Startup Professionals Musings

OCTOBER 16, 2023

Yet every business requires revenue and volumes, as certainly as it requires a product to sell. Doubling revenue each year is a good target. You need 5 percent or more of revenue for marketing, maybe more for ongoing development, and people costs will double as you add benefits, insurance, training, IT and new processes.

Forecast 290

Forecast Burn Rate Widget Business Plan 290

Both Sides of the Table

NOVEMBER 3, 2009

This is part of my ongoing series of posts and I need to file this one under both Raising Venture Capital and Startup Advice. I’m not even talking about your 12-page Powerpoint presentation that you need to raise venture capital or to talk with potential biz dev partners. Let’s take your revenue line.

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

Steve Blank

MARCH 17, 2020

The questions every startup or small business CEO needs to ask now are: What’s my Burn Rate and Runway? Burn Rate and Runway. To answer the first question, take stock of your current gross burn rate i.e. how much cash are you spending each month. What does your new business model look like? How do you know?

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

Steve Blank

APRIL 26, 2022

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. Except, that is, for the bottom feeders of the Venture Capital business – investors who “ cram down ” their companies. Why do VCs Do This?

Cram Down 404

Cram Down Founder Venture Capital Recapitalization 404

View from Seed

OCTOBER 24, 2019

As a first time founder, having a few million dollars in the bank after a successful seed raise may seem like a huge amount of capital, and it’s easy to lose discipline around your burn rate. In any of these cases, there isn’t a standard path that all companies take.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

FEBRUARY 5, 2021

Yet every business requires revenue and volumes, as certainly as it requires a product to sell. Doubling revenue each year is a good target. You need 5 percent or more of revenue for marketing, maybe more for ongoing development, and people costs will double as you add benefits, insurance, training, IT and new processes.

Forecast 369

Forecast Burn Rate Startup Widget 369

Steve Blank

NOVEMBER 2, 2009

In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.) In times when venture capital is hard to get, investors extract high costs for failure (down-rounds, cram downs , new management teams, shut down the company.)

Lean 244

Lean Silicon Valley Startup RSS 244

David Teten

NOVEMBER 26, 2019

Sean Colrock, Director of Client Partnerships at Wiss & Company , suggests at a minimum you track: cash on hand; fume date; and burn rate. The next most important set of metrics are sales by category; working capital (cash and other current assets, less current liabilities); EBITA; and gross margin.

Agile 60

Agile Management Forecast Silicon Valley 60

crowdSPRING Blog

OCTOBER 24, 2014

Benchmarking SaaS Startup Efficiency with Revenue per Employee Metrics | by @ttunguz – crowdspring.co/1sRVdjm. Why You Should Find Product-Market Fit Before Sniffing Around For Venture Money | Co.Labs – crowdspring.co/1sRVsv5. What is the Right Burn Rate at a Startup Company? | by @msuster – crowdspring.co/1qKWc0z.

Social Media 95

Social Media Small Business Design Media 95

Startup Professionals Musings

DECEMBER 11, 2017

You need 5 percent or more of revenue for marketing, more for new development, and people costs will double as you add benefits, insurance, training, IT and processes. If you want to be assessed as a “premium” acquisition candidate down the road, an aggressive but reasonable target might be doubling revenue each year.

Burn Rate 144

Burn Rate Forecast Angel Investor Revenue 144

Both Sides of the Table

JUNE 17, 2017

70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue. They don’t want high burn rates but they will never fund slow growth. The Nature of Revenue Matters Of course revenue alone won’t tell you enough.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Both Sides of the Table

AUGUST 9, 2011

Companies with less than $2 million in revenue were asking for $50-60 million valuations and getting them. Companies raised too much money in 2005-08 and had high burn rates. 2010 was the year of the “super angel&# and 2011 has to date been the year of unbelievably highly priced B,C & D rounds of venture capital.

Stock 305

Stock Technical Review Marketing Greece 305

Both Sides of the Table

JULY 13, 2013

So then when I wanted to go into venture capital, they said, “You can’t do that, you need to be in EIR.” So when I got into venture capital, I thought, “Well, what can I do that’s different?” ” “Okay, well you can be an operating partner or a venture partner.”

Cofounder 337

Cofounder Technical Cofounder San Diego Startup 337

Steve Blank

SEPTEMBER 7, 2009

Instead of a Sales team and organized to sell with a consistent and successful sales roadmap generating revenue, it is a disorganized and unhappy organization burning lots of cash. Because the company based its headcount and expenses on the expectation that the Sales organization will bring in revenue according to plan.

Customer Development 224

Customer Development Developer Customer Silicon Valley 224

abovethecrowd.com

FEBRUARY 24, 2015

As a result, a “late-stage” financing is no longer reserved for high-revenue, pre-profitability companies getting ready for an IPO; it is simply any large round of financing done at a high price. You must subtract it from your top-line revenue. You should not pay a net revenue multiple for a gross revenue disclosure.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

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. ” It goes like this: What is your net burn rate? What is your revenue growth rate and what does this imply about your number of months of capital remaining?

Burn Rate 150

Burn Rate San Francisco Private Equity LP 150

ReadWriteStart

APRIL 30, 2020

Many fail because they fail to keep their burn rate in check and then run out of investors who are willing to fund their operations. They treat their startup’s burn rate like it’s etched in stone. That money would be better spent on creating products and services that drive revenue, however.

Burn Rate 107

Burn Rate Management Startup Early Stage 107

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

This is going to be BIG.

