Startup Professionals Musings

JANUARY 22, 2020

Despite the recent growth of crowdfunding, angels continue to be one of the major sources of financing for new ventures, so it behooves every aspiring entrepreneur to understand who these people are. Since they know that most startups fail, their target return is ten times investment, so be prepared to talk cost vs revenue and product life.

Angel Investor 322

Angel Investor Valuation Syndicate Syndication 322

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   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.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Version One Ventures

OCTOBER 15, 2020

Let’s now explore the major developments and ultimate use cases for the Lightning Network in two categories: A) payments/finance and B) Web3. . Use Case I: Payments and Finance . As Chris Dixon documents in his seminal essay on Why Decentralization Matters , open networks always ultimately win. 1) Generalizable Payments .

Networking 168

Networking Global OTC Security 168

Startup Professionals Musings

APRIL 24, 2011

billion to work across 738 financing deals with U.S. Your friends and family are really the only answer until you have a significant revenue stream. Don’t try to talk your way to a deal before you have the documentation. To make this work, you will need an initial valuation of at least $5M. Overall, investors put $7.5

Venture Capital 233

Venture Capital Revenue Elevator Pitch Silicon Valley 233

Pascal's View

JULY 9, 2017

This is a fundamental issue that does, indeed, boil down to understanding the post-money valuation of a company. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. But it is also a topic that many find esoteric and difficult to grasp.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

David Teten

DECEMBER 3, 2019

That Google document provides cut and pasteable text I can share with other investors, based on their stage, focus, and appetite. . Lighter Capital, a Revenue Based Investing VC, offers a Cost of Capital Calculator. I also use several living Google docs to maintain the minutes and the group agendas for my fixed weekly meetings.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

VC Adventure

MAY 5, 2022

How many of those valuations will hold remains to be seen, but that kind of market clearly advantaged funds that deployed capital very quickly. Really more than that, as 10 years is an increasingly outdated vestige that seems for some reason to live on in fund documents, even if it doesn’t in reality. Many will not. But not now.

IRR 116

IRR Metrics Valuation LP 116

Lightspeed Venture Partners

OCTOBER 7, 2012

They won a design award at a trade show, but have no revenue and no orders. In the real world a fund raising process takes 90 days on average to get to a termsheet, where deal terms are agreed, and another 30-45 days of legal and financial diligence before the legal documents are finalized and the money is wired.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Duct Tape Marketing

FEBRUARY 3, 2022

So, you know, I, I have kids that are in their thirties and I'm envisioning a purple dinosaur that I did a a lot of watching with, but I guess there's also Smith Barney, which is certainly in the finance space, but I'm sure you have and Barney. Amanda Dixon (01:29): The store. John Jantsch (01:29): Oh, right, right, right.

Entrepreneur 79

Entrepreneur Technical Review Cofounder Valuation 79

Gust

SEPTEMBER 5, 2012

How to finance a new seed-stage startup? ” Ressi in particular seems to be passionate about removing the “debt” component from convertible debt seed financing transactions. .” For a good summary with links to the documents, see Leena Rao’s post at TechCrunch. Convertible debt? Convertible equity?

Finance 134

Finance Convertible Security Equity Seed Stage 134

Hearpreneur

AUGUST 5, 2020

It helped them to engage already existing customers with the brand and kept the revenues steady. Another pointer is to how much the industry is ready for disruption is the trend of recent HR and Recruitment startups such as Zenefits which reached up to a valuation of a billion dollars after a few years. 16- Coffee. 19- Silvertech.

Technical Review 155

Technical Review Software Review Entrepreneur China 155

reidhoffman.org

NOVEMBER 12, 2013

Friendster’s valuation set the tone for the entire social networking space. we had no revenue. You may happen to emphasize the right points that pique an investor’s interest, but you shouldn’t leave your financing up to chance. Second, understand the broader financing climate. Investors see a lot of pitches.

Entrepreneur 111

Entrepreneur Revenue Viral Networking 111

Up and Running

OCTOBER 3, 2018

Whichever type of plan you choose, remember that a business plan is a living document. Financial Summary: Explain your business model, startup costs, revenues, and liabilities to the company. Others predict Automated Valuation Models will provide more sophisticated revenue and expense information, possibly replacing financial analysts.

El Paso 61

El Paso Business Plan Technical Review Forecast 61

View from Seed

OCTOBER 15, 2014

Regardless, this document is a viable alternative to creating decks at the seed stage, and we wanted to deconstruct what that might look like below. Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Up and Running

SEPTEMBER 20, 2021

This is all incorporated into a document called a Cap Table. . For instance, the cap table will help you with various possibilities while running business activities like available options and pre-money valuations faster. Here is an example of a cap table after a round of funding, with a pre-money valuation of $1 million.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

ConversionXL

APRIL 12, 2017

No, the first 2% is more valuable in terms of revenue. Create a revenue forecast before you even run the experiment. You need to track the right revenue goals. The CEO doesn’t care about his website, he cares about his valuation (i.e. Sell CRO by calculating the valuation increase. Valuation increase?

San Antonio 86

San Antonio Metrics B2B Analytics 86

Austin Startup

AUGUST 20, 2017

Keep the valuations consistent with company progress. Messy cap tables can come back to haunt you when you do a financing or sell the company. The bottom line is that the pedigree of your investors will have much to do with your ultimate valuation and with your enjoyment of the startup experience. Not really.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

Cracking the Code

JULY 6, 2007

I was surprised today when I went through the NetSuite IPO filling (S1) to see that it looked very much like any Enterprise software document - not a single mention of churn or % of recurring revenues. Minor adjustments can be made based on faster cash payments and one time revenues, but the key focus should be MRR.

