Osiris Media (June 2019)

Deal Abstract

https://www.seedinvest.com/osiris.media/seed/

Podcast network with 30 podcasts, 1.7MM downloads wants to raise money. Distinguishing characteristic is looking to deliver “podcasts, video, and live events, creating commentary and experiences for music fans to delight and inform—while helping companies connect with a difficult to reach demographic in an authentic way.”

Decision

No.

Why Investing/Passing

  1. “Want to make a million dollars in media? Start with a billion.”
  2. Besides content, not seeing much that is engineering 10x or monopoly/durable in Thiel terms.
  3. 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)

CheckPass/Fail
1. A startup that is based in SVFail: (Princeton, NJ)
2. Has at least 2 founders Pass
3. Has product in the market Pass (barely monetized)
4. 6 months of continuous user growth or 6 months of revenue.Pass (83% growth of user base)
5. Notable investors?Pass: Andy Weissman (USV)
6. Post-funding, will have 18 months of runway Fail: at present raise of $300k, they can last for 18 years, but spending is definitely going to go up.

Raised $306,983, burn is $18k for 2018. Revenue was $9k.

Osiris Media Financial Summary (Hosted link.)

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: Nothing cohesive besides processes, maybe.
  2. The Timing question
    • Bad: Not a bad time to start podcasting business, but why this music niche?
  3. The monopoly question
    • Bad: no reason to believe there won’t be multihoming in the podcast world.
  4. The people question: 
    • Not Bad: but not great.
  5. The distribution question
    • Good: sure, it’s direct to consumer.
  6. The durability question
    • Bad: next to no barrier entrance for someone to start their own music enthusiast platform. See “Gimme Radio.”
  7. *What is the hopeful secret?: 
    • Starting topically deep music podcasts will be highly lucrative once they start to monetize.

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

  1. Monetization goes extremely well.
  2. Build a defensible scalable way to product sticky music podcasts.
  3. The market for this type of podcast goes from niche to mainstream, or they take the manufacturing method from music niche to other niches.

What the Risks Are

  1. Down round from $6MM to $2.5MM
  2. No market
  3. Product that has a differentiation without a distinction

Financials (References)

  • Total Amount Raised: US $306,983
    Total Round Size: US $750,000
    Raise Description:  Seed
    Minimum Investment:  US $1,000 per investor
    Security Type:  Crowd Note  (SWIFT)
    Offering Type:   Side by Side Offering
  • While Osiris Media has set an overall target minimum of US $150,000 for the round, Osiris Media 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 Osiris Media’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
  • Security Type:Tiered Crowd Note  (SWIFT)
  • Conversion discount: 20%
  • Valuation Cap:US $2,000,000 before Apr 20, 2019 
  • US $2,250,000 before May 4, 2019 
  • US $2,500,000 Final 
  • Interest rate:5.0%
  • 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

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