YoungUpstarts

JULY 31, 2019

Founders need seed capital to get their operations up and running, and to begin generating revenue. But “fundraising debt” comes into the picture when you raise too much too early, diluting your business at the beginning of the venture, with no real plan or unrealistic projections for how your business will scale.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

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. rollout support.

Software Review 321

Software Review Software IP Technical Review 321

Both Sides of the Table

SEPTEMBER 28, 2014

So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000. But those of us with longer memories remember that the revenue line can move south very quickly when the market overall turns south. Gross burn is the total amount of money you are spending per month.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

OCTOBER 7, 2022

On the other hand, venture capital organizations typically look for needs that exceed $2 million. Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count.

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Gust

OCTOBER 18, 2011

The Venture Capital Method. The Venture Capital Method (VC Method) was first described by Professor Bill Sahlman at Harvard Business School in 1987 in a case study and has been revised since. It is one of the most useful methods for establishing the pre-money valuation of pre-revenue startup ventures.

Valuation 174

Valuation Pre-Money Valuation Southern California Post-Money Valuation 174

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. These usually play a role in the very early stage of your business, primarily pre-revenue. Capital is expensive. Government programs. Equity investors.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Startup Professionals Musings

JANUARY 4, 2020

On the other hand, venture capital organizations typically look for needs that exceed $2 million. Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count.

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

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. Revenue When I look at an income statement I start by focusing on the revenue line. You need to understand the “quality” of the revenue.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Both Sides of the Table

OCTOBER 1, 2009

Consumer spending is 70% of the economy and will continue to be stretched – We can look all we want at tech innovation, VC funding cycles and hot M&A deals, but ultimately growth and therefore investment must be underpinned by revenue. Tags: Pitching VCs Start-up Advice VC Industry startup technology vc venture capital.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Both Sides of the Table

APRIL 14, 2010

If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. Tags: Entrepreneur Advice Raising Venture Capital Start-up Advice Startup Advice.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

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

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. Venture capital is when you get funding from investors in exchange for a percentage of your company. Financing Your Startup.

Technology 137

Technology Venture Capital Finance Startup 137

David Teten

JANUARY 21, 2021

This essay is part of a series on alternative VC: I: Revenue-Based Investing: a new option for founders who care about control. II: Who are the major Revenue-Based Investing VCs? III: Why are Revenue-Based VCs investing in so many women and underrepresented founders? IV: Should your new VC fund use Revenue-Based Investing?

Equity 78

Equity Revenue Cofounder Colorado 78

ReadWriteStart

SEPTEMBER 10, 2010

They already have several customers including some telcos, and are at about $350,000 in revenues. Gio expects to get to about $500,000 by the end of this year and asked me for advice on venture funding. You can get cash without diluting your ownership in the company. Because customer financing equals revenue, not equity.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

This is going to be BIG.

OCTOBER 10, 2014

For those of you that have trouble doing division, not surprisingly, that puts the average dilution right around 20%, which isn''t surprising. then you need to take a look at the dilution numbers. Dilution is the price and you''re all pretty much getting the same deal. What about if you have some revenues? No Revenues.

Pre-Money Valuation 146

Pre-Money Valuation Dilution Valuation Term Sheet 146

K9 Ventures

JUNE 12, 2012

While it it may not feel that way, the data suggest that there is indeed too much capital in the system — especially so at the seed stage, with more and more individuals and larger funds trying to invest in companies at this stage.). For most venture capital funds money is a commodity. It is a tool.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

K9 Ventures

JUNE 12, 2012

While it it may not feel that way, the data suggest that there is indeed too much capital in the system — especially so at the seed stage, with more and more individuals and larger funds trying to invest in companies at this stage.). For most venture capital funds money is a commodity. It is a tool.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

ReadWriteStart

APRIL 4, 2023

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. For example, artists on Patreon can solicit members of their fan base to donate in appreciation and support of their work going forward.

Startup 141

Startup Campaign Cofounder Venture Capital 141

Both Sides of the Table

JUNE 5, 2011

But the reality is that you’re faced with two problems: 1) the earlier the stage the riskier and thus more write-offs so you need to have enough ownership percentage in your winners to make up for the losers and 2) the earlier stage your check the more likely the company will need many more funding rounds behind you and thus you face dilution.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

VC Cafe

FEBRUARY 27, 2024

especially if the startup already has a product and revenue? To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples).

