Evaluation of Instant Chemistry and funding recommendations.

1. Instant Chemistry
Venture Capital
1

2.  Overview - Instant Chemistry
 Viability Assessment
 Market & Competition
 Product & Strategy
 Management Team
 Deals Terms Sought
 Current and Desired Financing, and Financing Efforts
 Valuation
 Assessment
 Financing Structure Recommendations & Risks
2
Agenda

3. 3
Instant Chemistry - Overview
Instant Chemistry is seeking to become a leader in the Non-Health Genomics space
Need
- Plethora of dating websites but low success rates of 10 – 15%
- Research shows that 40% of physical attraction can be
predicted based on genetic factors
Solution
- Products to determine your genetic match based on cheek
swabs
- Kits sold both via matchmakers/dating sites and directly to
consumers
Scope outside Dating Industry
- Idea can be extended to :
• corporate team building
• military individual/team effectiveness tests

4. 4
Viability
Assessment

5. 5
Dating Industry - Market Size
$2
B
Size of North American Dating Market
• Number of Singles – 60M
• People who have used dating service - 40M
• Average $ spent by a dating site user- $238/year
$4 B Size of Global Dating Market
Assistive technologies becoming less taboo, may drive sales

6. 6
Personal Genomics
Market Research Methodology
• Dependant on own research – Surveys through
Google Ads and Social Media
• Supplementary research - data from 100
relationship kits
Personal Genomics Space
• Our research shows no mention of non-health
genomics, only Health-based genomics - an
industry worth approximately $3.3 billion
Non-Health
Genomics?
• Offers Gene testing kit similar to Instant Chemistry’s
relationship kit, priced at $249
• Research on 6 of its dating company partners
revealed that the product wasn’t viable
• Lacks a good business model. Poor marketing
Competition

7. 7
Viability - Market
• Novel product idea,
attempts to solve an
industry wide problem
• No big competitors
Assessment Red Flag! Potentially High Adoption and Education Costs.
• Preliminary research
indicates high marketing
costs for increasing
adoption and educating
consumers.
• Lacks data on
commercialization
potential
• Unreliable market research
methodology
• Bad precedent in
GenePartner
Positives Negatives

8. 8
Product
Relationship Kit
Get kit via
matchmakers
/dating websites
Collect Sample Send it to the lab
who analyzes your
DNA (Time?)
Register Kit &view
your results
on IC’s website
Rapid Home Test Kit - test for compatibility genes on the spot
Instant Chemistry needs money for the Rapid Home Test kit which makes genomic
testing simple and affordable
Order kit via dating
websites or buy it at
a pharmacy
Place cotton pad in
mouth to get your
Genetic Score
(Under Development)
OIEQ
Feed the code into
an app or website to
view results

9. 9
Business Model
Rapid Home Test
• Sold via Matchmakers +
Dating platforms
• Sold via partner dating websites
as a value added service and
via drug stores
• Also co-branded and sold with
Wendy Walsh’s books
Pack of 2 for $x (tentative) $y(tentative)
Go-to-
Market
Strategy
Pricing
B2B B2C + B2B
Business
Model
$x with scale $y with scaleCost
IP
Applied for 2 utility patents : 1. Matching algorithm based on genes
and 2. Speedier method for gene evaluation in lab

10. 10
Viability - Product
• Low cost product – rapid
test
• Cost control advantage
Potential due to partnerships. Some perceived redundancy &
product risk associated with relationship kit.
• Possible redundancy and
risks in dual product
offering.
• Both require huge
infrastructure investments
($260K for relationship kit
and $360K for rapid test)
Positives Negatives
Assessment

11. Management Team
Core Management
Team
Scientific Advisory
Board
All PhDs
Jeremy Bluvol
Full Time
Huan Xie, CFO
Full Time
Ron Gonzalez
Founder
Mariana G. Coni
Part-time
Carmelia Ray, CMOSara Seabrooke, Founder
MBA
Bioengineering
MBA
Accounting
MBA
PhD
Neuroscience
Biz Dev
Biz Dev
Biz Dev
20+ yrs dating
industry
Industrial
Design
PhD
Genetics

