A Harvard Business Review (HBR) case detailed the investment evaluation strategy behind early stage food delivery startups behind 5 startups then, namely, Postmates, Sprig, Kitchensurfing, Plated and EatStreet with the motivation to trigger discussion as to which of these we would invest in and why.
The structured framework was used by Simon Rothman, a partner of Greylock VC felt contextually applicable. I appreciated it because of two primary reasons. Firstly, having done a fair amount of Mckinsey styled consulting cases and the fact that it’s creator, Simon Rothman was a former Mckinsey Engagement Manager gave me a sense of déjà vu. Secondly, despite the fact that food delivery is not in anyways related to fintech, they are undoubtedly inherent similarities functioning as a marketplace.
In this article, as one of the early members of a bootstrapped team, I will attempt to evaluate www.soCash.io, a cash management startup that serves as a marketplace for cash. soCash connects banks, users, and merchants and serves as a three-sided platform market, giving users the ability to withdraw cash from merchant shops while debiting eWallets owned by banks respectively.
Back in April 2014, Rothman acknowledged that investing in online marketplaces were not formulaic and he identified five factors that required careful analysis in order to make investment decisions. Exhibit 1 describes this using Lyft/Uber as descriptive examples. With these factors in mind, we can begin to evaluate soCash in a similar context.
Large and fragmented market
Cash in itself is a form of commodity, and we want to understand the cash distribution industry, that is the business of distributing cash, is a multi billion dollar industry all over the world. Everyone holds some form of cash and local and central banks spends millions of dollars to ensure it is within reach and accessible to the population.
Cash in Circulation — With much of the fan fair of digital transformation and e- payment initiatives going on, one would expect that the amount of Cash in circulation in developed markets and economies to go down, but even in…