Startup Professionals Musings

JANUARY 27, 2021

Most entrepreneurs have found by now one or more of the many popular crowdfunding sites , and have the name and contact information for at least one of the big venture capital firms. Here are eight key insights that will help you find a productive match: Angels want equity ownership, not causes.

Search 317

Search Accredited Investor Angel Investor Venture Capital 317

Startup Professionals Musings

MARCH 1, 2010

Just don’t quit your day job before your new company is producing revenue. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. Venture capital.

Technical Review 149

Technical Review Bootstrapping Startup Venture Capital 149

Steve Blank

MARCH 31, 2014

As the venture capital business has come roaring back in the last 5 years, startups are awash in available capital. Companies horde cash and squeeze the most revenue and margin from the money they use. Instead of measuring success in dollars of profit, …firms focus on measuring capital efficiency.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. RBI investors usually don’t take equity.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Berkonomics

AUGUST 3, 2023

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor). Often private equity investors will want control of the business as well.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Both Sides of the Table

JULY 16, 2010

LP’s who invest in funds are typically university endowments, public & private pension funds, insurance companies, large corporations and very high net worth individuals called “family offices.&# To give you an indication of how bad, for example, university endowments are suffering check out this chart. VC will shrink.

LP 311

LP Technical Review Early Stage Silicon Valley 311

Austin Startup

NOVEMBER 6, 2017

C-Corp largely because (i) VCs have historically favored C-Corps for nuanced tax and other reasons, and (ii) virtually all of the standardized legal infrastructure around startup finance and equity compensation assumes a C-Corp. However, times are changing. But not all VCs think that way. If you are an LLC tech startup, you need tax counsel.

Delaware 48

Delaware LLC Startup Silicon Valley 48

This is going to be BIG.

JULY 8, 2013

I probably get around a dozen e-mails a week asking me how to get into venture capital. On top of that, anytime I talk to anyone who wants to get involved in startups but isn''t sure what they want to do, inevitably, I hear, "And then I was thinking maybe I should look into venture capital, too.".

Venture Capital 167

Venture Capital Early Stage Portfolio Private Equity 167

Steve Blank

MARCH 17, 2020

Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month. Subtract your monthly gross burn rate from your monthly revenue to get your net burn rate. All your assumptions about customers, sales cycle and most importantly, revenue, burn rate and runway are no longer true.

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

The Next Web

FEBRUARY 27, 2014

your equity in a hot new patented technology business), the higher the demand (e.g., As an example, a new restaurant may get valued at 3-4x EBITDA (earnings before interest, taxes, depreciation, and amortization) and a hot dot com business with meteoric traffic growth could get valued at 5-10x revenues. Supply and demand.

Valuation 167

Valuation Forecast Seed Stage .Net 167

Startup Professionals Musings

FEBRUARY 16, 2015

Most entrepreneurs have found by now one or more of the many popular crowdfunding sites , and have the name and contact information for at least one of the big venture capital firms. Here are eight key insights that will help you find a productive match: Angels want equity ownership, not causes.

Angel Investor 120

Angel Investor Accredited Investor Venture Capital Startup 120

Up and Running

JUNE 17, 2019

It breaks down the revenue your business generated and the expenses incurred. When investors look at your business plan , they will use your income statement to assess the level of risk involved in extending credit or venture capital your way. Owner’s equity: “ What is left over for the owner(s)?”

Balance Sheet 120

Balance Sheet Small Business Finance .Net 120

Berkonomics

DECEMBER 17, 2020

Let’s take a few minutes to examine the kind of equity financing available to small or early stage businesses. In most cases, these applicants for equity funding must be rooted in technology to apply to this limited discussion. Venture farms. Then there is venture capital. Friends and family investors.

Equity 62

Equity Finance Liquidity Event Angel Groups 62

Cracking the Code

JANUARY 22, 2009

While it may make sense to offer very slight adjustments for favorable payment terms and one time revenue, net additions to MRR should dominate the sales rep’s thoughts. 1 of MRR generates $12 of annual revenue, so $1 commission equals 1/12=8.3% Accelerating bonuses for upfront cash payment depends on your cost of capital.

Software Review 91

Software Review Clawback Sales Salary 91

Both Sides of the Table

OCTOBER 14, 2015

One of the points I tried to make is that as venture capital investors as an industry we seem to have a healthy disdain for public market investors. The truth is that the brutal reality of public markets is that they self correct much more quickly than our shitty little private equity illiquid corner of the universe.

Burn Rate 150

Burn Rate San Francisco Private Equity LP 150

Berkonomics

JUNE 8, 2017

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor). Often private equity investors will want control of the business as well.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

David Teten

DECEMBER 3, 2019

Private equity and venture capital investors are copying our sisters in the hedge fund world: we’re trying to automate more of our job. . In the private equity universe, most Partners have primary training as deal-makers, not as managers. When I was single, I registered for (a lot of) dating websites.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

This is going to be BIG.

MARCH 1, 2010

It’s often some combination of the idea not being big enough to sustain a venture exit or the company just not being appropriate for venture financing. My company was not well executed enough to achieve venture capital financing—and that wasn’t the city’s fault, it was mine. I was there, too. > Office rents?

New York City 113

New York City New York Startup Burn Rate 113

Up and Running

FEBRUARY 12, 2014

The business income statement, also referred to as a profit and loss (P&L) statement, is a useful tool for providing an overview of how your business is doing over time and breaks down the revenue generated by your business and the expenses incurred. Owner’s equity – “ What is left over for the owner(s)?”

