DADA (June 2019)

Deal Abstract

https://www.seedinvest.com/dada/other

Successful artist wants to create an art collaboration platform and market that is tokenized by cryptocurrencies. Yes, that’s a lot of buzzwords in one sentence.

Decision

No.

Why Investing/Passing

  1. I’ve made the mistake of thinking a “great product makes great business.” It is a false siren.
  2. DADA wants to grow the art market by making it easier to invest, but I believe the main component to sizing the art market is how many rich people there are who want to consume conspicuously aka it’s not the difficulty of investing, but the market of people who have disposable income to throw away on art.
  3. Maybe unfair comparison, but reminds me of Masterworks.io which seems to be a company that hasn’t grown since I first heard of it.

The 6 Calacanis Characteristics (91 161 18)

Passed on 2/6.

CheckPass/Fail
1. A startup that is based in SVFail: (New York, NY)
2. Has at least 2 founders Pass
3. Has product in the market Pass
4. 6 months of continuous user growth or 6 months of revenue.Fail
5. Notable investors?Maybe?
6. Post-funding, will have 18 months of runway Fail: at present raise of $50k, they’ll be out of money in two months.

The Company has incurred losses from inception of $346,037. For the financial year ending in 2018, the Company experienced a net loss of $244,443 (monthly burn 20k); for the financial year ending in 2017, the Company experienced a net loss of $101,604. To date, the Company has not yet received revenue.

DADA Financial Summary (Hosted link.)

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: How is this better than Masterworks.io?
  2. The Timing question
    • Bad: I don’t believe we’re on the verge of having explosive interest in art investment.
  3. The monopoly question
    • Bad: See Masterworks.io
  4. The people question: 
    • Bad: there is no CFO. Though the founder is a successful artist, as mentioned previously, making art and monetizing art are completely different skillsets.
  5. The distribution question
    • Bad: why does DADA have unique access to buyers or sellers?
  6. The durability question
    • Bad: though I’m not sure what competitor would want to copy the business as it is now.
  7. *What is the hopeful secret?: 
    • There’s a tremendous wellspring of art investors who have just been dying to invest in online art via cryptocurrency that no one else has noticed.

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

  1. Successful finding a pool of buyers.
  2. After establishing good platform, creating benefits to doing transactions on the platform.
  3. Online digital art has to be a rapidly growing market/monetizing this market lends itself to some other uncapitalized market.

What the Risks Are

  1. No market
  2. No CFO
  3. No revenues

Financials (References)

  • Total Amount Raised: US $57,000
    Total Round Size: US $1,500,000
    Raise Description:  Other
    Minimum Investment:  US $1,000 per investor
    Security Type:  Crowd Note
    Valuation Cap:  US $10,000,000
    Offering Type:   Side by Side Offering
  • Closing conditions:While DADA has set an overall target minimum of US $750,000 for the round, DADA must raise at least US $25,000 of that amount through the Regulation CF portion of their raise before being able to conduct a close on any investments below $20,000. For further information please refer to DADA’s Form C.
  • Security Type:Crowd Note
  • Conversion discount:20.0%
  • Valuation Cap:US $10,000,000
  • Interest rate:6.0%
  • Note term:24 months

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

Get New Posts Automatically By Email:
 
Leave a Reply

Your email address will not be published. Required fields are marked *

Feedback
Feedback
How would you rate your experience?
Do you have any additional comment?
Next
Enter your email if you'd like us to contact you regarding with your feedback.
Back
Submit
Thank you for submitting your feedback!