TransitNet Deal Memo (Closing Date: 2021–03–04)

Former early PayPal employee and team are building title services for crypto holder institutions. Pre-product, pre-revenue.

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

Deal Abstract

Former early PayPal employee and team are building title services for crypto holder institutions. Pre-product, pre-revenue.

Financials

1. Fundraising Target? $1070000
2. Fundraised So Far? $662220
3. Pre-Money Valuation? $6000000
4. Previous Year’s Annual Revenue: $0
5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $0

Six Calacanis Criteria

1. A startup that is based in SV? False, Manhattan Beach, CA
2. Has at least 2 founders? True, Two
3. Has product in the market? False, Only beta
4. 6 months of continuous user growth or 6 months of revenue? False, Def no revenue
5. Notable investors? True, Founders Fund & Peter Thiel?? Also 500 Startups
6. Post-funding, will have 18 months of runway? True, I mean, $0*18=$0

Seven Thiel Tests

1. Engineering? 1, Product doesn’t exist yet
2. Timing? 2, Timing could be right, as crypto as surged recently as this writing
3. Monopoly? 1, No revenue and only 4 firms using it
4. People? 3, People are strong, but notably, no founding CTO for a crypto based tech company
5. Distribution? 3, Via PayPal mafia connections, definitely can be introduced to right people at firms
6. Durability? 3, Probably pretty heavily regulated firm so legislation as a moat
7. Secret? 2, Investment funds that need to have crypto title services will need a tech startup like Transitnet to help them solve regulatory burden

What Has to Go Right

1. Develop product; 2. Monetize product; 3. Scale product into compliance platform

What Could Go Wrong

1. Does the market exist; 2. Can the product solve it; 3. Is Peter Thiel really invested in this company with $$$ vis a vis Facebook?

Muhan’s Bonus Notes

Very cool. May have to check out the CEO’s book and see how his thinking is. Also hard to believe it’s been two decades since PayPal! https://www.amazon.com/PayPal-Wars-Battles-Media-Planet/dp/1936488590

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/TransitNet
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