Startup Professionals Musings

NOVEMBER 8, 2021

Under all of these, net income flows easily into your personal income. Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. Corporate versus personal growth really becomes a lifestyle decision. There is no free lunch for money.

Entrepreneur 371

Entrepreneur Equity Dilution LLC 371

Startup Professionals Musings

JUNE 5, 2015

Entrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). They will need more money. If you subscribe to truths one to five, startup investing can be lucrative.

Angel Investor 120

Angel Investor Angel Groups Accredited Investor IRR 120

Steve Blank

NOVEMBER 13, 2018

Unless you have them capture the unique aspects of the culture, it will become diluted and disappear among the new hires. For employees, how you handle change will affect the trajectory of your career and possibly your net worth. Loss of Community? Your original hires embody the company culture. Declare them cultural co-founders.

Part-Time VPE 333

Part-Time VPE Employee Cofounder Hiring 333

Startup Professionals Musings

NOVEMBER 6, 2020

With major investors, your equity and return is diluted and delayed. With most small businesses set up as sole proprietorships or LLCs ( Limited Liability Corporations ), net income flows more directly into your personal income. Use flexibility to match your lifestyle. Personal income is related to operations versus equity.

Small Business 311

Small Business Small Business Administration SBA Equity 311

YoungUpstarts

OCTOBER 16, 2016

But take it from what a good friend and advisor once said to me: “Ego is dilutive to net worth.”. There are many cautionary tales around about business growth happening too soon, too reactively or too unsustainably, like this one from Harvard Business Review. Don’t expand for the sake of your ego.

Cofounder 100

Cofounder Balance Sheet Small Business Administration Technical Review 100

Berkonomics

JULY 16, 2020

If the equity value of a company is growing at the same rate as the company, say 40% per year, almost any form of debt financing may be preferable as a way of preventing further dilution from issuing additional equity. Back to loans costing less than dilution of equity. The banks need to be convinced. Read the loan covenants carefully.

Covenant 62

Covenant Dilution Warrant Intellectual Property 62

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. Founder Earnings = Net Income + any amount of founders’ salaries over a certain threshold. RevUp : “Companies receive $100K-250K in non-dilutive cash…[paid back in a] 36-month return period with revenue royalty ranging from 4-8%, no equity.”.

Revenue 60

Revenue Technical Review Software Review Equity 60

Startup Professionals Musings

JANUARY 26, 2019

Under all of these, net income flows easily into your personal income. Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. Corporate versus personal growth really becomes a lifestyle decision. There is no free lunch for money.

Startup 194

Startup Equity Dilution LLC 194

View from Seed

MAY 2, 2019

The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. The downside is that YC is itself quite dilutive, the program itself may not be a great fit, and there are many many companies out of your batch that won’t be one of the anointed winners. The Pre-YC Pre-Seed.

Early Stage 214

Early Stage Dilution Valuation .Net 214

Both Sides of the Table

JUNE 17, 2017

This is not atypical for “middle men” who often take 15–30% of the value of the sale If you’re shaking your head and thinking, “duh” I promise you that even some of the most sophisticated people I know get off track on this issue of “gross revenue” versus “net revenue.” Stock option grants dilute your ownership in the company.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Hunter Walker

JANUARY 17, 2019

It’s pretty basic but is meant to give managers (and their potential LPs) a sense of how many companies will be in the fund, ownership targets, dilution assumptions, reserves strategy, exit expectations and ultimately, a target return for the fund. This exercise is also known as “let me show you how we get to 3-5x net.”

Portfolio 104

Portfolio Forecast Dilution LP 104

Both Sides of the Table

OCTOBER 7, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). Why the latter? My personal definition?

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

Up and Running

JULY 14, 2015

The net effect of raising too little funding is that the company runs out of money and all growth comes to a grinding halt. It will lead to inadequate validation of your proposition, or to executing growth initiatives that do not materially move the needle. Whatever the case, the business is left in limbo.

