SnapStrat (May 2020)

Deal Abstract

https://www.seedinvest.com/snapstrat/bridge

SaaS company hoping to sell a dashboard to C-suite executives, starting out with CMOs. They have revenue, and want to make consulting work more integrated via data. Possibly like Mint.com (which collects and demonstrates all your financial info in one place) for C-Suite or Geckoboard. Already has sales with large enterprise CMOs of Sephora and Frontier technology.

Decision

No

Why Investing/Passing

  1. Passing because despite having large famous customers and seemingly legit VC team, not seeing the vision.
  2. Revenue dropped from 2019 to 2018. Crude but clear signal of not gaining further clarity on what the business is.
  3. Even if the product works, it’s providing a value that seems incremental rather than a magnitude greater.

The 6 Calacanis Characteristics (91 161 18)

CheckPass/Fail
1. A startup that is based in SVPass: Oakland, CA according to LinkedIn.
2. Has at least 2 founders Pass (3+ Head of Sales & Marketing)
3. Has product in the market Pass
4. 6 months of continuous user growth or 6 months of revenue.Fail: (2019 revenue was 120k, 2018 revenue was 166k.)
5. Notable investors?Shasta Ventures, who seem legit, but I don’t know anyone from this team from my knowledge of VCs. Apparently they invested in Canva, Dollar Shave Club, Hinge, Mint.com, Nest, Turo, Zuora, etc.
6. Post-funding, will have 18 months of runway Pass: 2019 burn was 273k and targeting 2.5M was raised, giving 9.15 months of burn.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Probably bad: how much better is this company compared to Google Sheets/Zapier/Geckoboards of the world? If you’re selling to CMOs that’s all well and good but doesn’t scale tremendously.
  2. The Timing question
    • Bad: it’s cheap to build SaaS, conceded. But uncertain why this particular time is when CMO’s/execs will suddenly adopt executive dashboards by a large magnitude of order.
  3. The monopoly question
    • Bad: Again, already plenty of dashboards/pivot tables/etc for people who care. Zapier has a great business as the maintainer of API integrations, but not seeing how SnapStrat would do this.
  4. The people question: 
    • Good: Team seems smart and competent.
  5. The distribution question
    • Good: The team’s one saving grace. They sold to Sephora and Frontier which is great. But not seeing how this software-for-consultants ultimately scales to SaaS and isn’t just tech-enabled consulting.
  6. The durability question
    • Bad: What’s to stop someone else from making another dashboard app?
  7. *What is the hopeful secret?: 
    • Execs will come to rely on dashboards and technology in a non-linear fashion in the coming years, and require different information than most other forms of dashboards.

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

  1. Executives become more tech-trusting and tech-literate in large scale in the coming years.
  2. There is something proprietary developed, not just from presentation, but SnapStrat needs to not only amalgamate information but ultimately have some novel processing of insight.
  3. SnapStrat starts developing luxury dashboards but after figuring out the product, develops exec dashboard for smaller companies e.g. startups that Shasta has funded.

What the Risks Are

  1. The company is essentially a consulting shop, relying on connections to start the business but ultimately can’t find scalable product.
  2. Timing, not sure why this is the right time to build this business. Doesn’t seem like a venture backable business.
  3. Why is this a painkiller rather than a nice to have? It seems less personalized than an analyst but more expensive than an automatic report.

Financials (References)

  • Total Amount Raised: US $55,000
  • Total Round Size: US $2,500,000
  • Raise Description:  Bridge
  • Minimum Investment:  US $1,000 per investor
  • Security Type:  Crowd Note
  • Valuation Cap:  US $6,500,000
  • Offering Type:   Side by Side Offering

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4 comments
  1. Jonathan Stern
    Jonathan Stern
    May 24, 2020 at 6:54 pm

    Hi Muhan,
    I am Jonathan Stern, CEO and founder of SnapStrat. Interesting site and I like the detailed thought and the frameworks you are using to evaluate deals. I wanted to give you a bit more insight into our product, which is quite different than outlined here.

    Our core product is a platform which we configure using low-code application development and metadata modeling to build customer-specific enterprise class applications that span decision support and process automation. These applications provide very different functionality than spreadsheets or BI dashboards, ranging from near real-time data ingestion and transformation, integrated scenario modelling, prescriptive analytics, allocation optimization, as well as enterprise-ready features such as fine grained permissioning and workflow management.

    What is changing in our sector is that a combination of low code application development and metadata management technology allows a much higher degree of customization at near SaaS-like economics.

    We are not a consulting firm, although we do displace a piece of the consulting value chain. The reason I left consulting after 25 years was the realization that clients were looking for permanent assets more than Power Point or Excel and there were not alternatives for recurring strategic decisions in the marketplace. Why now? 2 primary reasons: 1) The pace of business change has gotten to the point where manual and/or ad hoc decision processes are not sustainable — the decision criteria change too rapidly with business context. 2) The pressure on enterprises (CMOs or other functions) to become more data driven is increasing rapidly. The inability to tie their highest value decisions to data is becoming critically important if they want to align strategy with execution.

    Anyway, lots more I can say about SnapStrat and certainly happy to address questions –I am understandably passionate and unquestionably not objective. Thanks again for providing the space and take care!

    Reply
    • muhan
      muhan • Post Author •
      May 24, 2020 at 8:03 pm

      Jonathan,

      Great to hear from you and thank you for leaving this detailed comment! Any chance you have a video walkthrough of your platform for a dummy enterprise account? In addition, who do you think your competitors are? Love the passion and happy to give you as much room to make your case.

      Muhan

      Reply
      • Jonathan Stern
        Jonathan Stern
        May 24, 2020 at 11:53 pm

        This is a short clip pulled from our Batchery demo day. (we will release the entire pitch after it is shown on Wednesday) It has a quick “day in the life” with screen shots, it is short because it has to fit in a 7 minute pitch.
        https://drive.google.com/file/d/1ykyfGTlMTBN_Pk0kO2voY5jAqjUiwRzP/view?usp=sharing
        On the competitor side, it is a complex space. I am copying a response on competition and differentiation from an interview that will be published next week:

        The most frequent way these decisions are made today are either manually, with spreadsheets and meetings, or, by using expensive consultants. Some organizations may try to assemble different technologies, using AI tools like DataRobot, BI tools like Domo or Looker, or functional process management tools like FICO, Planview (Strat planning) or Allocadia (mktg allocation). SnapStrat has a unique product that holistically addresses a customer’s most critical, high-value decisions. Our product approach is differentiated in several key areas:

        We are decision-focused. Many analytics providers focus on collecting and viewing data. While this provides useful information on what has happened in the past, SnapStrat believes that executives want just the right prescriptive analytics and modeling tools to make their specific decisions.

        We provide end-to-end solutions. Most software providers focus on either decision analytics or process management. SnapStrat delivers an end-to-end application that ensures the alignment of strategy and execution.

        Fast time-to-value. We leverage low-code app builder technology to be able to deliver enterprise-class, feature-rich, applications within weeks of a customer commitment. Our data ingestion and transformation tools allow us to demonstrate value with pilots even faster than that.

        Commitment beyond initial delivery. We knew from the beginning that the key to successful customer relationships in our space was going to be based on understanding their business problems. We view our mission as making individual executives more successful in their careers by providing them the tools to make better decisions. That commitment starts at delivery but extends across the life of the relationship — a philosophy that we have embedded in our subscription model.

        Reply
  2. Jonathan Stern
    Jonathan Stern
    May 24, 2020 at 6:59 pm

    One more note here, the round size is $750K, not $2.5M. That number is a vestige of our board authorization for the initial Shasta Convertible.

    Reply
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