David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Of the Inc. 5000 companies, only 6.5% raised from angels.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

MARCH 21, 2013

I think it’s important for enterprise startups to layer in professional services into your revenue stream. deliver profitable revenue that while on gross margins of 50% vs. software at 85-95% it is still profits to help you cover fixed costs. Control Size of PS Revenue Relative to Software Business. configuration.

Software Review 321

Software Review Software IP Technical Review 321

Up and Running

NOVEMBER 5, 2018

What will it cost to start that business? Many people underestimate startup costs and start their business in a haphazard, unplanned way. Estimating realistic startup costs is one of the key elements of your financial plan. What are startup costs? And it interferes with the estimates and dilutes their value.

Cost 150

Cost Balance Sheet Startup Intellectual Property 150

SoCal CTO

SEPTEMBER 27, 2011

Suppose further that he's going to cost $60k a year in salary and overhead, x 1.5 = $90k total. I've talked about this topic before in How Investors Think About Valuation of Pre-Revenue Startups. Suppose the company wants to make a "profit" of 50% on the new hire mentioned above. So subtract a third from 16.7%

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

Up and Running

DECEMBER 9, 2014

Bates: Good morning and welcome to our CEO panel, “How to Fine-Tune Your Small Business Finances From Funding to Growth” which I think is the direction that we would all like to be going. I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth.

Small Business 95

Small Business Finance Forecast Metrics 95

Both Sides of the Table

MARCH 11, 2011

I thing I’ve learned over the years is that technology purists hate advertising even when it is that revenue stream that truthfully drives much of our industry. 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. Anyway, we discussed so much more.

Product 350

Product Tuvalu Dilution Incubator 350

ReadWriteStart

JUNE 1, 2020

The primary source of your funds should be your paying customers, i.e., your business should generate enough revenues and profits to fund the growth and expansion. It is going to cost a lot of money just to get the initial batch of products to test the market and would definitely require external funding. Incubators and Accelerators.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

David Teten

AUGUST 21, 2019

Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. Less or no dilution.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

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

Both Sides of the Table

DECEMBER 18, 2009

The agreement was that both sets of investors would fund the combined entity, we would reduce overlapped costs and become a healthier company. We committed to cost focus, customer adoption and delivering our numbers. We got their commitment and our existing investors bridged us until the new financing round could close.

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Life Beyond Code

SEPTEMBER 27, 2011

One Million by One Million is a global initiative that aims to nurture a million entrepreneurs reach a million dollars each in annual revenue and beyond by 2020, thereby creating a trillion dollars in global GDP and ten million jobs. This, of course, doesn’t mean that we discourage entrepreneurs to seek financing.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

YoungUpstarts

JUNE 13, 2011

years, and had reached an average revenue level of $60 million with the range being from $5 million to $350 million. 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.

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Revenue multiple? In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Me: More dilution? There are a million ways to do quick, easy, low-cost rounds with prices.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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.

Design 111

Design Framework Product Development Technical Review 111

Both Sides of the Table

SEPTEMBER 29, 2009

Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. As a personal story, I sat on the board of one company with a very unhealthy burn rate relative to revenue or expected growth. While the company continues to perform well it has come at a cost.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. Consider convertible debt Before diving into a seed round, you may want to consider convertible debt over equity financing. I speak from experience.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Both Sides of the Table

APRIL 25, 2011

It’s nearly impossible to get a services company financed by VCs. They have created two internal technology “products&# and wanted to figure out how they could turn their services business into a product business that could be financed. You’re a small fish. This team is talented. They wanted advice.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Startup Professionals Musings

SEPTEMBER 5, 2016

Every startup I know has pivoted at least once, so learning from your mistakes should be a positive experience, rather than a painful error that will cost you credibility. Don’t quit your day job until the revenue is flowing. Keep later critical financing needs viable. Keep your focus on customers rather than investors.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

ReadWriteStart

APRIL 4, 2023

These fees are charged to cover the costs of operating the crowdfunding platform, including marketing, payment processing, and customer support. Bridget Reed, Co-founder and VP of Content, The Word Counter Yes, but Look for Restrictions Crowdfunding is an efficient and cost-effective way to raise money to finance the development of a startup.

Startup 141

Startup Campaign Cofounder Venture Capital 141

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. You just said, “nobody would take 1-2% dilution.” I will weigh in with some thoughts soon. Was this a good thing?

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors. . This is why a bottom up approach is more credible.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Austin Startup

MARCH 23, 2017

Digital ink has been spilled across the interwebs these past two weeks on the issues with different types of venture financings. Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. Atlassian).

Dilution 54

Dilution Equity Warrant Distribution 54

Hunter Walker

JANUARY 15, 2016

I wish I could claim I deftly foresaw this, but I was just seeking recurring revenue to to cover OneMatchFire’s office expenses. By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue. InVenture is in a really great place.

Technical Review 48

Technical Review Startup Cofounder SMS 48

This is going to be BIG.

MARCH 16, 2020

Some key existings who didn’t want to see their prior money get lost wouldn’t budge on a dilutive financing, despite the fact that they knew where we were headed. Part of it was that we had gotten over our skis on valuation, making further investment unattractive to both new and existing investors.

Bankruptcy 95

Bankruptcy Private Equity Seed Stage Dilution 95

Up and Running

APRIL 18, 2013

Specialty finance structures have been around since the beginning of finance, but in the last several years, as bank lending remained frozen following the financial crisis, alternative financial product offerings have exploded. Equipment finance. Equipment finance is one of the most common forms of specialty finance.

Small Business 89

Small Business Finance Dilution Equity 89

Both Sides of the Table

MARCH 30, 2016

Invoca was raising at the tail end of this market phenomenon at this time doing tens of millions in SaaS recurring revenue and growing at a nice clip. Here are some stats to give you a sense: • Year over year revenue grew 51% in 2015 and we’re forecasting the same again for 2016. forward revenue for public comps (comparable stocks).

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. By the first quarter of 2016, the late-stage financing market had changed materially.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

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.

Employee 155

Employee IRR Startup Mexico 155

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

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. Revenue multiple? In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Up and Running

AUGUST 28, 2013

Worrying about dilution. Rejecting a cash offer for your company when you have almost no revenues. Cutting costs every day. When you have a billion in revenues, staying focused. When you have zero revenues, staying unfocused and coming up with new ideas every day. Having fights with partners in the first year.

NDA 70

NDA Dallas Dilution Revenue 70

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. it also means less dilution, something that entrepreneurs should be very mindful of. Here are my thoughts on the companies that were featured in the second episode of season four : SURFSET FITNESS.

Pre-Money Valuation 163

Pre-Money Valuation Post-Money Valuation Valuation Dilution 163

Startup Company Lawyer

MAY 4, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. The application fee is $50, which only partially offsets costs associated with processing applications. June 23rd, 2009: Create a revenue model for your business. How to grow it.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Ben's Blog

MAY 24, 2021

Small” IPOs — companies with less than $50m in annual revenue at the time of IPO – have declined from more than 50% of all IPOs in the 1980-2000 timeframe to about 25% of IPOs from 2001-2016; Companies are staying private much longer — the median time to IPO from founding hovered around 6.5

SEC 36

SEC Accredited Investor IPO Technical Review 36

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. Flippers financed by venture capitalists are more likely to hire executives having high level profiles and previous exit experience.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48