Worth Network Inc Deal Memo (Closing Date: 2021–04–30)

Team is building a competitor to RAD Technologies. What’s interesting is this company is taking 50% of ad spend.

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Deal Abstract

Team is building a competitor to RAD Technologies. What’s interesting is this company is taking 50% of ad spend.

Financials

  1. Fundraising Target? $300000
  2. Fundraised So Far? $290458
  3. Pre-Money Valuation? $5500000
  4. Previous Year’s Annual Revenue: $4030
  5. Previous Year’s Annual Net Income (+ Profitable, — Burning Cash): $-176668

Six Calacanis Criteria

  1. A startup that is based in SV? False, Los Angeles, CA
  2. Has at least 2 founders? True, Two
  3. Has product in the market? True, Essentially an agency/job board for influencers to make content
  4. 6 months of continuous user growth or 6 months of revenue? True, Allegedly $93k in revenue second half of 2020, aiming for 1.3m in 2021
  5. Notable investors? False, No one I recognize
  6. Post-funding, will have 18 months of runway? True, Done now

Seven Thiel Tests

  1. Engineering? 2, Not seeing 10x better
  2. Timing? 2, I have seen several of these including RAD and Insense, so makes sense
  3. Monopoly? 1, See competition above
  4. People? 2, Team seems lovely but no obvious wins in influencer marketing
  5. Distribution? 2, Fine, selling B2B
  6. Durability? 1, Starting to suspect these influencer networks have the multihoming problem e.g. not much defensible
  7. Secret? 2, A nice UI/UX will allow this business to charge 50% of all ad spend for influencer content marketing

What Has to Go Right

  1. Business model has to scale well; 2. Keep building two-sided marketplace; 3. Eventually be able to compete with the SocialNatives of the world

What Could Go Wrong

  1. Influencer marketing blah blah; 2. What’s defensible? Why is talent staying on this platform?; 3. Cannibalizing nature of social media marketing

Muhan’s Bonus Notes

Looking forward to asking founders my questions

Investment Decision Teaser

So, did I invest?

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