SoCal CTO

FEBRUARY 2, 2011

A lot of my time is spent helping early-stage companies get to proof points so that they can raise capital. They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). Bill Payne is an expert on how early-stage investors should look at valuation.

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Both Sides of the Table

APRIL 26, 2016

profitable and companies like Amazon who chose to focus on growth > profitability were not losing money on each book sale (ie they were gross margin positive). But often this doesn’t tell the whole story because often companies are also spending money on PR and other marketing activities in order to support the sales process.

Metrics 150

Metrics Cost Acquisition Startup 150

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Flexible VC: Revenue -based. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Startup Professionals Musings

NOVEMBER 26, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Steve Blank

MARCH 17, 2020

Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month. If you’re an early stage company, that number may be zero. Subtract your monthly gross burn rate from your monthly revenue to get your net burn rate. Or you change sales strategy. Laying off people?

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

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

YoungUpstarts

SEPTEMBER 16, 2015

What’s critical for entrepreneurs to understand is that valuations for startups do not increase at a linear rate; they increase geometrically based on achieving the right milestones. The best entrepreneurs raise enough money to achieve a set of interim milestones and then raise capital again at a significantly increased valuation.

Valuation 100

Valuation Dilution Chicago Technical Review 100

Both Sides of the Table

NOVEMBER 14, 2017

As an early-stage VC I love this phase. Throughout the first year we made many fixes and saw our revenue base in these markets accelerate so we felt we were ready to attack Los Angeles, amongst the most important storage markets in the country.

Operations 286

Operations New York City Technical Review Startup 286

Startup Professionals Musings

JUNE 25, 2012

Just don’t quit your day job before your new company is producing revenue. After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. Friends and family. Commit to a major customer.

Technical Review 257

Technical Review Bootstrapping Venture Capital Incubator 257

Cracking the Code

OCTOBER 1, 2020

The company’s success has been largely driven by its developer-led freemium model, going from Series A funding to a valuation of $2.6B With COVID, we’re getting into a world with tighter budgets and likely longer sales cycles. It took us longer to get into revenue, but the freemium was a real accelerator for us.

Early Stage 62

Early Stage Open Source Development Team Review Security 62

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Berkonomics

MARCH 25, 2012

For those of us who’ve invested in early stage companies, especially technology startups, we have confronted a universal problem. There are many ways to project the value of a company for purposes of pricing an investment, but all rely upon the revenue and profit projections of the entrepreneur as a starting point.

Early Stage 128

Early Stage Valuation Revenue Internet 128

Startup Professionals Musings

MARCH 16, 2011

Just don’t quit your day job before your new company is producing revenue. After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. Friends and family. Commit to a major customer.

Technical Review 233

Technical Review Bootstrapping Startup Venture Capital 233

Both Sides of the Table

MAY 19, 2010

Greycroft is an early-stage VC. The “private sale” market phenomenon was started in France by Vente-Privee (literally means “private sale”) and was replicated in Germany by BrandsforFriends. Gilt Group is currently the largest private sale web site in US. Note that these are “gross” revenue numbers.

Partner 240

Partner New York City Cofounder Syndicate 240

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

The Equity Kicker

JUNE 4, 2014

the ecommerce companies or software companies that we invest in) and you have a $1m revenue run rate and 20%+ month-on month growth you will generally be in good shape. Companies with greater revenues and stronger growth are able to raise bigger rounds at higher valuations. If you’d like to apply to join us, get in touch.

Revenue 146

Revenue eCommerce Affiliate Valuation 146

David Teten

SEPTEMBER 23, 2017

In venture capital in particular, early-stage companies are often operating in frontier industries, where the rules are unpredictable and conventional analytic frameworks may be misleading. I previously posted a detailed presentation with sales technology tools useful for B2B sales. Pitchbot.vc 3) Originate investments.

Private Equity 60

Private Equity Venture Capital Equity Technical Review 60

Gust

JUNE 17, 2012

Just don’t quit your day job before your new company is producing revenue. After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. Friends and family. Commit to a major customer.

Technical Review 164

Technical Review Bootstrapping Venture Capital Incubator 164

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Better yet, the valuation of your enterprise is often higher than if the same investment were taken from a professional investor.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. Equally bad is professing no valuation estimate at all, asking investors to “make me an offer.” First priority is real revenue, customers and contracts.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Startup Professionals Musings

MARCH 1, 2010

Just don’t quit your day job before your new company is producing revenue. After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. Friends and family. Partner with beneficiary company.

