Both Sides of the Table

MARCH 19, 2013

The era of VCs investing in successful consumer Internet startups such as eBay led to a belief system that seemed to permeate many enterprise software startups that hiring sales or implementation people was a bad thing. But the “no sales people” mantra isn’t what I’m here to take on. I believe it’s flawed.

Technical Review 403

Technical Review Software Review Startup Churn Rate 403

Startup Professionals Musings

SEPTEMBER 27, 2023

Make sure the government waits for a stock sale to collect taxes. This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions. At that time the original split makes all the difference. In the U.S.,

Stock 240

Stock Vesting .Net Founder Vesting 240

Both Sides of the Table

FEBRUARY 6, 2013

it’s the most expensive dilution you’ll ever face. Your first sales people should be consultative sellers who can fuel evangelical sales. Don’t hire “relationship management” sales people too early. Quick summary: Be careful not to have too many co-founders.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Startup Professionals Musings

JANUARY 15, 2021

Make sure the government waits for a stock sale to collect taxes. This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions. At that time the original split makes all the difference. In the U.S.,

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Both Sides of the Table

MARCH 21, 2013

So when I meet with GRP portfolio companies that do enterprise sales I try to emphasize the following: 1. Often your sales engineers can do the customizations without bugging the core eng team. Integrate PS Work Into Sales & Marketing Processes. Referenceability is the lifeblood of sales.

Software Review 321

Software Review Software IP Technical Review 321

Both Sides of the Table

MAY 9, 2018

I also had to negotiate a follow-on round at a portfolio company because new investors were trying to force a bit option-pool top-up that would dilute the founders and existing shareholders and existing investors were fighting over prorata rights. I always tell people that fund raising is a sales process.

Software Review 381

Software Review Churn Rate Due Diligence New York 381

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. As stated earlier, investors will dilute ownership upon nearly every round of financing. So, if o = initial ownership and y = total dilution, x = o * (1 – y). N: exit size.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Gust

NOVEMBER 1, 2011

in the case of one investment round, no subsequent investment and therefore no dilution). The selling price can be estimated by establishing a reasonable expectation for revenues in the year of the sale and, based on those revenues, estimating earnings in the year of the sale from industry-specific statistics.

Venture Capital 161

Venture Capital Valuation Pre-Money Valuation Post-Money Valuation 161

Startup Professionals Musings

APRIL 23, 2017

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Marketing and sales chasm. Product development chasm. Another common chasm is never-ending product development.

Customer 191

Customer Entrepreneur Technical Review Dilution 191

Startup Professionals Musings

AUGUST 31, 2018

This experience includes browsing your website, social media interactions, the sales process, as well as your support and follow-up. Totally new and risky products will dilute your focus, and may confuse existing customers. These days, customers remember the total experience with a company longer than they remember the price they paid.

Angel Investor 167

Angel Investor Dilution Software Review Distribution 167

Both Sides of the Table

FEBRUARY 8, 2016

But I would point out that raising money is an existential event and I think in the coming 12-18 months you may see loss ratios (companies going out of business or selling in fire sales) go up. Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive.

Burn Rate 150

Burn Rate Cap Table Dilution Balance Sheet 150

Startup Professionals Musings

OCTOBER 13, 2021

It’s easy to say “yes” to one more feature request after another, until the potential for real impact gets diluted. Obsessive sales – must meet revenue goals. Otherwise, your most innovative and disruptive product thinking will be diluted and lost, killing your dream of a better world.

Dilution 334

Dilution Metrics Acquisition Revenue 334

Both Sides of the Table

SEPTEMBER 17, 2011

Still, I’ll bet that functionally you divide areas of competence like sales & marketing, product, engineering, biz dev, etc. “I need a COO to focus on the business while I focus on M&A and strategic discussions.&# The company that wrote me this told me they were doing $4 million in sales. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

Startup Professionals Musings

APRIL 23, 2012

Expertise can be marketing, technical, financial, or sales. All partners should never forget that their allocated shares are only the beginning, and will be diluted proportionately when outside funding is later required from angels or venture capitalists. Building a product doesn’t get it distributed and sold.

Intellectual Property 252

Intellectual Property Equity Cofounder CTO Hire 252

Both Sides of the Table

SEPTEMBER 5, 2012

In a standard VC term sheet there is a standard term called an “anti dilution provision” and they are in nearly 100% of deals. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. But my $500k, while only buying 10% of the company (and now diluted down to 7.5% That would suck.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

A Smart Bear: Startups and Marketing for Geeks

MARCH 1, 2010

What would a sales call look like, starting with your 30-second pitch, then dealing with skeptical questions, trying to earn this potential customer's interest, respect, and eventually money, all with only one advantage? You should go through this exercise because this skill is valuable in every sales call. Don't dilute your message.

Open Source 239

Open Source Dilution Software Developers Software Development 239

YoungUpstarts

SEPTEMBER 23, 2017

Investing more money in stage one won’t really help, as spending twice as much on sales won’t produce twice the sales. You should also be able to start to build some pointers on how increasing expenditure could increase sales, and gross margin, in order to plan future growth. Often, this is considered as a mistake.

