David Teten

JANUARY 19, 2021

John Berger, Director Operations & Impact Solutions, Toniic , observed that this has clear investor benefits: “ The grace period became a feature because it benefits investors in regions like the US where there can be tax differences between short and long term gains. “A That said, nothing is cost-free.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

ReadWriteStart

JUNE 1, 2020

Reasons for funding. ? Scale up your operations. One of the most prominent reasons for funding is to scale up your operations, for expansion and achieve economies of scale. Now you may want to scale up your operations or expand your presence. The third reason is to fund your short term operational expenses or working capital.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

View from Seed

JULY 15, 2020

Companies that are largely in R&D phase can operate business as usual, assuming there is capital to fund the company for 18-24 more months. Mid-stage portfolios can be more acutely impacted if many companies have fat cost structures and were investing heavily in growth that is not materializing.

Portfolio 217

Portfolio IRR Dilution Distribution 217

Both Sides of the Table

SEPTEMBER 29, 2009

The other investors around the table didn’t agree nor did the “independent” board members who were willing to turn a blind eye to capital inefficiency since they didn’t have any economic interests that would be diluted by continued fund raising to support a capitally inefficient management team. I only had one board with this problem.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

YoungUpstarts

JUNE 13, 2011

The 54 companies in the study operated product and service businesses, had been in business on average 9.6 They end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service. The problem is that too many entrepreneurs never learn to say ‘NO!’ Hiring smart. magazine.

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

Startup Professionals Musings

NOVEMBER 4, 2013

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. Many entrepreneurs still dream of “going public,” making billions of dollars, and playing with the big boys.

IPO 224

IPO Founder Exit Strategy Investment Bankers 224

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Office and Operations. Financing A Small Business. Personal Finance. Before Roving Software could receive its first round of financing from professional investors, in early 1999, he had to put all the stock arrangements in writing. Start-up | Mondays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Startup Professionals Musings

SEPTEMBER 30, 2012

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. Many entrepreneurs still dream of “going public,” making billions of dollars, and playing with the big boys.

Exit Strategy 239

Exit Strategy IPO Investment Bankers Entrepreneur 239

ReadWriteStart

APRIL 4, 2023

These fees are charged to cover the costs of operating the crowdfunding platform, including marketing, payment processing, and customer support. Founders should consider other fundraising possibilities, such as traditional venture capital or angel investment, as well as non-dilutive funding sources such as grants or loans.

Startup 141

Startup Campaign Cofounder Venture Capital 141

Startup Professionals Musings

JULY 5, 2011

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. Many entrepreneurs still dream of “going public,” making billions of dollars, and playing with the big boys.

Exit Strategy 235

Exit Strategy IPO Investment Bankers Entrepreneur 235

K9 Ventures

JUNE 12, 2012

VCs also operate in a limited time window that is determined by the duration of their funds. Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. It is a tool. They use that tool to buy ownership in a company.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

K9 Ventures

JUNE 12, 2012

VCs also operate in a limited time window that is determined by the duration of their funds. Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. It is a tool. They use that tool to buy ownership in a company.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

Hunter Walker

MARCH 14, 2019

Then he tells you he likes being an investor but *really* misses being an operator, and is joining another one of his other portfolio companies as COO. Former operators return to operating; GPs trading up (or being managed out); wealth-effect retirements; whole firms dramatically changing strategy.

Cap Table 95

Cap Table Dilution Silicon Valley Portfolio 95

Hunter Walker

JANUARY 15, 2016

Early on my original expectation was that, like a social club, Dogster site members should be able to incur all cost of site operations. Social benefit companies also have access to impact investors which can provide 6 & 7 figure zero-dilution grants, which are an early stage secret weapon.

Technical Review 48

Technical Review Startup Cofounder SMS 48

The Next Web

MARCH 2, 2014

Instead, honestly analyze the company’s business plan and finances to determine whether the business needs to secure outside funding in order to achieve its objectives, and if so, how much. Should we finance with debt or equity? What are the main considerations when exploring third-party investments? Take your time.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

David Teten

NOVEMBER 17, 2011

I’ve often found it helpful to have on hand a simple model showing the impact of each financing stages on all team members, suitable for sharing with everyone in the company. In particular, this model is designed to help all team members understand the impact of dilution on their options. Participa.me

Employee 155

Employee IRR Startup Mexico 155

David Teten

AUGUST 21, 2019

Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Less or no dilution. Lower processing cost. Much lower cost of capital, if company is highly successful. Most founders who are raising capital look first to traditional equity VCs. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

K9 Ventures

OCTOBER 10, 2017

This post is intended to be a dynamic document, and I will attempt to update it from time to time with new questions that may arise or as financing trends evolve. Q: What amount of financing is considered Pre-Seed? It’s a legitimate stage of financing in the venture eco-system as of this writing (October 2017).