12. Viability – Management Team
• Strong Executive Team &
Scientific Board with
industry connections
• Pertinent Scientific
knowledge and business
expertise
• Investments from founders
total $67k ( 61% of total
investments) – shows
commitment
• Carmelia Ray - conduit for
further partnerships
Good Potential.
• Direct entrepreneurial/
startup experience lacking
Positives Negatives
Assessment

13. 13
Current Deal Terms
Instant Chemistry is looking for funds to develop its rapid test kit and commercialize it
Now
Founded in 2013 To transition to full commercialization, IC needs
Capital Requirement :$xM over 16 months
Type of financing : Convertible Note
4
Months
16
Months
Phase I : $yK Phase II : $zK
Total Current
Investments :$xK
Valuation Cap : $yM
Ownership
Instant
Chemistry
100%

14. 14
Valuation : Using Tool developed by Bill
Payne
Approach 1 : Pre-revenue business valuation tool developed by
renowned Angel Investor Bill Payne
$X M
Mean
Pre-Money
Valuation
$y M
Mean
Post-Money
Valuation
After Market Research this Pre-Money Valuation went up by $xk to yM and share
preserved by 15% (detail in appendix)
Strength of
Management
Team
Product
/Technology
Competitive
Environment
Factors impacted by Market Research
Percent of Ideal

15. Cash Flows : Monte-Carlo Simulation
Approach 2 : Monte Carlo Simulations for Cash Flows
Our Simulations indicate that Instant Chemistry without Market research would
require an additional $xK in cash flows due to higher variability in the initial deal
terms assumptions

16. Assessment
Poor. Deal terms do not correspond with pre-money valuation.
• Clear that the deal terms requested are not suitable
• Valuation Cap ($xM) of approximately 26% much too low
• A pre-money valuation cap would require at least a 68%
valuation cap based purely on financials alone
Negatives
Assessment

17. 17
Recommendations

18. 18
Scenario 1: Adjust Valuation Cap
Raise Funds with the Company As-Is Using a Convertible Note,
however with Adjusted Pre-Money Valuation Cap of $xM
Deal Risk
Very High
Now 4
Months
16
Months
First Tranche: $xK Second Tranche: $yM
• Significant risk - requires VC to believe in idea despite lack of market research
• Costs to educate and incite adoption may too high
• Risks of dilution due to business uncertainty
Capital Requirement :$xM over 16 months
Type of financing : Convertible Note
Valuation Cap (Post Money) : $y M
Funding Source: Seed VC Investor
32
%
68
%
VC
New Ownership
Instant
Chemistry

19. 19
Scenario 2 : Conduct Professional
Research to Validate Concept
Use Professional Research to Validate Concept, After Which
Raise Funds through Convertible Note
Deal Risk
Medium
• IC doesn’t need the additional $600K here because the initial assumptions hold
• Better pre-money valuation cap of $1.1M
• Risk of potential cash burnout and $$ to fund market research
• Mitigate some risk by tying up with a dating partner & using their customer base
4
Months
16
Months
Second
Tranche: $yK
Third Tranche:
$zK
First
Tranche:
$xK
Capital Requirement :$x M over 16 months
Type of financing : Convertible Note
Valuation Cap (Post Money) : $y M
Funding Source: Seed VC Investor
Now
Internal
Investment$xK
1-2
Months
We recommend convertible note post market research approach due to its medium risk
and ability to achieve a better valuation cap
47
%
53
%
Instant
Chemistry
VC
New Ownership

20. 20
Summary
 We recommend that Instant Chemistry perform Market
Research, Adjust Valuation Cap to $ X M and then seek funds
 This enables Instant chemistry to retain higher share of company
(Increase of y%) in the case of further needed financing or exit
 If third-party market research is deemed unfeasible, we
recommend term Scenario 1.

21. Questions?