Balance Sheet 136

Balance Sheet Small Business .Net Finance 136

Venture Chronicles

MAY 26, 2010

This is the “tastes great, less filling&# debate that recurs on a regular basis in the venture capital and entrepreneur communities. Venture math is really simple, if you raise $10 million for a company that is valued at $10 million “pre-money&# then you have sold 50% of the equity to the new investors.

Lean 40

Lean Early Stage Valuation Startup 40

This is going to be BIG.

NOVEMBER 28, 2011

Associate position at a top tier VC fund or lead dog for a random pool of high net worth money that no one's ever heard of? They have lots of revenues, high growth, funding, etc. Because of that, you're simply not going to get a major chunk of equity, nor are you going to get hired there without a ton of relevant experience.

Non-Compete 115

Non-Compete Design Hiring Incubator 115

Both Sides of the Table

APRIL 25, 2011

This thinking is largely driven by the venture capital industry (and subsequently Wall Street) who are in search of high margin, highly scalable businesses. I gave them advice I don’t think they were expecting from a VC, “Don’t raise venture capital for this business. This team is talented.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Up and Running

JULY 1, 2015

Using existing resources or earned revenue instead of borrowing is a great approach, but being creative and resourceful can be profitable too. Loans, angel investment, and venture capital . These outside investors will either be angel investors or venture capitalists. How did you fund your startup?

Bootstrapping 60

Bootstrapping Angel Investor Venture Capital Finder 60

Eric Friedman

AUGUST 18, 2021

I lovingly call him the curmudgeon of fintech – in this episode we go deep into how he is building a venture capital firm and practice, not just running a fund and how he views the world of fintech investing. One of the ones that really bothers me is how Venture Capitalists try and conflate what they do as being complicated.

Silicon Valley 88

Silicon Valley Venture Capital Cofounder Africa 88

Up and Running

MAY 15, 2018

Whether you are hoping to expand a small business with a loan or going for a round of venture capital, you will need a scalable business model. Your business model must show the potential to increase the revenue with minimal expenditure in the coming months or years. Venture capital. Angel investors. Crowdfunding.

SBA 84

SBA Angel Investor Technical Review Startup 84

David Teten

AUGUST 20, 2019

I’ve been a traditional equity VC for 8 years, and I’m now researching Revenue-Based Investing and other new approaches to VC. The question I’m asking myself: should a new VC fund use Revenue-Based Investing, traditional equity VC, or possibly both (likely from two separate pools of capital)?

Revenue 60

Revenue SBIC Cofounder Venture Capital 60

The Equity Kicker

JANUARY 10, 2020

Nic is also the author of one of Europe’s most popular venture capital blogs – www.theequitykicker.com. They find a niche in the market where they can grow some revenues and then they raise some more money. The industry classic is NPS – the Net Promoter Score; and we encourage all our companies to track that as soon as they can.

Partner 68

Partner Early Stage Portfolio Metrics 68

Berkonomics

JANUARY 20, 2010

However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor).

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Both Sides of the Table

SEPTEMBER 2, 2009

The net effect for [my company] for example is we are now doing reasonably well. We should end the year with a few million in fully recurring revenue and we’re projected to double next year. But more spend = more viral opps = more revenue down the road. >50% of our revenue in now viral. Probably revenue based.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Up and Running

AUGUST 19, 2014

Before I jump in and share the secrets of how to impress angel investors, I should tell you what an angel investor is, and how they differ from venture capitalists. An angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

The Equity Kicker

SEPTEMBER 3, 2015

If a VC has a $200m fund, a 20% stake in a $1bn exit will net them $200m and hence be a fund returner. First there’s enough to be sure there’s a tiny market, then a small, one and so on, until, assuming the best, several $100m+ revenue companies have emerged and all analysts everywhere agree the market is huge.

Marketing 60

Marketing .Net Revenue Partner 60

blog.simeonov.com

FEBRUARY 22, 2010

It outlines key points of agreement between founders around IP ownership, equity ownership, vesting, etc. The number of separate documents may vary but they fall into two categories: Those related to equity, typically a restricted stock purchase agreement (RSPA) and associated escrow and other agreements.

Founder 44

Founder Vesting Agile Startup 44

Steve Blank

FEBRUARY 26, 2020

There are two reasons to raise money: You have a killer idea that is only partially validated, that you think can get to $50M+ of revenue in 5 years with 80%+ gross margins (if margins are lower, you need a lot more revenue)and you need money to get to product-market fit, or. Revenue per customer? Revenue, Gross Margin?

Cofounder 429

Cofounder Seed Stage Valuation Metrics 429

Austin Startup

JUNE 26, 2019

I recruited a top-flight engineer and serial entrepreneur to build our MVP, on equity?—?and However, we also discovered key challenges we could not overcome with the capital and window of our team. You might notice what’s not on that list above: revenue, investors. So, we worked to raise capital. That dog don’t hunt.

Silicon Valley 54

Silicon Valley Startup B2C Sweat Equity 54

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. About this same point in time, the journalists that focus specifically on the venture capital industry noted something quite profound. Competition also has access to capital.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

VC Cafe

JANUARY 10, 2011

V iola Private Equity , an Israeli PE fund with $164 million under management for technology buyouts, has announced a $7 million investment in Zend , the leading provider of open-source and commercial solutions based on PHP web applications.

Private Equity 87

Private Equity Equity PHP 87

Women Entrepreneurs Can

MAY 9, 2019

During the early days, these are your key contributors and they must be willing to put as much sweat equity into the organization as you are. This is the point where a lot of startups are ready for an angel investor- individuals who have earned income that is exceeding $200,000 or have a net worth of more than $1 million.

Programming 40

Programming Sweat Equity Startup Private Equity 40