Both Sides of the Table

article thumbnail

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

We want a strong balance sheet (um, ok. but that’s our firm’s money on your balance sheet. Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service. otherwise I prefer to invest less and risk less).

Burn Rate 383
article thumbnail

What’s Really Going on in the VC Industry? What Does it Mean for Startups?

Both Sides of the Table

You don’t have to hire as many sales people because much can be sold online. You invest low amounts of capital and the company gets to IPO (96-99) or trade sale (05-08) without raising too much capital and certainly not on punishing terms. You don’t need to buy hardware – there’s Amazon AWS.

LP 311
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Does the Size of a VC Fund Matter?

Both Sides of the Table

VC’s raise this money from university endowments, public & private pension funds, insurance companies, banks who invest from their balance sheet or that of their wealthy clients, “family offices&# which means money from very wealthy people, etc. And funds also have investments from the partners of the firm.

article thumbnail

Why you should never have a data room — the most counter-intuitive fund-raising advice you’ll ever…

Both Sides of the Table

A detailed financial model that shows your anticipated revenue, costs and profits (Income Statement) as well as your balance sheet and cashflow statements. For starters you have to realize that fund-raising is a sales process. A brochure is an easy out for you in the sales process without being rude. It felt like heresy.

Cap Table 336
article thumbnail

Should Startups Care About Profitability?

Both Sides of the Table

The most obvious way to explain this is with sales people. If you hire 6 senior sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business 6 months. COGS” represents the amount that each sale costs you.

article thumbnail

Don’t Try to “Pull an Instagram.” Here’s Why …

Both Sides of the Table

Just checked their balance sheet. They have $339 million in cash on their balance sheet. I am not saying all companies should be for sale. You better be a very clear improvement to their bottom line to pull this off. Oh, I know – we’ll just ask them for cash! Uh… yeah.

Valuation 316
article thumbnail

Fauxmentum

Both Sides of the Table

I’m not saying don’t hire sales staff or market your products aggressively. I’m saying something simpler: protect your balance sheet and make sure you have enough cash to weather a slowdown and don’t let your reserves dip too low before raising more capital unless you have no choice.