Beanstox Deal Memo (August 2020)

Deal Abstract

https://www.startengine.com/beanstox

Betterment for middle-income Americans, co-founded by Shark Tank celebrity Kevin O’Leary. Has 3000 downloads, $32k in revenue for all of 2019, and is claiming $15M valuation. Uncertain what the differentiation is.


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Decision

Pass

Why Investing/Passing

  1. Lack of Differentiation: Besides targeting Americans making $60k-$70k, I’m not seeing much differentiation here.
  2. Timing: I feel the great robo-advisor wars started half a decade ago.
  3. Valuation: Not convinced that a company can be worth $15MM just with brand name, 3k downloads, and little to no revenue.

The 6 Calacanis Characteristics (91 161 18)

CheckYes/No
1. A startup that is based in SVNo: Boston, MA
2. Has at least 2 founders Yes: 2
3. Has product in the market Yes
4. 6 months of continuous user growth or 6 months of revenue.No: I don’t there are any app-based subscription fees, given that 3000 downloads would be making $15k MRR which is not happening.
5. Notable investors?No: Only Kevin O’Leary who is co-founder.
6. Post-funding, will have 18 months of runway Yes: 2019 burn was $23, so easily will have 18 months

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: identical to competitors
  2. The Timing question
    • Bad: Unconvinced this fight is still happening in 2020.
  3. The monopoly question
    • Sure: Could scale fast, but realistically look at all the other robo-advisors.
  4. The people question: 
    • Good Not Great: No one on payroll means the team isn’t full-time/isn’t very big yet.
  5. The distribution question
    • Bad: O’Leary helps on marketing but CAC will still be high.
  6. The durability question
    • Good: Once people join a robo-advisor, I don’t think it’s likely they hop month to month.
  7. *What is the hopeful secret?: 
    • Charging a fixed fee model for customers making $60k-$70k is a super business model.

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

  1. N/A

What the Risks Are

  1. N/A

Muhan’s Bonus Notes

Found this hysterical compilation of O’Leary’s moments on Shark Tank, but can’t find parts 1-3: https://www.youtube.com/watch?v=iOurt19fP28

Financials (References)

  • Current Fundraised: $940k
  • Valuation: ~$15MM

Updates

This is where I’ll post updates about the company. This way all my notes from offering to post-offering updates will be on one page.

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

Test if original thesis still applies

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