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Steve Blank

APRIL 10, 2019

As Venture Capital emerged as an industry in the mid 1970’s, investors in venture-funded startups began to give stock options to all their employees. And Mark Suster of Upfront Capital has a great post that summarizes these changes. It’s called Growth capital. Lessons Learned.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

This is going to be BIG.

MARCH 16, 2020

They decided to raise venture capital money in order to build a factory, open new stores, and take advantage of their newfound fame to go into wholesale. 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.

Bankruptcy 95

Bankruptcy Private Equity Seed Stage Dilution 95

Both Sides of the Table

APRIL 14, 2012

You’ve found yourself in a super hot category and – let’s face it – it’s still a very frothy venture capital funding market so you may have loads of VCs chasing you. You just said, “nobody would take 1-2% dilution.” Let’s say your company is currently valued at $15 million.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

The Next Web

FEBRUARY 27, 2014

As an example, a new restaurant may get valued at 3-4x EBITDA (earnings before interest, taxes, depreciation, and amortization) and a hot dot com business with meteoric traffic growth could get valued at 5-10x revenues. revenue, cash flow or net income multiples from recent M&A transactions in your industry.

Valuation 167

Valuation Forecast Seed Stage .Net 167

Startup Professionals Musings

SEPTEMBER 5, 2016

The reality is that over 80 percent of new businesses will never attract venture capital or Angel funding, according to experts , and there are many good reasons for skipping that painful and distracting process. Don’t quit your day job until the revenue is flowing. Outside funding is not a startup entitlement.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

The Next Web

SEPTEMBER 13, 2013

The venture capital landscape in Asia is varied and complex, as most of the active firms on the continent are concentrated in just a few areas. Finding the right partner is a much bigger win than the extra cash or minimizing dilution. Where are all of the VCs in Asia? This is even true for the Asian arms of Silicon Valley VCs.

Asia 132

Asia Silicon Valley India Term Sheet 132

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. To illustrate dilution effects, we show a couple of investment rounds (angel and VC) as well as employee option increments at different stages. I couldn’t find one online, so I built it.

Employee 155

Employee IRR Startup Mexico 155

Both Sides of the Table

JULY 17, 2018

" Revenue doesn't pay your bills, GM does  —  @msuster 2/ Founders obsess with revenue as a vanity metric. Some even grow "bad" revenue just to show growth. But if you want to add some in the comments section on Medium and I’ll make sure to read them.

Founder 242

Founder Dilution Software Review Later Stage 242

Both Sides of the Table

MARCH 11, 2010

This is part of my ongoing series on Raising Venture Capital. Recently I’ve been debating with a number of young startup companies that are raising money in the next few months, “what is the right about of capital to raise at a startup?&#. Your revenue will take longer to ramp then you think. add a buffer.

Venture Capital 319

Venture Capital Startup Silicon Valley Warrant 319

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

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. Not necessarily the entire business, but at some point, something will fail and you’ll either learn from it and grow or it will be the beginning of the end.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Startup Professionals Musings

MARCH 7, 2015

On the other hand, venture capital organizations typically look for needs that exceed $2 million. Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count.

Preferred Stock 120

Preferred Stock Exit Strategy Equity Angel Investor 120

Tim Keane

JANUARY 12, 2010

  I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.]   Pre-bubble Siliicon Valley deals were popularly valued at multiples of revenue.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 25, 2011

This thinking is largely driven by the venture capital industry (and subsequently Wall Street) who are in search of high margin, highly scalable businesses. I gave them advice I don’t think they were expecting from a VC, “Don’t raise venture capital for this business. This team is talented.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

VC Cafe

JUNE 10, 2022

For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. As a result, founders are accepting increased dilution of the stakes they hold in their own companies. How shut are the venture markets for companies seeking capital right now?

Valuation 151

Valuation Marketing Venture Capital 151

The Equity Kicker

MAY 14, 2012

achieving first revenues. breaking through revenue thresholds – e.g. run-rates of £1m, £5m, £20m and so on. In his book The Second Bounce of the Ball , Ronald Cohen , one of the founders of the UK venture capital industry, is even more conservative – he advises raising enough money to get past two milestones.

Finance 118

Finance Valuation Venture Capital Dilution 118

Austin Startup

MARCH 23, 2017

Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. I point back to Fred Wilson’s blog, specifically a guest post by Andy Sack on revenue based financing. However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54