They were raising $1.7 million at a $20 million cap SAFE. I passed. Here's why…
"PaintBetter" is an app that teaches you how to paint. ***"PaintBetter" is a composite, not a real startup, and the name is made up.*** But it illustrates why even some startups with really cool products don't get funded.
The Good
"PaintBetter" had a great app and the founders were very experienced painters themselves. They showed us some of the pictures users had made, and they were really pretty!
"PaintBetter" charged $40/mo for their product and had thousands of users. I love the consumer SaaS business model — it's produced some amazing outcomes like Duolingo, with an $8 billion market cap.
But as cool as their product was, "PaintBetter" had some real issues…
The Bad
Of their nine full time employees, only two were technical. They were heavily staffed with expert painters, but light on people who could build software.
The lack of tech talent led to a lack of product velocity. It took them years to move from web only to a mobile app, despite the popularity of mobile.
That lack of product velocity showed in their revenue, which was flatlining. Annual recurring revenue (ARR) had grown just 2% a month over the last year.
At this rate, they'd never get to the $100 million they need to become a unicorn.
The founders didn't have a good strategy to increase growth either. They were focused on adding more classes, but didn't seem to know how to find users.
Decision Time
"PaintBetter" had a really cool app and some very talented people behind it. But the slow growth, thin technical team, and lack of a growth strategy were dealbreakers for me.
I passed.
To have any hope of making money on this angel investing thing, I need to find companies that are growing like crazy. I'm talking growth that's ridiculous and unnatural: 3x, 5x, or even 10x a year.
That's what a best in class startup looks like. And even in those, we'll lose our money most of the time!
That's how hard investing in startups really is.
Wrap-Up
I really liked the "PaintBetter" guys, but the deal just didn't work for me. I hope they prove me wrong and grow like crazy!
And if they do, I'll show up hat in hand, begging to invest.
Would you have invested in "PaintBetter"? Why or why not?
Leave a comment and let us know! Have a great weekend everybody!
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More on tech:
Why I Passed: ReadMate
The Startup Conveyor Belt
The Power of Small Checks
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