Relay on Demand Deal Memo (Closing Date: 2021–04–22)

In the months following Fleeting, a new trucker-on-demand marketplace has emerged with higher revenue, lower valuation, but also, smaller team and less institutional investors. Who will win the Uber for trucker driver war?

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

Deal Abstract

In the months following Fleeting, a new trucker-on-demand marketplace has emerged with higher revenue, lower valuation, but also, smaller team and less institutional investors. Who will win the Uber for trucker driver war?

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $195715
3. Pre-Money Valuation? $8000000
4. Previous Year’s Annual Revenue: $461117
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-229101

Six Calacanis Criteria

1. A startup that is based in SV? False, Norco, CA
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? True, Impressive growth from 2018 to 2019
5. Notable investors? False, No one I recognize
6. Post-funding, will have 18 months of runway? True, Needs $400k

Seven Thiel Tests

1. Engineering? 2, Better than nothing, but curious to compare to Fleeting
2. Timing? 2, Is now the right time to start a truck driver labor aggregation platform?
3. Monopoly? 4, Incredible revenue of $2m ARR on $8m valuation
4. People? 2, Good founder though he doesn’t appear to have much of a team
5. Distribution? 3, Definitely able to sell/build the two sided marketplace
6. Durability? 1, This is what I don’t know. Need to ask about Fleeting.
7. Secret? 2, Relay will be able to build a faster two sided marketplace than Fleeting.

What Has to Go Right

1. Build faster and get tight network effects; 2. Scale a team to get more aggressive customer acquisition; 3. Anticipate the coming trucking automation and figure out how to get ahead

What Could Go Wrong

1. Over half a year later than Fleeting, which has star studded investors; 2. Trucking automation; 3. Payroll expense for 2019 was only 133k which means two employees, so I wonder if they’ll be able to compete against Fleeting’s team size

Muhan’s Bonus Notes

Very, very cool. $2m ARR to $8m valuation may be one of the strongest revenue businesses I’ve seen. Going to ask the founder some key questions.

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/Relay-on-Demand
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