Surya Spa Deal Memo (Closing Date: 2021–05–01)

Star studded clientele for Ayurvedic spa is pivoting into mass consumer wellness products. Revenue grew modestly and needs to see hockey stick growth.

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

Deal Abstract

Star studded clientele for Ayurvedic spa is pivoting into mass consumer wellness products. Revenue grew modestly and needs to see hockey stick growth.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $76418
3. Pre-Money Valuation? $15000000
4. Previous Year’s Annual Revenue: $1276151
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-928674

Six Calacanis Criteria

1. A startup that is based in SV? False, Santa Monica, CA
2. Has at least 2 founders? True, Two founders and a LP
3. Has product in the market? True, Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? True, Though revenue barely grew
5. Notable investors? False, No one I recognize
6. Post-funding, will have 18 months of runway? False, Would need $1.5m and only raising a few hundred k’s

Seven Thiel Tests

1. Engineering? 2, Ayurveda spa, applying traditional medicine
2. Timing? 2, People are into alternative medicine, but this is still a spa
3. Monopoly? 2, Popular among clients
4. People? 2, Good team not slam dunk
5. Distribution? 1, It’s a spa, as far as I can tell
6. Durability? 3, Hard asset and location, with high cap ex to start business
7. Secret? 2, Building a luxury brand via a spa will then cause a beachhead into traditional medicine brand

What Has to Go Right

1. Expand into products business; 2. Get more premium margins than companies like Aavrani, 3. Proprietary product and supply chain

What Could Go Wrong

1. Transferability of brand to d2c; 2. Is this business defensible; 3. High fixed costs

Muhan’s Bonus Notes

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/Surya-Spa
3. Want me to cover your startup? Submit your ‘Request for Startup’ (RFS) submission here: https://airtable.com/shrzNK8tguH8qEUF6

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