Technical Review 149

Technical Review Bootstrapping Startup Venture Capital 149

View from Seed

APRIL 30, 2015

In many instances, you raise an institutional round to either fulfill a product strategy or go-to-market strategy or you’re increasing sales and marketing hires, so you have better visibility into what needs to happen in the next six, 12, 18 months. NVV: Let’s talk about the seed stage specifically. Traction and revenue?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Startup Professionals Musings

SEPTEMBER 30, 2011

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Berkonomics

NOVEMBER 11, 2021

This form of thinking has been unusually true during the current rise of social media platforms, where market share became the primary goal of a company, with revenues and profitability to follow later. It was true for Amazon and other visionary companies that grabbed market share during the early Internet era. But beware.

Angel Investor 62

Angel Investor Valuation Early Stage Venture Capital 62

Gust

OCTOBER 20, 2011

In 2011, the valuation of pre-revenue, start-up companies is typically in the range of $1.5–$2.5 Scorecard Valuation Methodology. Such comparisons can only be made for companies at the same stage of development, in this case, for pre-revenue startup ventures. million for pre-revenue companies.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

ReadWriteStart

SEPTEMBER 10, 2010

They already have several customers including some telcos, and are at about $350,000 in revenues. Because customer financing equals revenue, not equity. Why not go further, develop more valuation, customer experience, and really, deeply validate the business? You can get cash without diluting your ownership in the company.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Steve Blank

JUNE 15, 2011

A tech bubble is the rapid inflation in the valuation of public and private technology companies that exceeds their fundamental value by a large margin. Today, the signs of the new bubble are the Linked-In initial public offering (IPO), Facebook’s stratospheric valuation and the rapid rise of early-stage startup valuation.

Silicon Valley 327

Silicon Valley Stealth Valuation Mississippi 327

A Smart Bear: Startups and Marketing for Geeks

DECEMBER 16, 2014

Still… Now Slack has been valued at over a billion dollars, less than a year after launch, every month adding more than a million dollars of annual recurring revenue. “It’s not fair,” we all said to ourselves. Well, at least they had to toil for four years instead of two. They’re next!

Metrics 246

Metrics Early Stage Retention Revenue 246

Both Sides of the Table

JUNE 19, 2017

That is, how much should your company be willing to lose in cash every month as you make investments in staff and equipment that funds technology, sales, marketing and management. Gross burn is your cost base and net burn is the difference between your revenue and costs. If your revenue grows you can afford to increase your cost base.

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

Austin Startup

AUGUST 20, 2017

Early stage startups have to survive one day at a time and are often presented with limited choices of the moment that enable them to continue. At early stages you probably don’t have an assembly line and can’t clearly define any particular job. Keep the valuations consistent with company progress.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

Scalable Startup

JULY 20, 2013

We looked at several SaaS based systems for accounting, sales automation, calendaring, product management, scheduling our company airplane, travel, etc. Spell-guesser, auto-fill, travel, accounting, calculating company valuations, facebook, pinterest, dropbox, codecademy, me writing this blog are all managed by a SaaS platform.

Mobile 22

Mobile Hawaii Angel Investor Early Stage 22

Both Sides of the Table

APRIL 14, 2012

Did raising money at a $500 million valuation help secure the $1 billion deal? “it’s smart to use an impending investment valuation to drive a higher acquisition valuation” I would like to amend her statement slightly to read, “it’s smart to use an impending investment valuation to drive an higher acquisition.”

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

SoCal CTO

MAY 19, 2010

By way of background for the question, there’s a great post by Bob Aholt, a Pasadena Angel: An Angel Investor’s Thoughts on Valuation. For example, TCA’s evaluation criteria first bullet is: A market opportunity sufficiently large to create a business that can grow to at least $50 million in annual revenues. So get real.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

Austin Startup

JANUARY 25, 2020

I remember enjoying reading his book “ Delivering Happiness ,” the story behind how he led Zappos and drove it to a billion dollars in revenue before Amazon bought it. Having just moved to Austin from Boston, she thought adding African car sales could help, maybe thinking Africans looking for used cars can use it to find car deals.

Delaware 62

Delaware SEC New York City New York 62

Up and Running

JUNE 14, 2017

Early stage idea validation can be accomplished without building an application. 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. Here’s what I learned from launching my first app, Recycle Spotter: 1. Priorities change.

Technical Review 96

Technical Review Distribution Redemption Demand 96