iSport360 (November 2018)

Deal

https://www.seedinvest.com/isport360/seed

Decision

Not yet.

Why (Not) Investing (Yet)

  1. Acquired 1800 teams using the app in 18 months. The average league is 500 players or 35 teams, and monetizing leagues should be straightforward if value is present. In addition, there are several leagues that are 300 teams big. 
  2. So far is a vitamin not a painkiller.
  3. Revenue is too early for my skill level to assess. 

Master Checklist

CheckPass/Fail
1. Syndicate lead has >5 years investing and >1 unicorn investmentFail
2. A startup that is based in SVFail (Manalapan, NJ)
3. Has at least 2 founders Pass 
4. Has product in the market Pass
5. 6 months of continuous user growth or revenue.Fail: only $30 of revenue so far.
6. Notable investors?Fail
7. Post-funding, will have 18 months of runway Fail: $85k raised so far, $223k burn in 2016 and 2017, one month left to go and shooting for $1MM this round
8. Proprietary technology?Pass: as proprietary as anything in digital property can be
9. Network effects?
Pass
10. Economies of scale?
Pass
11. Great branding?
Fail

Seven Questions

  1. The Engineering question
    • Bad: From what I can infer, this is selling a feedback app instead of a scheduling app. Doing investigation into my network and industry insiders, this seems like a vitamin not a painkiller. In addition, this is (surprisingly) not my first time evaluating a sports startup: https://getplayerpro.com/
  2. The Timing question
    • Good: always a great time to start a SaaS business, especially in this frothy market. 
  3. The monopoly question
    • Good… but does it matter?: why is having a monopoly in just feedback providing a good thing? I understand if this is something like Qualtrics or NPS, but youth sports leagues are not competing on the same metrics that businesses are.
  4. The people question: 
    • Bad (by default): Two professionals in digital agencies—no previous product based entrepreneurship, in addition, no serious revenues from product that’s been in marketplace for nearly 2 years.
  5. The distribution question
    • Same answer as #3 the Monopoly Question. 
  6. The durability question
    • Bad: five hundred pound gorilla TeamSnap already dominates the scheduling and could integrate this product fairly quickly. The only reason to buy instead of build would be if there was some factor of feedback that drove key business results in other arenas. 
  7. The secret question: 
    • Bad (by default): that feedback about players is an undervalued criteria and parents/decision makers are willing to pay money to learn it?

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

  1. Feedback is an underrated market.
  2. iSport360 does feedback better than and more defensibly than others.
  3. iSport360 can sell and get exclusive licensing deals with other players in the space. 

What the Risks Are

  1. Never finds product-market fit
  2. Always at the mercy of bigger painkiller companies in the space
  3. Measures the wrong things

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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