MARCH 1, 2010

My company was not well executed enough to achieve venture capital financing—and that wasn’t the city’s fault, it was mine. If you want to build your startup in the middle of nowhere and optimize purely for low burn rate, then sure, I’m sure you could work more cheaply elsewhere. I was there, too.

New York City 113

New York City New York Startup Burn Rate 113

Startup Professionals Musings

JANUARY 4, 2015

Yet every business requires revenue and volumes, as certainly as it requires a product to sell. Doubling revenue each year is a good target. You need 5 percent or more of revenue for marketing, maybe more for ongoing development, and people costs will double as you add benefits, insurance, training, IT and new processes.

Forecast 120

Forecast Entrepreneur Burn Rate Widget 120

The Next Web

MARCH 8, 2014

Jason Lemkin is the Managing Director at Storm Ventures , a venture capital firm focusing on early-stage enterprise and IT companies, including MobileIron , Marketo and GuideSpark. From the standpoint of a founder, the life of a venture capitalist can seem very, very different.

Partner 138

Partner Burn Rate Early Stage IPO 138

Feld Thoughts

SEPTEMBER 9, 2015

Venture capitalist Marc Andreessen warned in a tweetstorm that startups with high burn rates would “vaporize.” I once was on the board of a company that had generated lifetime revenue of $1.5m I’m encountering an increasing number of companies with burn rates in the stratosphere.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

Haystack

SEPTEMBER 1, 2018

A company is starting to get its sea legs, they’re booking revenues and growing, and they raise a hefty seed round of, say, $3M-ish dollars. .” I was reminded of this line because I actually used it in a slightly different context with a founder I’m working with and invested in. ”

Burn Rate 76

Burn Rate Term Sheet Acquisition Revenue 76

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. It’s got a big burn rate, it’s too big to pivot, and it goes bust. Let’s start with the obvious question.

Partner 68

Partner Early Stage Portfolio Metrics 68

www.chubbybrain.com

SEPTEMBER 28, 2011

If you are an entrepreneur seeking funding, try our free Funding Recommendation Engine to identify a list of angels, venture capital and state grant programs that best match your business. spent $20 million to get back to the same revenue that I had when I was CEO. Think of it as 7 bonus post-mortems on the house.

Software Review 79

Software Review Startup Technical Review Vesting 79

Professor VC

JULY 31, 2008

The artists received very little of album sales, but kept concert and merchandise revenue. The artists received very little of album sales, but kept concert and merchandise revenue. The artists had very few sales of albums, but gave a concert and commodity revenue. The Most Important Venture Capital Statistic.

San Jose 28

San Jose Software Review Angel Investor Silicon Valley 28

Both Sides of the Table

FEBRUARY 14, 2016

Huge funding increases lead to massive wage inflation, rent inflation and thus higher burn rates. Put simply, it’s really hard to build a strong company when all of your competitors are giving away free s**t fueled by venture capital chasing winner-take-all returns. This corrected only to go back up to 13.4x

Valuation 150

Valuation Down Round Startup Later Stage 150

Up and Running

MAY 22, 2018

You’ll have to actually demonstrate that you’re generating revenue and increasing your client base. Say a customer pays $50 for your product and uses it for a month, so this means your revenue generated from this customer is 50×30= $1500. Expenses that were surpassed by revenue. Nerdy term: Burn rate.

Exit Strategy 90

Exit Strategy Angel Investor Search Elevator Pitch 90

Professor VC

AUGUST 26, 2011

Everyone seems to know someone who has raised huge amounts of venture capital without ever putting together even back of the envelope projections. Does a complicated sales build model make sense for a pre-revenue SaaS company? I often do this in the revenue tab. Rebuild our Inner Cities one Venture at a time?

Silicon Valley 35

Silicon Valley San Jose Hockey Stick Venture Capital 35

Professor VC

JULY 2, 2010

A similar trend is happening in alternative energy, the industry that has greatly benefited from both venture capital and US government assistance over the past decade. This does show that venture backed companies have a huge impact on the US economy. Labels: Andy Grove , economics , venture capital. Venture News.

San Jose 28

San Jose Silicon Valley Venture Capital Angel Investor 28

Professor VC

JUNE 20, 2011

But of course, the model had us requiring only $10M equity to breakeven and to achieve $185M in revenues in 2008 (the magic Year 5 in all business plans). Once you raise venture capital, you are forced on a path to spend ahead of the business and seek the highest growth business model options. Venture News. Steve Bennet.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

BeyondVC

JUNE 11, 2007

Sure, while some of these venture debt firms recognize that web-based businesses may not have as much hard and true intellectual property, the fact that they are more capital efficient and can scale more rapidly means they can also generate pretty nice returns from the warrant portion of their deal.

Intellectual Property 60

Intellectual Property Covenant Warrant Equity 60

dondodge.typepad.com

JANUARY 15, 2011

My next post will be about the importance of cash flow, keeping burn rates low, and how to avoid excessive equity dilution. from David Dalka - Creating Revenue and Retention - Chicago GSB MBA As discussed in my recent post about a TiE event on Chicago start ups, there are many factors to consider when taking in funding and employees.

Equity 40

Equity Employee Dilution Valuation 40

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. Venture Capital Funds VC firms are like seed firms in that theyre actual companies, butthey invest other peoples money, and much larger amounts of it.VC This is a good plan for someone with kids, because it takes mostof the risk out of starting a startup.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76