In the world of investment, a “party round” is an investment round — typically an angel round — where a larger number of angels throw in what (to them) is pocket change to help a company get off the ground. “Pocket change” is relative, of course; what is pocket change to a very high-net-worth individual could be a down payment on a house for you and an annual salary for me.
About a year ago, Alex reported that Party Round raised a $7 million pre-seed using its own platform, adding a medium-size busload of angel investors to its cap table. Usually, party rounds are more about who you know (and who they are willing to bring to the table) than anything else, but having a decent story and narrative is still crucial.
The Party Round team was willing to share its deck with me, so let’s take a closer look at what the founding team did to shake enough trees to make $7 million in money apples succumb to gravity.
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Slides in this deck
Party Round’s 10-slide deck is by far one of the tightest decks I’ve seen. It shared its full deck without edits or redactions. Nice.
- Cover slide
- Slogan slide
- Solution slide
- Value prop slide
- Product slide
- Competitive advantages slide
- “Why now?’ slide
- Mission slide
- Team slide
- Closing slide
Three things to love
Party Round gets a lot of things right in its deck. I like the design and I particularly like the scarcity of words. Hell, the entire deck contains just 148 words. That’s … nothing. The company raised $7 million with 148 words. That’s $47,000 per word. These pitch deck teardowns are usually 2,200 words long, and I haven’t checked my pay stub in a hot minute, but I’m pretty sure TechCrunch isn’t paying me $100 million per article. Then again, I’m not widely known for my brevity.
So, apart from being crisp and to the point, what else does Party Round get right?
It knows what it does. It knows who it does it for.
There’s something refreshing about a company that knows what it does, who it does it for and what the value proposition is; and it’s all here, on the slide, succinctly and simply. There is beauty and clarity here, and there’s … genuinely not a lot more to say! I wish every founder I spoke with had this level of overview and focus.
Tap, tap, boom.
On slides 4 and 5, the company outlines the process for founders and investors. It’s as easy — if not easier — than creating a crowdfunding campaign. For founders, you create the round and configure the SAFE terms, you invite your investors and Bob’s your mother’s brother. For investors, you open the invite. If you’re in, you type in how much you want to invest, you sign the investment notes and you wire the money. It seems so simple!
Excellent market context!
Investors rarely invest in a single data point, and contextualizing the “why now?” for a company is crucial. The company rightly points out that it is capturing the zeitgeist. It even did so with remarkable restraint; there isn’t a mention of NFTs in sight.
Retail investing has hugely shifted through the gamified world of Robinhood, and Coinbase has put crypto investing within range even of people who don’t want to spend the time to figure out what a digital wallet is and how many words you have to remember to create one.
I’m not 100% enthused by this deck. In fact, hand on heart, I am really struggling to understand how this company was successful in raising any money at all, let alone raising $7 million. In the rest of this teardown, we’ll take a look at three things Party Round could have improved or done differently, along with its full pitch deck.
Three Four things that could be improved
I think that this company is solving a really, really niche problem that most founders simply don’t experience. Let’s talk about why.
It may be helpful to scroll down to the full pitch deck, embedded at the bottom of this article, and give it a quick click-through so you can get a first impression of what’s going on there.
More product than company
As described, the set of features that Party Round offers feels somewhat basic. Create a round, configure your SAFE, invite your friends. My vibe from reading the deck is that Party Round feels more like a product than a company.
The investment side also didn’t excite me: “Sign, then wire the money” is essentially a HelloSign API integration and a pre-configured set of PDF documents. Again: Throw a few thousand dollars at a lawyer to get a boilerplate SAFE document, add some check boxes for the configurables and add an e-signature to it all. Done. Choosing what color to make the app and designing a logo takes longer.
The company has some obvious competition. You can download SAFE documents from the Y Combinator site for free. You can “invite your friends” by sending an email. Signatures are easy, too — there is no shortage of legally binding e-signature companies out there.
In a nutshell, I’ll say this: I don’t get it.
Where is your competitive landscape?
The company skipped the competitive landscape slide. That kind of makes sense, because every lawyer in the U.S. can throw together a SAFE or convertible note before their morning coffee.
The fact that the company decided to forgo the competitive landscape makes me wonder one of two things: Either there are no competitors because its product is sufficiently basic that nobody has bothered “solving the problem,” or the company realized that every lawyer could generate one of these documents for next to no money — and you may as well go that route, because you’ve got to incorporate as well.
Anyway, all of that is to say that the company was able to create what should, by all rights, be a feature that Y Combinator or AngelList or Rocket Lawyer or LegalZoom or the venerable Wilson Sonsini Goodrich & Rosati should have as part of its core service offering. That also means that all of the above are legitimate competitors and not listing them out seems rather naive.
This leads to another question:
How is this going to make money?
There’s nothing in this deck about how Party Round is going to make money. Nothing about a go-to-market strategy. Nothing about the business model. Which is a problem; sure, lawyers aren’t cheap, but if you’re charging enough to make this an interesting business, you’re placing yourself in direct competition with all of the competitors listed above.
Even today, when you go to the Party Round website, there’s no mention of pricing. I tried to sign up for the service to see if that clarified things but was met with an “unknown error has occurred” alert, so that didn’t illuminate things all that much. The FAQ says “Party Round is currently free to use for founders and investors.”
In his article from November last year, Alex noted that, “Normally I’d protest at delayed monetization.” I’d like to re-protest that same notion.
The thing is, if you’re building a company that grows rapidly and is very successful, you’re going to get a few copycats on your tail who think they can do better.
This reminds me of the next problem with this deck …
How is this defensible in any way?
The deck doesn’t make reference to an IP strategy nor to any “moat” or defensible aspect of this business. As an investor, that worries me; Stripe Atlas is rapidly becoming one of the most popular ways of founding a company. Back in 2021, Stripe itself claimed it has helped with the incorporation of more than 20,000 companies, and no doubt there have been a lot more since then. It is not unreasonable that Stripe throws in SAFE notes as a perk to the program, or as an add-on feature, which would dramatically tank the viability of Party Round. Not because Stripe would be able to defend it better, but because it has a steady funnel of founders looking to spin up companies.
If not Stripe, any of the companies I mentioned as “competitors” could take this idea and run with it. Without some defensible aspect, this simply isn’t an investable company.
To be clear; that doesn’t mean that Party Round is awful — but judging exclusively by the deck, which I have to do, because, well, the series is called “Pitch Deck Teardown,” there’s nothing here.
The full pitch deck
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