Technical Review 60

Technical Review Valuation Due Diligence Finder 60

Startup Professionals Musings

JANUARY 21, 2017

Under all of these, net income flows easily into your personal income. Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. Corporate versus personal growth really becomes a lifestyle decision. There is no free lunch for money.

Entrepreneur 120

Entrepreneur Equity Dilution LLC 120

The Next Web

FEBRUARY 27, 2014

In terms of techniques investors use to value your business, investors will study things like: revenue, cash flow or net income multiples from recent financings in your industry. revenue, cash flow or net income multiples from recent M&A transactions in your industry. The valuation techniques.

Valuation 167

Valuation Forecast Seed Stage .Net 167

Berkonomics

JANUARY 13, 2022

You no longer need to worry over daily cash or threats to your net worth. Others are diluted by subsequent investors to the point where there was nothing for them to celebrate at all in a sale. First there comes a sense of relief and maybe guilt. Many fail multiple times. Some fail in the first year of the attempt.

Dilution 62

Dilution .Net Sales Entrepreneur 62

YoungUpstarts

AUGUST 8, 2013

And today they’re actually notable with a reported $100 million net worth. The second a brand lets its management be outsourced to someone else, the brand is at risk of diluting itself. But the entire brood seems to have faith in what they’re selling and generally regarded themselves as famous before they were ever famous.

Dilution 203

Dilution Open Source .Net Web 203

Rob Go

JUNE 17, 2014

It has a meaningful impact on your net dilution, and I’m often surprised how often founders don’t consider this a malleable term. Net net, I think that currently entrepreneurs are able to manage this more effectively. Here are three good ones from Venturehacks , Mark Suster , and Jeff Bussgang.

Option Pool 65

Option Pool Dilution .Net Term Sheet 65

A Smart Bear: Startups and Marketing for Geeks

JULY 11, 2011

He’s in the best possible position — the company is profitable and growing and doesn’t “need&# the money, so with little dilution he could take $10m for safety, comfort, and scale. In fact, you’re already there!

.Net 230

.Net Cofounder Dilution Finance 230

Berkonomics

AUGUST 21, 2013

If the equity value of a company is growing at the same rate as the company, say 40% per year, almost any form of debt financing may be preferable as a way of preventing further dilution from issuing additional equity. And it is often cheaper than the cost in dilution of issuing additional stock to obtain working capital.

Covenant 61

Covenant Warrant Dilution Intellectual Property 61

ReadWriteStart

SEPTEMBER 9, 2019

It’s non-dilutive capital you don’t have to pay back, plus it tends to create a great PR opportunity. We reached out to high-net-worth individuals and small funds. If you do know a wealthy individual who would guarantee a loan for you in exchange for options in your business, go for it. Your bank will be happy, too.

Venture Capital 105

Venture Capital Equity SBA Finance 105

The Startup Magazine

OCTOBER 15, 2019

Many marketing agencies believe that casting a wide net will land more clients. This can be tricky and you could end up with a confusing or diluted message. However, this tactic can actually slow your growth. A smarter approach is to focus on a specialty and become a niche marketing agency. This works especially well online.

Marketing 76

Marketing Advertising eCommerce Dilution 76

Duct Tape Marketing

OCTOBER 11, 2023

But what the dilution, if you bring it down to it that even creator entertainers and educators have in common is it's this human element. 14:33): So thinking about how many conversations the sales team was able to capture, how many net new names do we get on to our list?

B2B 80

B2B Marketing B2C Community 80

Startup Lessons Learned

OCTOBER 26, 2009

In previous posts, I’ve mentioned quite a few of these, including these most important ones: having engineers post on the forums in their own name when they make a change routinely split-testing new changes routinely conducting in-person usability tests and interviews Net Promoter Score Each of these techniques is fundamentally bottoms-up.

Advisory Board 151

Advisory Board Customer San Francisco Lean 151

Occam's Razor

APRIL 15, 2019

During 2019, our Net Promotion Score has dropped 15 points. They dilute the analysis with non-facts. If you are in the data business – my bread, butter and tofu – you often carry the burden of being the bearer of bad news. The conversion rate is down 30% at launch. You might think it would be the Attacker.

