Deal Abstract
https://www.seedinvest.com/gimmeradio/seed
Twitch/Discord livestream/engagement meets music fans. Building a new music platform with deep expert DJ’s (think Inside.com and the columnist) to go niche and upsell the goods that are 4x to fans.
This is a retroactive deal memo, as the company raised $510k in March. I went to a live investor event.
Decision
Yes (hypothetically.)
Why Investing/Passing
- Right people with experience on music side of business
- Interesting take to engagement that has seen success in videogames (Twitch/Discord,) while also being tested in news (Inside.com)
- Solid media company, and while it’s impressive that Gimlet sold for $200MM in 5 years of founding, I’d say that’s the exception to the rule. (Alex Blumberg and NPR all-star team were essentially masters of their craft but under market value.)
The 6 Calacanis Characteristics (91 161 18)
| Check | Pass/Fail |
| 1. A startup that is based in SV | Pass: (San Francisco, CA) |
| 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. | Pass |
| 5. Notable investors? | Pass: Techstars (Music) |
| 6. Post-funding, will have 18 months of runway | Fail: at present raise of $500k, that means 10 months of runway. If they raised 1.5MM, it would have been 30 months of runway. |
Has $111k cash on hand for operations. “The Company’s cash position is relatively limited, and while the company has reduced its burn over recent months, gives the company a limited runway.”
Gimme Radio profile on SeedInvest
The 7 Thiel Questions (ETMPDDS)
- The Engineering question:
- Good: introducing Twitch/Discord dynamics with superstar DJ’s has the potential of a 10x better engagement with superfans.
- Good: introducing Twitch/Discord dynamics with superstar DJ’s has the potential of a 10x better engagement with superfans.
- The Timing question:
- Good: Not a bad time, especially since this is mainly a digital distribution platform for music, not really a music platform.
- The monopoly question:
- Good: if Gimme Radio can nail the human + tech + community aspect, it will be the Inside.com of music engagement.
- The people question:
- Good: years of experience in industry, tapping into Metal roots and unfair advantages.
- The distribution question:
- Good: sure, at >$1 CAC, not bad at all. Now to see those subscription rates.
- The durability question:
- Bad: Gimme Radio has a key hypothesis which is that the human component is rare, value, imperfect replicable, non-substitutable. The super fan DJ’s, by definition, are not that common. In addition, though these DJ’s are rare, they are not well advertised because this was historically an unmonetized expertise.
- *What is the hopeful secret?:
- Superstar DJ’s + solid tech platform + community of deep hardcores is valuable but scalable across enough niche music genres.
- Superstar DJ’s + solid tech platform + community of deep hardcores is valuable but scalable across enough niche music genres.
What has to go right for the startup to return money on investment:
- Conversion rates to premium goes well.
- Scaling to country then other genres is like shampoo: rinse, lather, repeat.
- After becoming the Spotify for super fans, more market power to make taste/push other lucrative avenues.
What the Risks Are
- Conversion rates to premium does not go well.
- The deep fan is only in metal and not scalable ($$$ wise) to other genres.
- Competition like Spotify and such see the appeal and copy the tactics and model.
Financials (References)
- Total Amount Raised: US $510,601
Total Round Size: US $1,500,000
Raise Description: Seed
Minimum Investment: US $500 per investor
Security Type: Crowd Note
Valuation Cap: US $6,000,000
Offering Type: Side by Side Offering - Closing conditions:While Gimme Radio has set an overall target minimum of US $435,000 for the round, Gimme Radio 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 Gimme Radio’s Form C.
- Security Type:Crowd Note
- Conversion discount:20.0%
- Valuation Cap:US $6,000,000
- Interest rate:4.0%
- Note term:24 months