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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. Danielle goes through some commentary from Bill Gurley, Fred Wilson and Marc Andreessen about burn rate and then goes on to discuss her own burn rate and others publicly weigh in.

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Is the Lean Startup Dead?

Steve Blank

It’s the antithesis of the Lean Startup. These bubble startups were actually guessing at their business model and did premature and aggressive hype and early company launches and had extremely high burn rates – all predicated on an IPO to raise more cash. The Rise of the Lean Startup. And it may work. IPOs dried up.

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Are Business Plans Still Necessary?

Both Sides of the Table

portfolios. The last couple of years has also seen the huge initial success of Ycombinator, the Lean Startup and many other product driven approaches to going to market. Too aggressive about the rate of customer adoption? You might then slow down your burn rate or raise more money. Better to model that now.

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Get to Know Richard de Silva of Highland Capital

Both Sides of the Table

The second phase will be who can get the right combination lean back, lean forward, interaction, enhanced data, and make it fun. An example is Metacafe, a Highland Capital portfolio company. They had a very expensive burn rate at the wrong time. The first phase was just getting all the content online via YouTube.

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Blue Collar VC

Mucker Lab

With a well-capitalized fund, great LPs, and a solid portfolio, we are privileged to continue serving exceptional entrepreneurs. And we aren’t afraid to roll up our sleeves and get our hands dirty alongside the founders in our portfolio. We’ve been on founding teams and worked from entry level through executive management.

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Out of the Crisis #2: Mark Cuban on putting people first, the Dallas Mavericks, and what we'll want on the other side

Startup Lessons Learned

You really have to lean in and say, "Okay. So anyone in your portfolio, or anyone that you've been talking to have an example of something like that, or impressed you with something? So even in these dark days you have to be opportunistic. That also includes really learning everything you can about what's going on in your industry.

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Some Thoughts and Models Around Ownership Targets

This is going to be BIG.

They’re not only leading larger rounds, but may need to bridge companies they’ve otherwise made large investments into that have higher burn rates. They hold their cash back until they have more data, and lean in as a company is outperforming. Funds that lead Series A, B, and C rounds have serious capital needs.

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