Leadership 79

Leadership Non-Compete Analytics Software Review 79

Both Sides of the Table

APRIL 25, 2011

It would not be a big stretch to image a well run service business like this making 15-25% net profit margins. Well, let’s look at this exact situation: I don’t have access to their actual financial statements but let me make some reasonable assumptions. That is $12 million in profits over 3 years.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

The Equity Kicker

MARCH 24, 2015

Everyone loves a high valuation and it’s natural for founders to want to minimise dilution. And look at what Zuck achieved… But companies that spend too much time optimising terms end up as net losers. They will most probably go on to raise multiple rounds of venture capital after all.

Valuation 60

Valuation Down Round Dilution Venture Capital 60

ConversionXL

NOVEMBER 6, 2017

What works for first-time customers might have less of an effect on (and be diluted by) people who are returning to buy again. Then, seeing desktop variant outperform the control, the mobile version shows no difference, or clear small negative, but a net gain on the overall. We see this pattern all the time] outside of a test.’.

Chad 112

Chad Mobile Technical Review Aggregator 112

Rob Go

JUNE 8, 2014

Lower possible net dilution. It’s hard to predict total dilution over time for two different financing paths. Usually, the dilution is in the 25% range, and certainly at least 20%. At each juncture, you are able to use competition to your advantage and optimize for the best terms.

Dilution 69

Dilution Early Stage Angel Investor Venture Capital 69

Berkonomics

APRIL 4, 2019

These include election or re-election of board members if required by the bylaws of the corporation, approval of any increases to stock option plans (which would dilute the worth of shares outstanding,) and approve any additions to the capital stock authorized to be issued. Requirements created by investment documents.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

keen.io

FEBRUARY 5, 2013

If the company is pre-funding or only has a small friends-and-family seed round, then the numbers should go up from there, based on expected dilution and greater risk.” Assumption: The pre-dilution amount prior to Series A should be approximately double the amount in this post-Series-A chart. Result: A fair offer would be between.8

Salary 50

Salary Equity Startup San Francisco 50

ConversionXL

FEBRUARY 21, 2018

Most tools will not be capable of identifying the same user across different devices or browsers, diluting the value of customers who have multi-device journeys. You identified the user journeys in your pages that net you the highest lifetime value. Push more customers into the profitable RFM cohorts.

Programming 117

Programming Audience Analytics Metrics 117

Andrew Payne

FEBRUARY 8, 2013

But it doesn’t look good (in anti-trust terms) for Apple to reject competitive apps, and Google’s smart to get as many apps as possible to dilute Apple’s platform influence. I think it’s net-good for consumers, as it increases the chances that more of our devices and systems will interoperate.

Dilution 51

Dilution Europe .Net Search 51

Andrew Payne

FEBRUARY 8, 2013

But it doesn’t look good (in anti-trust terms) for Apple to reject competitive apps, and Google’s smart to get as many apps as possible to dilute Apple’s platform influence. I think it’s net-good for consumers, as it increases the chances that more of our devices and systems will interoperate.

Dilution 41

Dilution Europe .Net Search 41

Venture Chronicles

MAY 26, 2010

Another point worth mentioning is that not having a lot of capital does not immunize you from making bad decisions… companies with tight capital positions make bad decisions all the time and when they do they don’t have a safety net from which they can recover.

Lean 40

Lean Early Stage Valuation Startup 40

Gust

OCTOBER 8, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). Why the latter? My personal definition?

Cap Table 136

Cap Table Silicon Valley Term Sheet Non-Compete 136

Andrew Payne

FEBRUARY 8, 2013

But it doesn’t look good (in anti-trust terms) for Apple to reject competitive apps, and Google’s smart to get as many apps as possible to dilute Apple’s platform influence. I think it’s net-good for consumers, as it increases the chances that more of our devices and systems will interoperate.

Dilution 40

Dilution Europe .Net Search 40