Cofounder 103

Cofounder Sweat Equity Equity Dilution 103

YoungUpstarts

JANUARY 19, 2015

And that means you will end up losing money on a potential sale or ongoing business relationship! Don’t dilute your content. Many website owners make the mistake of diluting their content. They will ensure that what gets written is not diluted. Make your readers focus on a single part of the page: your primary content.

Dilution 100

Dilution Web Web Development Flash 100

Startup Professionals Musings

DECEMBER 18, 2013

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Marketing and sales chasm. Product development chasm. Another common chasm is never-ending product development.

Entrepreneur 252

Entrepreneur Marketing Technical Review Dilution 252

Steve Blank

NOVEMBER 13, 2018

I had joined MIPS Computers, my second semiconductor company , as the VP of marketing and also took on the role of the acting VP of Sales. and get the chip designed into companies building engineering workstations – powerful personal computers, all while trying to refine how to find the right markets, customers, and sales process.

Part-Time VPE 333

Part-Time VPE Employee Cofounder Hiring 333

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. It is best not to buy your competitors – they’ll always want an unreasonable price and think of the sale as failure. It has awesome features that my main competitor doesn’t have. Want to sell early?

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

JULY 22, 2010

So taking the same fund raising round and assuming that the VC wants the options including before he or she funds (and before is totally standard) then the math works like this: Assuming a 15% option pool post funding then you need a 20% option pool pre funding (because the pool gets diluted by 25% also when the VC invests their money).

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Startup Professionals Musings

JULY 1, 2022

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows. 7% Product Manager,2 -.3%

Stock Options 343

Stock Options Advisory Board Stock Startup 343

Startup Professionals Musings

NOVEMBER 10, 2012

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Marketing and sales chasm. Product development chasm. Another common chasm is never-ending product development.

Startup 254

Startup Technical Review Dilution Early Stage 254

Business Plan Blog

JANUARY 9, 2014

Fear of Dilution. Understand the difference between dilution and economic dilution, which occurs when the value of the business doesn’t change but the number of shares increases. Avoid chart junk, wild forecasts and top-down sales forecasting. Top 10 Reasons Why Startups Fail. Taking Money From The Wrong Investors.

San Diego 74

San Diego Dilution Technical Review Forecast 74

Startup Professionals Musings

NOVEMBER 8, 2010

Expertise can be marketing, technical, financial, or sales. All partners should never forget that their allocated shares are only the beginning, and will be diluted proportionately when outside funding is later required from angels or venture capitalists. Building a product doesn’t get it distributed and sold.

Equity 228

Equity Intellectual Property Cofounder CTO Hire 228

Both Sides of the Table

SEPTEMBER 28, 2014

Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service. If you have a very low gross margin (10-30%) it can be very hard to build a large, scalable business because you need to make a lot of sales to cover your operating costs.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

APRIL 9, 2016

Avoid adding features for a single customer to close a sale. Features added which have not been evaluated to have general appeal make your product more difficult to support, dilute your development effort for important features and complicate the usability and installability for all customers. Sometimes it pays to say “no.”

Product 120

Product Coder Dilution Agile 120

The Next Web

OCTOBER 10, 2013

Too dilutive.”. Since we bootstrapped Backblaze, early on we would have months when the company did not have enough cash from sales to buy the additional servers it needed. Dilution – bringing on a co-founder likely means you’re splitting your share in half. You know what is definitely the wrong number of cofounders? Too many.”.

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

Both Sides of the Table

AUGUST 14, 2017

Boards are not appointed to be founder-friendly lapdogs for the 1–3 founders who start companies and usually own the largest equity positions in the company.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Startup Professionals Musings

SEPTEMBER 13, 2011

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Marketing and sales chasm. Product development chasm. Another common chasm is never-ending product development.

Marketing 238

Marketing Entrepreneur Technical Review Dilution 238

Berkonomics

AUGUST 10, 2023

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. There is no middle ground. Resetting your priorities Taking money from these sources involves resetting priorities over time.

Liquidity Event 116

Liquidity Event Initial Public Offering Dividend Valuation 116

Up and Running

JULY 1, 2020

You may grow to tap new markets or increase sales in your current markets. It starts with a high-level strategy and continues all the way to market analysis, sales plans, operations planning, and financial modeling. Will marketing for the expansion dilute marketing of your brand or other products?

Business Plan 152

Business Plan Forecast Operations Dilution 152

David Teten

JANUARY 21, 2021

Jonathan Bragdon , CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50-$300k in post-startup, post-revenue businesses planning to 2X revenues in 12-24 months. By ‘structured exit’ we mean that investors can achieve liquidity without necessitating the sale of a company.

Equity 78

Equity Revenue Cofounder Colorado 78

Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

The Startup Magazine

JULY 25, 2021

But existing shareholders are not happy with the company’s proposed plan to issue $500 million in new shares as it would only dilute its current float. You should focus on making your startup irresistible to investors without opting for a dilutive capital raise. Understand market share .

Valuation 158

Valuation Artificial Inteligence Dilution Marketing 158

Berkonomics

FEBRUARY 8, 2024

And the restrictions upon your freedom to operate… This money comes with restrictions a founder may not expect, including restrictions upon the sale of founder stock, clauses that require the investor be allowed to sell an equal proportion of stock upon any other person’s sale of stock, anti-dilution provisions that protect the investor from a subsequent (..)

Cost 62

Cost Covenant Angel Groups Angel Investor 62