iWashie was raising $600,000 at a very attractive valuation. It was growing like crazy. But I passed.

This company is a composite and I changed the name and some identifying details. But it illustrates a key point: the size of the market matters.

An Amazing Startup

iWashie is a SaaS product for car washes. It gives them a great website, accounting tools, and an online store where you can book washes and detailing.

The car washes who were using iWashie loved it.

The fast website led to a lot more customers. Churn was practically zero.

When I met with the founders, they seemed very smart and dedicated.

The Numbers

iWashie was growing like crazy.

For the last 6 months, it had grown over 35% month over month, an outstanding record. Annual Recurring Revenue (ARR) was closing in on $500,000.

iWashie was also raising at a very reasonable valuation: just $5 million. This may be because the founders were in the middle of the country, not the big markets of SF or NYC.

But There’s One Problem

At this point, you’re probably thinking “Francis, why the heck did you not invest in this?”

Well, for all the awesome things about iWashie, there was one big problem: the market.

There are only about 17,000 car washes in America. iWashie was charging them $500/month for its product.

If they grabbed every single car wash in America as a customer, they’d still only make about $100 million a year in revenue.

For a company to become a unicorn, they need to get to at least $100 million a year in revenue. To IPO, it can be even more.

Although they have a great product, they’ll never get every car wash as a customer. And being so customized, the product didn’t easily slot into other businesses outside car washes.

Wrap-Up

As much as I loved these founders, I found myself wishing they were in a different business.

Angel investors have to go after giant opportunities. It’s the only way we’ll get those billion dollar outcomes that pay for all the failed startups!

So, as much as I loved the iWashie guys, I had to pass. This can be a great business, but it’s not a great venture capital investment.

Would you have invested in iWashie? Why or why not?

Leave a comment and let us know!

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