Seed Stage 82

Seed Stage Finance Later Stage Equity 82

David Teten

JANUARY 21, 2021

VI: Revenue-based financing: The next step for private equity and early-stage investment. This is a summary of: Revenue-Based financing: State of the Industry 2020. 4 from our first year cohort of 10 crossed $1m ARR with less than 15% equity dilution while growing 2x; all are operationally profitable. 20% initial ownership.

Equity 78

Equity Revenue Cofounder Colorado 78

Both Sides of the Table

MARCH 11, 2011

He took out an ad in the Yellow Pages (it was the early 80′s, pre Internet), which cost him $1,000 / month for a half-page ad. Secondly, they had an owned & operated (O&O) website – Google.com – and Overture had shut down GoTo.com at the request of their very profitable and large distribution partners.

Product 350

Product Tuvalu Dilution Incubator 350

VC Adventure

AUGUST 30, 2010

As I noted above the conversion terms typically contain a discount to the next financing round and – according to the super-angels I talked with – also almost always contain a cap on the price at which the equity can convert at later. Entrepreneurs like convertible debt for some obvious reasons.

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

Up and Running

APRIL 24, 2018

For example, having flexible work hours means you can hire talented candidates from different time zones, which will increase your productivity while keeping the costs down. Because of complex government regulations and a lengthy incubation period, funding a healthcare startup is more difficult compared to financing a tech startup.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

Austin Startup

MARCH 26, 2019

You just spent a few thousand dollars on advertising and your paid customer acquisition cost (CAC) numbers tested well relative to your best guess for customer lifetime value (LTV). All else being equal, the incremental cost of acquiring the next customer will always be higher than the last. What happens at 3X?

Technical Review 49

Technical Review Software Review China Acquisition 49

ConversionXL

AUGUST 30, 2018

It costs money. It’s likely to be related to improving revenues, reducing costs, increasing the number of new customers, increasing the sales from existing customers, or increasing shareholder value. The finance team understands that content customers are less likely to churn and destabilize revenue flows. It has no clear ROI.

Design 111

Design Framework Product Development Technical Review 111

Austin Startup

MARCH 7, 2021

In 2019 and 2020, we saw hundreds of millions of dollars in non-dilutive funding go to Texas startups, most of which had never worked with the government before. Other companies, like Blue Origin, Firefly Space and Space X are all conducting operations in Texas, both together with NASA and for their own unique space ventures.

Texas 90

Texas San Antonio Houston Dallas 90

Hunter Walker

SEPTEMBER 5, 2021

As a venture fund I might have a strategy which says “for every dollar I invest into companies, I will hold one dollar in reserve for additional financings.” No founder should assume their pro rata from insiders is in the bag, let alone a bridge check, only because the cost of being wrong (to the company) is so high.

Cap Table 94

Cap Table Seed Stage Syndicate Syndication 94

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. By the first quarter of 2016, the late-stage financing market had changed materially. Investors were becoming nervous and were no longer willing to underwrite new Unicorn-level financings at the drop of a hat. It will also minimize future dilution.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Hunter Walker

FEBRUARY 20, 2018

Well, the long path to liquidity means many GPs don’t have much capacity open and the cost of getting stuck with a mediocre company is high (sucks up capacity and a competitive blocker for other investments). That is to say, evidence of a startup being a potential outlier is worth a lot more to them.

Forecast 108

Forecast Early Stage Dilution Later Stage 108

Lightspeed Venture Partners

SEPTEMBER 23, 2012

it also means less dilution, something that entrepreneurs should be very mindful of. The entrepreneurs believed that they could build the business faster with more capital, so it’s not an unreasonable thing to give up more dilution for more money at the same valuation.

Pre-Money Valuation 164

Pre-Money Valuation Post-Money Valuation Valuation Dilution 164

Startup Lessons Learned

JUNE 19, 2019

Previously, on the venture side you wanted to invest as early as possible, because the first round of financing got you to a product, and then you'd get beta-type customers, and then you'd raise a second round at a much higher price, and the business could immediately take off from there. If you're the second person, you're an operator.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159