Investment Memo: Linen (#13)

How to write an investment memo for an early-stage, pre-revenue start-up

Investment Memo: Linen (#13)

Every Sunday I publish a newsletter featuring the best hacks and insights I discover on my journey as an entrepreneur and investor.

Last month, the SEC increased the amount of money start-ups can raise on Crowdfunding platforms from $1M to $5M. In last week’s newsletter, I discussed how this has caused greater investor appetite for Crowdfunding, and why I believe that bringing customers and community members on as investors will become a new norm in fundraising.

I also spoke about Republic (my favourite Crowdfunding platform) and Linen, a start-up that’s currently raising money on Republic and that you can invest in. In this newsletter, I’ll show you how I’d consider and analyse a Crowdfunding investment by writing an investment memo for Linen.

How I use investment memos

Whether it’s my newsletter, my to-do list or my latest plans to retire in Thailand, writing helps me structure my thoughts and clarify my thinking. To that end, I use memos to briefly summarise investment opportunities and focus on the key drivers of value behind an investment. They act as my initial research and hypothesis. Only if the investment opportunity passes this initial test will I look to conduct deeper due diligence and speak with relevant parties, such as start-up founders.

I adopt the ‘less is more’ attitude and remain concise by editing ruthlessly and eliminating extraneous ideas. As a result, my investment memos are usually only one page in length. This makes them digestible, shareable with friends and colleagues, and useful starting points for discussion.

To produce an investment memo efficiently and effectively, I like to use an initial checklist that can later be built upon and adapted to specific companies. In creating my checklist, I’ve drawn upon three general frameworks for evaluating start-ups:

  1. Jason Calacanis’ Six Characteristics from Angel: How to Invest in Technology Startups
  2. Peter Thiel’s Seven Questions Every Business Should Answer from Zero to One: Notes on Startups, or How to Build the Future
  3. Kogito Ventures’ Startup Evaluation Process

My investment checklist

  1. Market: What is the addressable market? Is the timing right?
  2. Competition: What is the competitive landscape? Is it crowded? Do competitors have moats?
  3. Durability: Can market position be defensible 10 or 20 years into the future?
  4. People: Are there at least two founders? Do they have the right mix of motivation, domain expertise, technical skills and social intelligence?
  5. Product: Is the product in market?
  6. Traction: Is there 6 months of continuous user growth or revenue?
  7. Engineering: Can the team create breakthrough technology instead of incremental improvements?
  8. Distribution: Is there a way to deliver the product? Can product usage drive user acquisition?
  9. Runway: Will there be 18 months’ runway post-funding?
  10. Investors: Are there notable investors?
  11. Customers: Is there a clear and well-analysed customer profile?
  12. Unfair Advantage: Is there a unique opportunity or edge others don’t see?

I answer the questions for each of these areas and give them a rating out of 3. This gives me a broad sense of an opportunity’s value drivers, risks, and areas to focus on in later due diligence.


  • Linen is developing a mobile app and wallet which enables users to hold, send and receive Crypto and access certain blockchain-based protocols, including liquidity pools in DeFi.
  • The company (website and LinkedIn) was founded in 2018 and is located in San Francisco. It has 2 full-time co-founders, 5 employees/advisors.
  • Linen provides users with a self-custody wallet that enables the use of any Web3 or DeFi platform (Compound, Curve, Uniswap, Zapper, Zerion, or any NFT platform).
  • By making their digital cash (USDC, DAI, USDT) available to borrowers and traders, users can earn yield and withdraw at any time without paying fees.
  • Linen’s wallet is designed for less tech-savvy and newbie investors. Users don’t need to write down unrecoverable passwords, thereby reducing barriers to entry to DeFi and Crypto for the average consumer.


  • Fundraising Target: $4.9M
  • Fundraised So Far: $2.6M
  • Pre-Money Valuation: $22M
  • Previous Year’s Annual Revenue: $0

Market: 3/3.

  • DeFi and the ownership economy are both areas of growth within Crypto.
  • While the total Crypto market cap increased from $200B to $2T in the last 12 months, assets locked in DeFi smart contracts increased from $1B to $25B.
  • Self-custody is expected to be the primary method of storing long-tail crypto assets like governance tokens and NFTs, and there have been 100M+ app downloads of self-custody wallets.

Competition: 2/3.

  • Crowded market including MetaMask, Exodus, TrustWallet, BlockFi, and Coinbase.

Durability: 2/3.

  • Like Coinbase, they’re trying to become an all-inclusive financial platform.

People: 2/3.

  • 2 decent founders. But the rest of the team are mostly either part-time or advisors. I’d hope for more at this valuation and capital burn.

Product: 2/3.

  • It’s in the App Store (private beta testing with 600 users) but there are only 64 reviews. I’d hope for more at this valuation and capital burn.

Traction: 1/3.

  • Pre-revenue.

Engineering: 2/3.

  • They're creating a more friendly UI/UX but not fundamental better or defensible technology.

Distribution: 1/3.

  • Despite having 4 pages of Crypto apps on my iPhone and being subscribed to dozens of Crypto newsletters, podcasts and YouTube channels, I’ve not heard of this app.
  • While Linen is still in beta, I’m concerned as to whether it will be “pulled” by the market instead of “pushed” with paid marketing and sales.

Runway: 3/3.

