The Startup Magazine

MARCH 30, 2022

Growth financing can also be described as revenue-based financing, which essentially allows you to upfront your annual recurring revenue (ARR) and make it available right now, rather than forcing you to wait weeks or months until your end-of-year earnings are accessible. A quick overview of growth financing.

Finance 134

Finance Dilution Green Revenue 134

The Startup Magazine

JULY 1, 2022

Production or service is the business’s core activity, which generates revenue. The most common types of financing are debt financing, equity financing, and venture capital. Equity financing is when you sell a part of your company for cash. Marketing and sales are how you reach and sell to your target market.

Technology 137

Technology Venture Capital Finance Startup 137

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. Such a model is particularly helpful for those founders looking for a co-founder or key employee. I couldn’t find one online, so I built it. Download the Startup Options Valuation model here.

Employee 155

Employee IRR Startup Mexico 155

Both Sides of the Table

MARCH 21, 2010

Plus, we’re all allured by the false sense that our contract with BigCo is going to “make us&# because once they start using us it will spread like wildfire and the revenue will flow in. They negotiate a “master agreement&# to work with your company with some maybe minimum guarantees in terms of revenue.

Warrant 298

Warrant Dilution Startup Stock Options 298

Berkonomics

MARCH 21, 2019

If you are a going business with a track record of revenues, then the importance of accurate current financial statements cannot be overstated. If there is no record of revenues, see the “The Berkus Method” available with any search query for valuing the business before revenues. Remember your employee option allocation.

Hockey Stick 63

Hockey Stick Liquidity Event Valuation Balance Sheet 63

dondodge.typepad.com

JANUARY 15, 2011

Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees? How much equity should I give up? How much equity should I grant to early employees? No loss of equity, at least until they convert at Series A. Should I take Angel or VC money?

Equity 40

Equity Employee Dilution Valuation 40

Both Sides of the Table

SEPTEMBER 18, 2014

Revenue multiple? Less than you’ll probably grant your most junior employees in stock options? And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? “But lawyers will charge much more for equity.” Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

VC Cafe

FEBRUARY 27, 2024

especially if the startup already has a product and revenue? In smaller funds, ticket sizes tend to be lower, so pre-seed is the only stage where micro funds are able to secure their minimum equity targets. A founder asked me what makes a $2M round “pre-seed”?

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Austin Startup

NOVEMBER 25, 2018

It was there that I met Eric Simone (one of the first investors in Bazaarvoice) as well as Josh Baer (one of the first investors in Bazaarvoice through his team building our first solution and getting paid primarily in equity versus cash). I failed to do that with Coremetrics and I paid dearly for it with dilution.

Bootstrapping 48

Bootstrapping Austin Equity Cofounder 48

David Teten

NOVEMBER 10, 2011

The Income Statement sheet allows you to model expenses and revenues as they occur. Here you will see listed assets, liabilities, and equity. The Cash Flow Statement , for a startup, will often prove particularly important, as it will tell you whether or not you can do the essential tasks like pay employees and bills.

Balance Sheet 154

Balance Sheet Startup Equity Valuation 154

Up and Running

MAY 21, 2015

All the other sharks typically make a traditional equity investment; for example they’ll invest $100,000 at a $1,000,000 business valuation, and take 10 percent of the business. That’s called a traditional equity investment. Mr. Wonderful, by contrast typically makes his investment in the form of Debt Securities With Warrants.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Tim Keane

JANUARY 12, 2010

The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Small Business Force

JANUARY 14, 2016

Equity and percentage ownership has always been a lightning rod for discussion and controversy with startups and entrepreneurs. It is also less understood than it should be, with dilution and control issues being major points of concern. The point of it was that with any kind of equity distribution, dilution will always occur.

Equity 20

Equity Dilution Distribution Valuation 20

www.startupnorth.ca

OCTOBER 23, 2010

Home Events Contact Jobs StartupIndex Founders versus early employees by David Crow on September 10th, 2009 in Resources Not everyone can be a founder. But for every founder, there is an early employee that takes near equal risks in joining an early-stage company. David Beisel We need to celebrate the employees at startups.

Employee 41

Employee Founder Salary Equity 41

Berkonomics

MAY 26, 2010

They include an expense account, company car, profit sharing, 401k contributions, medical coverage for dependents, free life insurance, educational payments, extra vacation, relocation expenses, paid trips to industry association meetings, or a small override on revenue from new products developed under the candidate’s watch. .

Employee 54

Employee Liquidity Event Stock Options Salary 54

Both Sides of the Table

APRIL 25, 2011

A great recent example of this was a successful group of entrepreneurs who had created a company that will do $10-12 million in revenue at their system integration business (read: services business) in 2011 after having done $5 million or so in 2010 and $2-3 million in 2009. That is $12 million in profits over 3 years.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Gust

SEPTEMBER 17, 2014

Revenue multiple? Less than you’ll probably grant your most junior employees in stock options? And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? But lawyers will charge much more for equity.” Try doing THAT with equity.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

epaley.com

MAY 6, 2013

Once financed, everyone at the startup should have a reasonable salary, but the real compensation for achieving the improbable is the equity that is typically shared between all employees proportional to the expected contribution of each person. Using revenue metric.s Did that make the employees happy? Not really.

