Does anyone have experience with 'lifestyle business' start-up funding?

searcher profile

April 16, 2021

by a searcher from Cornell University in Philadelphia, PA, USA

Super long story short - happy to give the longer version to anyone interested -, but I was looking to purchase a catering company in pre-pandemic###-###-#### The deal fell apart, but the company reached back out to me because they had launched a virtual catering business (sending lunches to Zoom meeting participants) in June 2020 which was cumulatively cash flow positive by December on something like 20,000 units sold (I haven't seen audited financials, but, from my past experience, I generally trust the story they're telling). They're one pace to triple sales this year and have signed a major partnership deal with a celebrity chief. Now, they called me to ask if I was interested in purchasing the virtual catering company or finding someone else who be interested in purchasing/investing. The challenge is that it has start-up risk without the prospect of hyper-returns. Anyone have any advice?

0
2
94
Replies
2
commentor profile
Reply by a searcher
from National University of Ireland, Galway in Seattle, WA, USA
I would ask for ther business development plan. Zoom is here to stay. I know businesses that have shuttered portions of headquarters because they will never need the full space again. Also I think a business like that can scale if they have somehow created a formulae that is hard to copy and can be deployed nation wide. . It could be a combo of branding, food prep prep, delivery and maybe celeb affiliations. Once you get to the third or fourth unique angle you have something that is hard to copy. If their business plan does not show that or they can't give you one then say no thanks. Other red flag is if key players want to exit. Key players can't exit start-ups and leave value intact. Different to established businesses with solid markets and process etc..
commentor profile
Reply by a searcher
from Hofstra University in Melville, NY, USA
Hard to find outside investors as the name implies 'lifestyle'. Would most likely be people in your inner circle/family.

As far as the target company goes, they have not proven they can scale. Its similar to a startup and what happens to that business if things go back to normal? Can they resume their previous business? At the very least a vast majority of the sale should be performance based.
Join the discussion