  • Average burn rate is currently $35K/month. If they raise the full amount, this means they'll have 10 years' runway net of fees.

Investors: 2/3.

  • Coinbase Ventures and Polychain Capital.

Customers: 3/3.

  • Clear customer profile. Less tech-savvy and newbie investors.

Unfair Advantage: 2/3.

  • They’re simplifying Crypto for the average consumer which could grow to a very big market.

What has to go right for the start-up to return money on investment?

  1. Get more users
  2. Monetise
  3. Develop a moat

What are the main risks?

  1. They’re too late to the game! BlockFi, Voyager, Coinbase, etc. are already here!
  2. Their business model and revenue generated per user may not work for venture-sized returns
  3. There’s no moat to make people want to use Linen over other Crypto passive income generators like BlockFi


Linen is pre-revenue and has a pretty app in beta-testing. I love that they’re building technology to democratise access to Crypto, but I’m concerned as to whether they can overcome the network effects of rivals like Coinbase or be innovated upon by MetaMask.

The opportunity is one I’m interested in learning more about, and I’ve therefore got in touch with the founders through Republic.


I’d love to hear from you

What do you think about Crowdfunding? Is it something you’ve tried before? If so, how have you assessed opportunities? What do you think about my initial analysis of Linen? Is it an opportunity you’d consider? You can reach me on Twitter or email:

What I’ve Been Reading

🎵 The music industry’s centre of gravity is shifting. Mark Mulligan is my favourite writer in the music industry. In this post, he explains how creator tools are pushing investment into new areas of the industry and that the process of music business diversification has only just begun. (700 words).

👼 What Information Do You Need in Order to Change? I’m always looking to improve myself. To do so, I need feedback to tell me what I’m doing well and where I’m going wrong. I can then use this to plan tactics and bridge the gap between where I can now and where I want to be. This article discusses how to get and give “good feedback”. (1,300 words).

🇲🇻 Maldives Will Offer Covid Vaccine To Tourists On Arrival. With the Covid-19 vaccine set to become almost a literal must-have to travel this summer, it’s interesting to think about how some countries may look to capitalise on vaccine tourism. Admittedly, there are worse places to go than the Maldives! (1,000 words).

🙊 The Ponzi Career. Dror Poleg is one of my favourite writers on the future of work. In this article, he discusses how, due to the growth of NFTs, the rise of the 10X class and the ‘tiktokization of work’, the future of work is a pyramid scheme where every person sells his favourite person to the next person. (2,500 words).

🤔 Thoughts on opening the private equity and venture capital markets to retail investors. Various trends mean PE and VC have a greater and ever-increasing role in our society. This article discusses how we should improve access to the private markets for everyone, and that, done right, allowing more small-ticket investors to participate is a good and necessary thing. (3,000 words).

🇪🇺 EU Countries Have Agreed To Vaccine Passport. With more countries allowing vaccinated travellers to enter, it seems vaccinations will be key to summer holidays this year. Yet along with vaccinations, it seems another essential feature of summer travel will be vaccine passports! (1,000 words).

👀 Looking Like Money: How Wellness Became the New Luxury Status Symbol. I love wellness and psychology, but I’m upset to see how they’ve become a new status symbol. It just distracts from the initial goal. I’m interested in how we can and will close the gap between the part of the population that’s getting healthier and fitter and the part that’s getting less and less healthy. (900 words).

What I’ve Been Listening To

🐐 Bankless interview Mark Cuban on why DeFi is the future. This interview was crazy. Mark Cuban needs no introduction, but the depth of knowledge he has of Crypto and his ability to break complicated subjects into simple, digestible ideas was really impressive. (01:40:21).

🇪🇸 Coffee Break Spanish Episode 1: Saying how you are feeling. I arrived in Barcelona three weeks ago now and I can’t see myself leaving. I’m therefore doing everything I can to learn Spanish. This is, so far, my favourite podcast for beginners to begin learning Spanish. (00:13:06).

💥 The Telling of DMX's Life Story. A conversation with Smokey Fontaine, who co-authored DMX’s autobiography in 2002, about the intense potency of the rapper’s music and religious fervour, and what it was like to interview him. (00:58:58).

🌴 Danny In The Valley with a double interview. First is Terraformation’s Yishan Wong who’s trying to plant 1 trillion trees and save the planet. Second is Gianni Satino who’s part of the group that purchased the $200K LeBron James NFT. Both fascinating and entertaining. (01:32:18).

🧠 Lex Fridman interviews Tyler Cowen. Two of my favourite polymaths discuss everything from Economics, Communism and Nuclear War to Clubhouse, Loneliness and Mexican Food. I wish this interview went on for longer! (02:15:29).

The Tools I’ve Discovered

🔊 Every Noise at Once is a free website that provides an algorithmically generated map of 5,000+ musical genres. Just click on an individual genre to listen to an audio sample. I love music and this was a wonderful rabbit hole to explore. Searching ‘Armenian Hip Hop’ yielded my favourite result so far.

💰 Accointing is a free Crypto portfolio tracker and tax reporting tool that works on desktop and mobile. I’ve tried every portfolio tracker on the market and this is my favourite free tool so far. I connect all of my wallets and exchanges to Accointing and it helps me track my overall portfolio and calculate my taxes.

🐦 Excerpts From The Twitterverse

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