’t see them with retail/sales experience
  5. Distribution? 2, This is my biggest concern, getting people to adopt this product requires B2B connections. That said, they already piloted with Target, which helps.
  6. Durability? 5, If this company can get adoption, as the model gets more data about fit, CAD, and return rates, it will only get better.
  7. Secret? 3, AI visualization of clothing fits will help customers buy clothing more confidently and scalably in the world of e-commerce

What Has to Go Right

  1. Monetize; 2. Algorithm gets consistently better; 3. Balance helping customers keep data while aggregating intelligence from data

What Could Go Wrong

  1. Business model; 2. Feature not a business; 3. Distribution risk selling to large apparel companies

Muhan’s Bonus Notes

Need to learn more about business model

Investment Decision Teaser

So, did I invest?

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  2. Read the rich format deal memo here: https://muhanzhang.com/Perfitly
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Founder of Startup Investing for All, for angel investors seeking better turns, together. 1st employee and COO @Yang2020. Subscribe at www.muhanzhang.com