📶 Deal Flow Report: 01/07/23

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Good morning 👋

Trying something new this week.

We’ve looked at tens of thousands of deals. Most of them aren’t great.

So when we see deals that excite us, we try to share them.

Here’s the first iteration of this experiment.

Let us know what you think at the bottom of this email. If you like it, we’ll keep doing it.

We look at hundreds of deals every week and only invest in the best ones that come across our desks.

After investing, we give portfolio companies unfair advantages by helping with marketing, hiring, and downstream capital connections.

If you’re accredited and interested in seeing our deal flow, apply to join our syndicate. (Free to join; you decide what you want to invest in.)

💭 My two cents: Education is fundamentally broken, and everybody knows it.

There are a few general principles I believe. One is that people do not like being told what to do, but they LOVE figuring it out by themselves. You can lead a horse to water …

In a traditional classroom setting, kids rebel because they are given no agency over their learning. They sit in a class for eight hours, and they listen to a lecture.

How much of that information will be realistically retained? Speaking from experience, not much.

Synthesis has built a different way to educate children, and their teaching style is centered around the idea of letting the kids figure out the answer themselves rather than telling them what to think.

➡️ Dig into their one-pager ⬅️

Candor 📶

💭 My two cents: I’m willing to bet most people outside of startup world have not heard of RSUs, but for those that know about them, they can be a big problem.

The startup world largely runs on RSUs (restricted stock units), and these are the primary lever used to incentivize early employees. For early employees, most of their wealth becomes tied to these illiquid RSUs, and until recently there have been limited tools to manage and protect their wealth. That’s what Candor is solving for, and its software provides employees with a way to build a custom plan based on their preferences.

I could see this being used by every venture-backed company, but I see a larger opportunity in selling some of the transaction data to hedge funds that are willing to pay for visibility into how employees are valuing their RSUs.

➡️ Dig into their one-pager ⬅️

Cello 🗣

💭 My two cents: Relying on traditional advertising platforms is building a house on rented land. As more advertisers come onto each platform, it becomes more and more expensive to acquire new customers.

That’s why I’m bullish on word-of-mouth advertising.

Cello helps SaaS businesses build affiliate programs with a low buy-in (~four hours of dev time). They have a free plan, and then their pricing scales along with the amount of revenue they generate for their customers.

We will have to wait and see if the four hours of dev time creates too much friction (compared to a more simple approach from competitors like Rewardful), but once these types of companies convert a customer, they become sticky.

➡️ Dig into their one-pager ⬅️

Sylva 👥

💭 My two cents: I love this concept. We will see if the market feels the same way.

Sylva targets online communities, they buy them outright (or at least a majority percentage), and then they operate to help the community reach its maximum potential. This could mean improving the underlying product, applying growth tools, or simplifying the back-office; they' step in to improve the asset and hold it to maturity.

I love this idea of buying goodwill / audiences (Workweek is another company doing this) because I think most of these audiences are underpriced. If the plan is to then sell directly to these audiences, Sylva has bought an owned marketing channel that they sell to whenever they want.

➡️ Dig into their one-pager ⬅️

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Thanks for reading this far and giving us a little bit of your attention this week.

Feel free to unsubscribe whenever this stops becoming valuable to you.

- Clay

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The information presented is based on sources believed to be reliable. However, I make no representation or warranty, express or implied, as to the accuracy or completeness of the information. The investments mentioned may carry risks, including the potential loss of principal. I am not providing tax, legal, or accounting advice, and this email should not be relied upon for such purposes. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

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