1Mby1M Virtual Accelerator Investor Forum: With Kelly Perdew of Moonshots Capital (Part 4)

Sramana Mitra: What is the metric that you look for?

Kelly Perdew: We publish that we like to see companies that have $50,000 to $100,000 of monthly recurring revenue which translates into $600,000 to $1.2 million in ARR. The companies that we’ve invested in have been at $1 million and growing. That’s the rule. There are exceptions to every rule. We want to see that. What gets interesting though is we have to do a whole lot with the financials because your definition of recurring revenue and my definition of recurring revenue might differ.

We just want to be on the same page with the definition of what that is. When you’re talking about clients that are small and medium-sized businesses, they may only spend money every quarter. It also depends on what vertical they’re in. Being able to separate that and understand churn and the ability to do upsell are super important. We don’t know the upper limit on the pricing. $30,000 to $50,000 a month is not out of the question on a lot of these deals. It’s a little different when you think about $6 to $10 a seat.

Sramana Mitra: Let’s do another one from a different sector. Maybe a B2C company.

Kelly Perdew: There’s one B2C company that’s called Fair that was founded by a military veteran Scott Painter. It’s the second time that I’ve invested in him. He also founded True Car which he took from ideation all the way through to IPO. In this instance, the conversation was very short.

Scott called me and said, “I’m doing a $4 million investment on 12%. I’m putting $2 million in. Do you want any?” I said, “Can I have the rest?” He’s very focused on the automotive space. He recently took a company to IPO. That’s when we were running the syndicate. I still needed something to tell the people that might follow us. I asked Scott, “Do you have any materials that I could share as we put the money in?” He sent me a screen of the logo. We’ve invested in every round.

His valuation has increased dramatically to the point where he’s now raising hundreds of millions on the equity side through very large entities that you see playing in these unicorns right now. We were in the friends and family, the seed, the A, and we’ll participate in the B. He’s just a multi-time successful entrepreneur who’s a domain expert in the area that he’s playing. He’s radically disruptive.

The product enables you to connect to your bank account, connect to the car that you like, and lease that car off the lot for an indeterminate lease. Meaning you can bring it back tomorrow or in two years. It’s a single payment for all of those items – insurance, car payment, after market things. He’s looking at transportation as a service.

Sramana Mitra: Interesting. He’s a real expert in the car leasing industry.

Kelly Perdew: True Car was radically disruptive. It enabled a consumer to look at how much the car they want to purchase in their zip code sold for yesterday. Nobody really likes to negotiate with a car sales person about how much the car is. He eliminated that concern which was very disruptive to a protected dealership-run industry. He fought a lot of legal battles along the way but ended up taking the company public at billions of dollars.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Kelly Perdew of Moonshots Capital
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