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

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

Both Sides of the Table

JANUARY 4, 2014

– while the other might want a quick sale and pocket some bucks while the tech market is hot. It either needed to get more aggressive in pricing, pivot to a new business or business model or raise more capital (and take the dilution) in order to have more time to figure things out. Those are the easy cases.

Founder 340

Founder Sacramento Cofounder Technical Review 340

Both Sides of the Table

JUNE 17, 2017

The most obvious way to explain this is with sales people. If you hire 6 senior sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business 6 months. COGS” represents the amount that each sale costs you.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Both Sides of the Table

NOVEMBER 14, 2017

It wasn’t just front-end processes like sales tools, marketing funnels, dynamic pricing, driver routes and so forth but we also had to build comprehensive systems to manage numerous warehouses across four different cities. Summary Startups are fun and exhilarating and filled with challenging problems to solve.

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

OCTOBER 11, 2009

You can go as high as 1% because they’re going to get diluted when you bring in VC. So one of your sales pitches to them to join is the other people you have on board (or are approaching). At a $2 million valuation this is 0.5% of the company – about right.

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Both Sides of the Table

FEBRUARY 17, 2011

A year ago I blogged about one of my most common mantras that applies to sales, biz dev & fund raising alike: “ Time is the Enemy of all Deals.&#. If you are able to raise money from credible sources at a reasonable dilution percentage then I personally favor getting the round done now and building your business.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Both Sides of the Table

JUNE 5, 2011

Then you can do a little bit of research and find out that very few companies ever achieve this valuation in a trade sale so you’re clearly gunning for an IPO. They did an inside round, spent a bunch of money and then went through a fire sale of the business less than 2 years later. The risk wouldn’t be appropriate.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

SEPTEMBER 10, 2021

A-Rounds used to be $3–7 million with the best companies able to skip this smaller amount and raise $10 million on a $40 million pre-money valuation (20% dilution). So in a way it’s self selecting. These days $10 million is quaint for the best A-Rounds and many are raising $20 million at $60–80 million pre-money valuations (or greater).

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Both Sides of the Table

MARCH 21, 2010

Future investors aren’t likely to mind that you had a PBW program because the dilution will be taken before they invest. Every share option you allocate to an employee is dilution both you and your investors face so they shouldn’t be allocated lightly. million in sales. million in sales (e.g.

Warrant 298

Warrant Dilution Startup Stock Options 298

Both Sides of the Table

DECEMBER 1, 2009

I know that people find safety in numbers (and there always seems to be 3 amigos) but imagine this for a moment – you go and raise venture capital and you’re fighting over whether to dilute with a VC by 25% or 30% as a company. Do you understand how to lead a sales process? Are you a shaper vs. a completer-finisher? -

Hiring 289

Hiring Cofounder Dilution Startup 289

Both Sides of the Table

JULY 16, 2013

Because at least while the VC spigot is open and flowing for high-potential individuals that fit a pattern that some VCs seem to favor they can access cheap capital that isn’t terribly dilutive and can use the to fund development and swing for the fences with limited focus on monetization. And the dilution that goes with it.

Burn Rate 412

Burn Rate Dilution Revenue Valuation 412

Both Sides of the Table

JULY 25, 2010

Because I built two SaaS companies and sold my second one to Salesforce.com (where I then took on the role of VP Products) I am often asked to look at SaaS and/or sales-oriented deals for others. I’d far rather dilute 10% early and get some investor traction than to wither for another 3-6 months trying to get my seed round together.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Both Sides of the Table

APRIL 14, 2012

Is your crappy little 12-person company really worth they and their shareholders diluting by 2% given more than a decade they’ve put in building one of the Internet’s most solid business social networks? You just said, “nobody would take 1-2% dilution.” I am not saying all companies should be for sale.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Both Sides of the Table

APRIL 25, 2011

Early in a services business there is usually no profits as the company reinvests in hiring people to grow, but by $20 million in sales the company should at least be pulling in 10% profits (if not more) depending on how much is reinvested. There are at least two types of tech services businesses in my mind: 1. It’s pure irony.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

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APRIL 21, 2013

While still owning the business he now does $60 million in annual sales built from nothing. Given the brand dilution going on with the name Sriracha how can he still grow his business? “We started this because we like fresh, spicy chili sauce.” ” And build a great business he did. But it wasn’t his ambition.

Vietnam 415

Vietnam Los Angeles Entrepreneur Thailand 415

Both Sides of the Table

JULY 17, 2018

Hire when it feels like you're bursting at the seems or missing a critical skill on existing team or have figured out how to scale growth  —  @msuster 6/ Raising capital at very high prices helps avoid short-term dilution. But if you raise at too high a price you make it harder to raise next round.

Founder 242

Founder Dilution Software Review Later Stage 242

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

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 Balance Sheet Dilution 150

Both Sides of the Table

OCTOBER 14, 2011

million pre-money valuation, which is a $10 million post-money) you get diluted by 25% (2.5m / 10m). But understanding how you’re likely to get diluted over time is a more difficult concept. So here is our crack at explaining the world of dilution to you. This post originally appeared on TechCrunch. million at a $7.5

Dilution 394

Dilution Pre-Money Valuation Startup Valuation 394

Both Sides of the Table

APRIL 27, 2010

But in our first year of sales (and those were really shitty years to be selling software) we sold $2.1 I learned how to establish sales targets and how to manage a sales pipeline. I learned how to do a pipeline review with sales people without getting bullshitted to. I never built Google. million, then $5.9m, $7.7m

Venture Capital 285

Venture Capital Hiring Software Review Stock Options 285

Both Sides of the Table

MAY 7, 2016

Almost all companies hit those tough moments when customer growth slows down, competitors launch products and dilute your good press coverage, employees start doubting the future and cash reserves start to dwindle. It’s what you do in these moments that often determine success from failure.

Churn Rate 150

Churn Rate Vesting Dilution Europe 150

Both Sides of the Table

FEBRUARY 25, 2010

But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. VC, sales, biz dev, M&A or otherwise. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. VC, sales, biz dev, M&A or otherwise.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Both Sides of the Table

DECEMBER 18, 2009

And for all of this we had no dilution and paid no money. That was our first year of sales. We signed deals worth $1.2 million over 2 years that made us profitable in Germany from day 1. Any customer not willing to commit we didn’t sign. iScraper Israel shut down and another UK competitor took on their UK assets).

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Both Sides of the Table

MARCH 30, 2016

forward sales with some as high as 12x sales. Collectively we chose growth and the market was rewarding high growth rates over any other factor so we felt that we ought to bring in an experienced CEO who had taken companies public, who had led large, international sales organizations and who was poised to take Invoca to the next level.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Both Sides of the Table

MARCH 1, 2010

He was grateful since I stuck with my first company, BuildOnline, well beyond when others would have (since I had taken great dilution during the dot com burst.). maybe I own 20% of the company) or $5 million at a $20 million post (I own 25%) shouldn’t I block that sale of a company a cheap price? He decided to let me earn.

Entrepreneur 321

Entrepreneur Warrant Silicon Valley Early Stage 321