Balloonr Deal Memo

I am excited to announce that I’ve made my first angel investment into a startup called Balloonr! I used the Republic crowdfunding platform to source this deal and invest. Below I highlight why I ultimately chose to invest in this company, along with some details on the deal itself.

Deal Summary

I made a $100 investment into Balloonr as a Crowd SAFE security at a valuation cap of $7M and a 20% discount using the Republic platform. For more information on the deal, check out their deal page.

 

Company Summary

Balloonr is a SaaS product that aims to improve collaboration and decision-making processes in large enterprises by removing biases and providing a safe forum for individuals to provide feedback, opinions, questions, and more. The platform achieves this by allowing anonymous submissions called “balloons” that anyone in the organization can raise. Others within the organization can upvote and downvote balloons, and the original author can reveal their identities if they so choose. Having worked in large corporations, I have been in meetings where individuals, including myself, did not feel comfortable raising an issue in front of the broader group. What if the question I ask is stupid? What if everyone disagrees? What if I get into trouble? If it’s a contentious issue, but it correct, how do I get others on board with it? Balloonr solves these problems.

Company website: https://balloonr.com

 

Total Addressable Market

This product is the first of its kind, in terms of the problem it’s trying to solve. Given that this issue is seen in just about every organization regardless of size and industry, it’s safe to say that the TAM is venture scale. According to Research & Markets, the enterprise collaboration SaaS TAM is estimated to be $31.74 billion in 2018 and is expected to reach $53.83 billion by 2023. These statistics show that VCs will have no problem backing this business in future rounds.

 

Product

The team is past the MVP stage and has a well working, intuitive product with great design. I think it looks elegant, easy to use, and is very approachable. Because it’s software, it is highly scalable and customizable for each client. Also, in September of this year, they will be launching V2 of the product. I think the biggest risk of this product is that it can be seen as a “feature” versus a standalone product, and therefore could be copied by a larger enterprise SaaS company. If the team can grow the brand fast enough to gain a strong foothold in the market, they could likely be acquired by one of these larger players.

 

Team

A husband and wife team can be a turnoff to some investors due to marital issues getting in the way of building a fast-growing company. With that said, Amanda and Noah seem like a powerhouse duo. Amanda is especially energetic and passionate about this problem and makes for an impressive CEO. In terms of qualifications, Amanda was a public health researcher who has firsthand knowledge of the problem she is trying to solve and why this solution works. Noah’s experience as a developer for large brands and design sense makes him highly qualified as CTO. I’m investing in this team just as much as I am investing in the product.

 

Customers

Balloonr is working with industry-leading companies, teams, and organizations, including Google, Capital One, Hyatt, and Esurance. With an active customer base with high ratings and rave reviews about the product, I’m convinced that there will be low churn and high net dollar retention rates.

 

Traction

Currently, the startup has $250K in ARR across 15 customers, with projections to double ARR to $500K by Q3 this year. They also claim to have $3.4M in their sales pipeline. Based on the current ARR, I find the valuation too high; however, if they can beat projections and unlock some of that pipeline, I am comfortable with the $7M.

 

Other Criteria

In general, I like their go-to-market strategy and subscription-based business model. I am not aware of any competitors in this business, so that gives them a first-mover advantage. Once again, I’d highlight that this product could be seen as a feature and copied by other enterprise SaaS companies serving other customers. There is high growth potential, but I am aware that there are few exit strategies beyond M&A. The company has backing from strong names such as 500 Startups, Wavemaker Partners, and Jason Calacanis. Strong team, big TAM, great P/M fit.

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