They were raising $400,000 on a $4 million post-money SAFE. The product was awesome, but I passed. Here’s why…
“FallDetector” is a device to prevent falls in the elderly. ***”FallDetector” is a composite, not a real startup, and the name is made up.*** But it shows why even growing companies with awesome products don’t get funded.
The Good
“FallDetector” was incredibly innovative. A tiny device attaches to an elderly person’s clothing and if they fall or encounter any other large shock, it alerts staff on their phones in the “FallDetector” app.
The patient doesn’t have to use a computer and the device isn’t obtrusive. This made it easy to get them to use “FallDetector.”
“FallDetector” was beginning to catch on. Revenue was closing in on a $500,000 a year run rate — impressive for this valuation.
When I met with the founder, I could tell how important this problem was to him. His grandmother had struggled with falls and he wanted to help her.
The Bad
“FallDetector” had a lot of revenue for a $4 million company. But it wasn’t growing as fast as some other early stage startups.
MRR was doubling year over year. Sounds amazing, right?
In a way, it is. But the best early stage companies are at least tripling. Some are even growing 10x year over year.
“FallDetector” was doing well, but not best in class.
What’s more, the founder wasn’t very forthcoming with information. When I asked what the sensors cost to make, he wouldn’t tell me.
The best founders I’ve worked with are very transparent. I wasn’t getting that feeling here.
As a minority investor, I don’t need to know every single detail about a company. But basics like COGS are important.
I just wasn’t getting the impression the founder wanted a collaborative relationship. So, I probably wasn’t the right investor for him.
Wrap-Up
“FallDetector” was a really awesome product. I hope it helps a lot of elderly people to live better lives!
But as an investment, it didn’t work for me. The combination of moderate growth and a founder I wasn’t sure I could work with were problems I couldn’t get past.
Would you have invested in “FallDetector”? Leave a comment and let us know!
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