Toffee Deal Memo (Closing Date: 2021–02–25)

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Deal Abstract

Solo technical founder is building a marketplace to buy/sell digital goods. Will have to solve platform challenges of what the value add is platform-wise.


  1. Fundraising Target? $1070000
  2. Fundraised So Far? $81769
  3. Pre-Money Valuation? $5000000
  4. Previous Year’s Annual Revenue: $0
  5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-317

Six Calacanis Criteria

  1. A startup that is based in SV? False, Middletown, DE
  2. Has at least 2 founders? False, One founder
  3. Has product in the market? True, 🏬 Marketplace is up and running with 3300+ users and 3650+ listings created
  4. 6 months of continuous user growth or 6 months of revenue? True, Revenue sketchy
  5. Notable investors? False, No one that I recognize
  6. Post-funding, will have 18 months of runway? True, Super early stage so no meaningful costs

Seven Thiel Tests

  1. Engineering? 2, Marginally butter than gumtree and other digital goods marketplaces?
  2. Timing? 2, Not a bad time but also not a ground breaking time to start this business
  3. Monopoly? 1, Very little users, not sure what the small market is
  4. People? 2, Technical founder but no experience in marketplaces or monetizing this
  5. Distribution? 1, Online marketplace
  6. Durability? 1, Unsure how this is defensible against Amazon regifting their own cards, Gumtree reselling their own assets, etc.
  7. Secret? 1, There’s a massive amount of goods that aren’t being served in the digital marketplace and Toffee is going to build a $1bn biz serving this market

What Has to Go Right

  1. Find a niche and go deep; 2. Build something defensible on the platform; 3. Eventually provide white label services for digital goods producers who want to incorporate second hand selling

What Could Go Wrong

  1. Not a defensible solution; 2. Unsure who the use case is for; 3. What is the value add

Muhan’s Bonus Notes

Very, very interesting business.

Investment Decision Teaser

So, did I invest?

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Muhan Zhang

Muhan Zhang

Founder of Startup Investing for All, for angel investors seeking better turns, together. 1st employee and COO @Yang2020. Subscribe at