It increases your burn rate significantly. One approach I like that some of my portfolio companies are taking is to tie hiring decision points to traction milestones, e.g. once we hit $xK/month in revenue we'll do our next hire. Hiring is hard. Not hiring can seem even harder, but often isn't. Needless to say, I'm an outlier. MORE >>

Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. The holy grail is break-even, when revenues first catch up with the outflow. Many entrepreneurs actually refuse to do financial projections beyond the first year, insisting that no one can predict the future. MORE >>

I had been confused for years why I had to update an income statement each board meeting that said zero for 18 months before we had any revenue. An early indication that you’ve found the right business model is when you believe the cost of getting customers will be less than the revenues the customers will generate. Revenue. MORE >>

While the revenue model may change as well, I like to at least understand going into the investment that the entrepreneur's head is in the right place and that the economics work right from the start. The remainder would go into deferred revenue.  Another area that is quite important is churn rate.  MORE >>

Investors like $1B markets with double-digit growth rates. In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Project both revenues and expense totals for next five years, and past three years. Show breakeven point, burn rate, and growth assumptions. Exit strategy. MORE >>