Airspace Experience Technologies (June 2019)

Deal Abstract

https://www.seedinvest.com/asx/bridge

A seasoned team of aerospace and industry executives launch an air mobility company delivering private air travel to the masses. They plan to manufacture, then build the business models on top of leasing and partnerships. They have said to grown by $10MM in valuation within the last year, and no product in the market. They need more money to finish researching the product.

Decision

No.

Why Investing/Passing

  1. $8MM on $25MM financing round is very high.
  2. Lots of hardware and capital intensive business.
  3. No revenue, I’m unqualified to invest.

The 11 Calacanis Characteristics (91 161 18)

Passed on 2/11.

CheckPass/Fail
2. A startup that is based in SVFail: (Detroit, MI)
3. Has at least 2 founders Pass
4. Has product in the market Fail
5. 6 months of continuous user growth or 6 months of revenue.Fail
6. Notable investors?Maybe
7. Post-funding, will have 18 months of runway Fail: burn rate is $77k-$80k/mth, would need 1.39MM to have this burn rate.

The Company recognized no operating revenue during the periods ended December 31, 2017 or December 31, 2018. The Company has incurred losses of approximately $464,331 for the financial year ending December 2017, and $927,906 for the financial year ending December 2018, which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plans to raise additional capital from the issuance of debt or the sale of stock, its ability to commence profitable sales of its flagship product, and its ability to generate positive operational cash flow.

https://www.seedinvest.com/asx/bridge/

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: The problem is that this is still R&D, so uncertain.
  2. The Timing question
    • Bad: the only new notable automobile company in recent years is Tesla, and the others are all asset light. The name of the game is in leasing/utilizing excess capacity, not in becoming a manufacturer (unless you raise a boat load of capital and go full Elon Musk.)
  3. The monopoly question
    • Bad: Because still in R&D, uncertain. Also, hard to monopolize air rights.
  4. The people question: 
    • Good: the founders seem well positioned to execute on this.
  5. The distribution question
    • Bad: needs to partner with a lot of juggernauts to finally get to revenue.
  6. The durability question
    • Bad: the defensible assets that ASX brings are too few to make me feel comfortable that they could compete against any incumbent who wants to laterally enter this space.
  7. The secret question: 
    • Bad: not sure what the secret is.

What has to go right for the startup to return money on investment:

  1. Product development and launch are on time and on budget.
  2. Very superior technology in a fear-laden marketplace where sticking to golden standard technology is a must.
  3. Somehow doesn’t lose too much power at every segment of the value chain.

What the Risks Are

  1. Technology risk
  2. Competitive/incumbent risk
  3. Business model risk (taking on all risk to own all segments of the chain right now, instead of just focusing on developing then leasing tech, or building a consumer brand.)

Financials (References)

  • Total Amount Raised: US $514,088 (at time of writing)
  • Total Round Size: US $8,070,000
  • Target Minimum:US $350,000
  • Raise Description:  Seed
  • Minimum Investment:  US $1,000 per investor
  • Security Type:  Preferred Equity
    • Share price:US $2.5
    • Liquidation preference:1.0x
  • Pre-Money Valuation:  US $25,000,000
  • Offering Type:   Side by Side Offering

Previous Fundraising:

  • Round Size: US $965,000
  • Closed Date: Aug 31, 2018
  • Security Type: Convertible Note
  • Valuation Cap: US $15,000,000

Updates

Review these deal memos every time the startup raises a new round

Test if original thesis still applies

Notice trends in how you think

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