Both Sides of the Table
FEBRUARY 15, 2016
This has led VC & entrepreneur bloggers alike to similar conclusions: start raising capital early and be careful about having too high of a burn rate because that lessens the amount of runway you have until you need more cash. But the hardest question to actually answer is, “What is the right burn rate for your company?”
Both Sides of the Table
MAY 28, 2018
It goes something like this … VC: “How much money are you raising?” Founder: “$8–10 million” VC: “What’s your current burn rate?” VC: “So at a constant rate of burn rate you’d be raising enough for 2.5–3 In the normal case you’d be running out of cash after 16 months or just one year after you raise money.
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Both Sides of the Table
SEPTEMBER 29, 2009
Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million. Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. I argued for literally a year to slash burn.
dondodge.typepad.com
JANUARY 15, 2011
So they will give you a pre-money valuation somewhere around the amount you raise. Sounds strange, but it usually works out that if you are raising $2M the VCs will value your company at $2M pre-money, and $4M post money so they end up with 50% of the stock. Venture Capital investing is extremely risky.
www.paulgraham.com
APRIL 28, 2010
There never has to be atime when you have no revenues. The friends might have liked to have more money in this first phase,but being slightly underfunded teaches them an important lesson.For a startup, cheapness is power. This is a good plan for someone with kids, because it takes mostof the risk out of starting a startup.
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