Salary 41

Salary Startup Equity Forecast 41

Startup Company Lawyer

MAY 4, 2009

If a founder’s company raises more than $50,000 in debt or equity financing, excluding funds from the founder, within 18 months of formation, then the founder must pay a tuition fee of $4,500, which is used to cover the Institute’s expenses in providing the program. June 23rd, 2009: Create a revenue model for your business.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

discuss.joelonsoftware.com

NOVEMBER 1, 2010

where I can learn about how to build a sweat equity team? Right now, my business is just myself and a part-time employee who does support, testing, and product usability design. Rather, it is a proposal for sweat-equity investors. Equity partners need to have a hand in guiding the enterprise. The gist: 1.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40

Rob Go

AUGUST 26, 2013

Post-product, early customer data, somtimes real revenue. Several employees in addition to founders. Often priced equity, but often convertible note. . “Institutional seed” rounds on the other hand tend to look like this: >$750K. More often these days, there are more like $1.5M or even more.

Valuation 68

Valuation Seed Stage Syndicate Syndication 68

crowdSPRING Blog

OCTOBER 30, 2018

It is a key factor in the success and prosperity of all businesses and nonprofits, regardless of their revenues. It directly affects your ability to sell, to fundraise, to hire the best employees, and to grow. If your brand tries to be too many things at once, the message becomes scattered and the brand grows diluted.

Small Business 55

Small Business Metrics Social Media Audience 55

David Teten

OCTOBER 1, 2015

intrapreneurs, e.g., the employee of GE who is tasked with launching a new business. Not surprisingly, the list above also is ranked from least to most equity stake in an investment for the investor, relative to the cash they invest. equity that belongs to departed cofounders)? mentor VCs, e.g., most VCs. What are the timelines?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Convertible notes. Example of a cap table.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

The Next Web

SEPTEMBER 29, 2013

They feel the money can and should be spent on ways to grow the company, so they shift into growth mode by hiring more employees, paying themselves, hiring salespeople, running paid ad campaigns, and spending on overhead. The Founder’s gut wrongly tells them their business plan has been validated because they received an investment.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Seeing Both Sides

JANUARY 4, 2012

After three or four years of jamming on your start-up, you've finally crossed a few million in revenue, gotten north of 10-20 employees, and it's all starting to click. Your employees start doing what I call "phantom equity math" (if this company were worth a billion dollars, I'd become a multimillionare!),

Lean 53

Lean Dilution Revenue Hiring 53

blog.simeonov.com

FEBRUARY 22, 2010

This can be a convenient shortcut to separate someone’s status (founder) from their role (employee or contractor or advisor, etc.) It outlines key points of agreement between founders around IP ownership, equity ownership, vesting, etc. The rest of the equity typically vests monthly with no cliff for 3-5 years.

Founder 44

Founder Vesting Agile Startup 44

crowdSPRING Blog

DECEMBER 13, 2018

Here, the “public” includes your customers, prospects, your employees, vendors, and others who connect in any way with your brand. But if you want to accelerate growth and improve your revenues and profits, you need to up your game. Are you interested in comparing revenues? Unique visitors? Total visits?

Marketing 162

Marketing Charlotte Naming Design 162

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. Whatkind of anti-dilution protection do they want? Most firmsalso have a handful of junior employees called something likeassociates or analysts.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

maplebutter.com

JANUARY 8, 2013

I would focus on one product and set a goal to generate $1M in yearly revenue from it. Outsourcing is something a big company, with a known customer / problem (that has revenue & traction) does to save cost. I have a proposal written up including full cost and revenue projections. Once you’ve done that – then. 1) Hire A’s.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

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

Transformify

FEBRUARY 1, 2019

If you're worn out from working as an employee, it may be time to start your own business. A business professional can guide you on everything from hiring employees to marketing to sales. Equity Funding. There are advantages too as the equity funding model may secure funding for faster growth.

Affiliate 49

Affiliate Equity Valuation SEO 49

Reid Hoffman

JUNE 8, 2021

And then how would you prompt other entrepreneurial leaders to think more broadly about stakeholders than even just investors, employees, customers, which tends to be the typical trifecta? We identified five, and the trifecta of employees, shareholders and customers, everyone has those, we also added two more. BC: Exactly, Reid.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Reid Hoffman

JUNE 8, 2021

And then how would you prompt other entrepreneurial leaders to think more broadly about stakeholders than even just investors, employees, customers, which tends to be the typical trifecta? We identified five, and the trifecta of employees, shareholders and customers, everyone has those, we also added two more. BC: Exactly, Reid.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

Both Sides of the Table

FEBRUARY 14, 2016

Social networking finally came of age connected the planet and leading to enormous wealth creation for Facebook employees and investors. Smart phones finally took off leading to enormous wealth creation for Apple employees and investors but also helped propel Google, Facebook, Twitter, Instagram, Snapchat, WhatsApp and others.

Valuation 150

Valuation Down Round Startup Later Stage 150

www.paulgraham.com

OCTOBER 23, 2010

Angels are individualrich people who invest small amounts of their own money, while VCsare employees of funds that invest large amounts of other peoples. Founders never really likedgiving up as much equity as VCs wanted. 5 ] But the advantage of these medium-sized rounds is not just thatthey cause less dilution.

Valuation 92

Valuation Stock Partner Founder 92