Software Review 66

Software Review Metrics Valuation Technical Review 66

Up and Running

JUNE 14, 2017

The point tracking and documentation system would be managed manually by my team on the back end. But when I ran the numbers, the revenue from just the first three months from the 150 who were interested in premium would cover the investment and more. They matched buyers with these businesses manually on-demand.

Technical Review 96

Technical Review Distribution Redemption Demand 96

Up and Running

JULY 22, 2019

Be sure to demonstrate its potential by clearly documenting key performance indicators, highlighting key customers, and demonstrating realistic revenue projections. If you take less money at a lower valuation, you can then prove the execution of your business and raise additional rounds at sequentially higher valuations.

Canada 78

Canada Early Stage Valuation Finance 78

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

abovethecrowd.com

JUNE 2, 2021

The banker’s even brag in marketing documents about this “achievement.” (see The punchline of Chris’ argument is in the highlighted box, where he argues Procore is better off (having done an IPO and “as a result” of choosing the IPO), because Procore ended up with a valuation the day after the IPO of 20.5X see below).

IPO 82

IPO Customer Matching Silicon Valley 82

abovethecrowd.com

JULY 10, 2014

On June 18, Aswath Damodaran , a finance professor at NYU’s Stern School of Business, published an article on FiveThirtyEight titled “ Uber Isn’t Worth $17 Billion. Financial models, especially valuation models, are interesting in that they can be particularly precise. This is well documented and understood.

San Francisco 111

San Francisco San Jose Marketing Technical Review 111

Startup Professionals Musings

APRIL 14, 2010

billion to work across 731 financing deals with US startups, a 50% increase over Q1 2009. To me, this indicates that venture capitalists (VCs) are looking for business, but they are clearly moving away from early-stage (pre-revenue) deals. Don’t try to talk your way to a deal before you have the documentation.

Venture Capital 123

Venture Capital Elevator Pitch Silicon Valley Massachusetts 123

Feld Thoughts

SEPTEMBER 20, 2013

After all the speculation about valuation, who owns what, what it’ll price at, how much money will be made, is Twitter growing or shrinking, what is a tweet after all, will their stock symbol be TWIT?, If the SEC didn’t agree with your auditors on revenue recognition, you’d end up in a crazy escalating set of discussions.

SEC 142

SEC IPO Investment Bankers Valuation 142

VC Cafe

MARCH 27, 2022

Yuga Labs, the team behind the Bored Ape Yacht Club (BAYC), announced earlier this week that it had raised $255 million seed round led by A16Z at a $4 billion pre valuation. Yuga Labs Pitch Deck: BAYC founders project $455M NFT revenue (2022) from Pitch Decks. Decentralised tech, centralised ownership?

Cofounder 179

Cofounder Venture Capital Equity 179

The Next Web

AUGUST 14, 2013

When we went out to raise money, we raised with only a couple thousand dollars in monthly recurring revenue. But we had a solid product, strong weekly revenue growth (10% week over week), and two distribution/marketing channels that were already paying dividends. What Does Traction Look Like? Traction is different for every product.

Founder 142

Founder Incubator Cofounder Accredited Investor 142

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

Up and Running

APRIL 11, 2016

More importantly, it is a document that you can provide to lenders or investors to clearly illustrate not only your direction but where you are and how you got there.” Step 5: Getting financed. Real estate agent Jamal Asskoumi, took the finances for his business from personal savings. “If How to Name Your Company.

Reputation 60

Reputation Cofounder Naming Business Plan 60

crowdSPRING Blog

APRIL 15, 2012

While much of the literature on succession planning tends to be about long-term legal planning as well as the importance of valuation, buy/sell agreements, and tax and estate planning, my advice is that you first focus on what will happen tomorrow if you don’t have any plan already in place. ” Throne, you say?

Startup 94

Startup Valuation Small Business Database 94

Software By Rob

APRIL 2, 2014

With SaaS businesses the majority of revenue will be through monthly, quarterly or annual billing recurring payment plans. Ensure they document everything they do in detail. As a general rule of thumb, any passive income stream in an online business will attractive a premium valuation. Choose your payment processor carefully.

Affiliate 67

Affiliate Valuation Reputation Sales 67

pandodaily.com

NOVEMBER 29, 2012

Lastly, seed-stage entrepreneurs who have pushed for the maximum valuation possible haven’t done themselves any favors. Meanwhile, their seed investors aren’t particularly incentivized to get them a Series A that crams the previous valuation down. Source VentureBeat ]. - November 29, 2012. Source GigaOM ]. -

Technical Review 93

Technical Review Silicon Valley Incubator Syria 93

Growthink Blog

OCTOBER 5, 2016

Slow moving and growing companies are valued at very low multiples to their revenues and cash flows, while those possessive of strong brands and proprietary technology (ideally both!), The most prized, but often overlooked asset of any organization is its capacity to change and innovate. On the refreshing of its brand.

Silicon Valley 63

Silicon Valley Valuation Hosting Security 63

Software By Rob

APRIL 2, 2014

With SaaS businesses the majority of revenue will be through monthly, quarterly or annual billing recurring payment plans. Ensure they document everything they do in detail. As a general rule of thumb, any passive income stream in an online business will attractive a premium valuation. Choose your payment processor carefully.

Affiliate 27

Affiliate Valuation Reputation Sales 27