Why I Invested in Firstbase.io
Deal Memo
Have you ever wondered why a lot startups and Fortune 500 businesses incorporate in Delaware? Yes? Well me too. It wasn’t until I started looking through a bunch of Form C’s did I realize that companies love to incorporate in the state of Delaware. The reason for that popular choice is because Delaware-incorporated businesses do not have to pay the state-imposed corporate income tax if they do not conduct business in the state. For more information on this fun fact, I suggest doing a deep dive after reading this.
I get really excited when I come across a startup that solves real problems. Especially problems that are easy to understand yet complex to solve. When the opportunity to invest in Firstbase.io arrived, I quickly knew that this is a company worth supporting. Here’s why:
Firstbase offers 100% remote-friendly way for businesses to incorporate from anywhere in the world. Along with that LLC or C-Corp formation comes a business bank account at Mercury.
The Problem
The process of forming a company is still dominated by outdated incumbents. These incumbent platforms only support U.S residents, can’t support foreign founders, and can’t provide them important things like an EIN or bank account. Platforms can be really expensive and charge hidden fees that founders are not necessarily ready to take on. In addition, once the founder incorporates, there are a lot more barriers like post-incorporation legal needs. Navigating these legal processes is generally a headache with or without expert support. For vc’s, its much simpler for a US based fund to invest in a US based company. Therefore making it harder for foreign entrepreneurs to garner the attention of US investors.
The Opportunity
Roughly, 2 million digital businesses are started in the US each year. The tech sector has seen a 33% growth in incorporations in 2020. E-commerce has grown ~44%. 30–50 million businesses are started worldwide. More and more influencers are forming LLCs due to increased surveillance and regulation by the government. As the future of work shifts to remote working teams, services like Firstbase will continue to pop up. The opportunity is pretty huge and the market continues to grow. Firstbase is building the largest company management platform on the planet. It’s the one place to start, manage, and scale a business.
Product & Solution
This company is providing more than what meets the eye. Business-in-a-box solutions are becoming increasing attractive as years go-on. The transparent pricing plan comes with a business bank account, a free tax consultation, and list of benefits from startup service partners like Brex, Carta, AWS, 50+ more.
There’s also an Incorporation API (Monthly/Annual recurring fee)
Rewards Program
The firstbase network is a curated library of special offers and discounts from service providers, technology companies, and tools to support diverse group of founders and businesses. — Firstbase.io
Coming Soon -> Firstbase Premium
A SaaS subscription for SMBs to manage their compliance, filings, and growth — all in one place.
Growth & Traction
- 🇺🇸 Incorporated 5000+ companies for founders in 160 countries and every US state
- 🚀 20% MoM growth, $200K in monthly revenue
- 🙌 Backed by Y Combinator, Earnest Capital, Amino Capital
The 6 Calacanis Characteristics
Financials
- Total Amount Raised: $545K
- Last Round Type: Seed
- Security Type: SAFE
- Valuation Cap: $40M
What has to go right for the startup to return money on investment?
1. Expansion of product offerings that builds strong customer loyalty.
2. Sustainable profitability
3. Leverage word of mouth growth
4. Consistent improvement of customer experience; Clean UI
What are the possible risks?
- Incumbents improving upon their platforms
- Bad customer experience
- Legal issues, changes in regulations
- Strong Competitors; Clerky, Stripe Atlas
Final Thoughts + Exit Scenario
This company is super interesting. The team is pretty solid. Team of serial entrepreneurs who have built and sold multiple startups prior to Firstbase. Their pitch is very strong and product is well done. I’m looking forward to the company mainting strong growth. The team has spent very few marketing dollars since it’s launch and I hope to see a combination of both organic + paid growth. There is definitely a clear opportunity to offer add-ons and upsell. Possible exit scenario: Stripe acquires Firstbase and continues to eat away at market share.
At the core, Firstbase.io reflects my personal investing thesis of “investing in startups that make a business out of failures”.
Have any questions on Firstbase.io? Looking to invest? Please let me know in the comments below on what you think! Also shoot me an email at niregbulem@gmail.com
