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. “Too Of the Inc. 5000 companies, only 6.5% raised from angels.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

SEPTEMBER 18, 2014

On the phone … Me: So, you raised venture capital? There were no metrics. Him: On metrics. Revenue multiple? If we priced it based on any metrics your company would likely be worth less than 7 figures at your A round. Maybe an IPO – who knows? We raised a seed round. About $1 million.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Steve Blank

SEPTEMBER 14, 2009

Over the same 30 years, Venture Capital firms have honed their skills and strategies to match Wall Streets needs to achieve liquidity for their portfolio companies. One of the biggest mistakes entrepreneurs make is misunderstanding the role of venture capital investors. What Do VC’s Do?

Silicon Valley 217

Silicon Valley IPO Technical Review Venture Capital 217

Both Sides of the Table

DECEMBER 27, 2011

I find it amusing when a journalist writes an article about a prominent startup (either privately held or preparing for an IPO) and decries that, “They’re not even profitable!” They have have raised $2-3 million, built a product that has some amount of market traction and got to annualized revenues of around $1 million.

Startup 418

Startup Revenue Technical Review Flash 418

Cracking the Code

MARCH 28, 2022

While the average forward revenue multiple has declined slightly since its February 2020 peak (19x), it’s still higher today than last year at 17x vs 15.8x The cloud IPO market has also been very active with 32 IPOs vs. 17 in 2020. 60% of the cloud IPOs had a market cap of $5B+ vs. only 28% this year. in Sept 2020.

Global 62

Global Europe Software Review 62

VC Cafe

AUGUST 3, 2023

Whether it’s gaming, commerce/ DTC or creator economy, there are many Israeli startups selling at over $10M and even $100M in annual revenue. B2C Venture Capital Investments in Israel To the most part, Israeli VCs shy away from B2C startup investments. Crossed the $200M in revenue and reached over 400 million unique users.

B2C 148

B2C Generative AI Artificial Inteligence 148

BeyondVC

APRIL 4, 2018

Look at the Dropbox IPO which priced above its initial value and came out white hot at the end of one of the worst weeks in stock market performance. Couple that with Mulesoft being bought for 21x TTM revenue ( see Tomasz Tunguz analysis ) at $6.5 Their growth to over $509mm of revenue from $281mm 2 years ago is a case in point.

Cloud 60

Cloud Agile Architecture Azure 60

Cracking the Code

JULY 6, 2007

SaaS business metrics: why are they different? 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. Different models require different performance metrics.

Software Review 66

Software Review Metrics Valuation Technical Review 66

Both Sides of the Table

JUNE 5, 2011

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. million post-money valuation with no revenue. The former is much more likely than the latter. I raised my A round at a $31.5

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Ben's Blog

MARCH 24, 2011

Let’s look at public market comparables and venture capital flows to see if we can find a match. Venture capital flows. A basic driver for a private technology market bubble is the over-supply of venture capital into the sector. If too much venture capital hits the streets, valuations will bubble up.

Technical Review 78

Technical Review Venture Capital Valuation Database 78

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Cracking the Code

MAY 25, 2010

A few highlights from the different keynotes and speakers On top of Jason, we also had the chance of having many great speakers at the event and here are a few quotes and notes that I have taken during the different keynotes and panels: Joe Payne, CEO of Eloqua moderated the panel on Revenue Performance Management. ipo process.

Software Review 74

Software Review Cloud IPO Jordan 74

Cracking the Code

NOVEMBER 10, 2009

While poised with a limited number of transactions this year, the world of public Cloud Computing and SaaS companies has been marked by two events in the past few months: the acquisition of Omniture by Adobe and the high profile IPO of LogMeIn, a leading provider of PC remote access and support with a very interesting freemium model.

Software Review 48

Software Review Technical Review IPO Cloud 48

reidhoffman.org

NOVEMBER 12, 2013

Neither is a particularly good backdrop for trying to raise capital, because. we had no revenue. In a single year, the classic general partner in a venture firm is exposed to around 5,000 pitches; decides to look more closely at 600 to 800 of them; and ends up doing between 0 and 2 deals. Investors see a lot of pitches.

Entrepreneur 111

Entrepreneur Revenue Viral Networking 111

Austin Startup

MAY 29, 2019

Brands would get higher margins but lower revenues while retailers would get lower margins but higher revenues (generally speaking, with Apple being a notable exception owning both sides of that for much of their sales).

Networking 48

Networking Fractional CTO CTO Hire B2C 48

Cracking the Code

MARCH 10, 2008

I found this approach interesting, but it seems to me that gross margin is a more relevant benchmark than revenues, given that the GM of saas companies varies by type of application and size of the company (for example NetSuite went from about 50% GM three years ago to close to 70% today).

Sales 79

Sales Software Review Marketing Technical Review 79

Cracking the Code

FEBRUARY 4, 2008

2007 was a turning point for the SaaS industry with the successful IPOs of NetSuite, SuccessFactors, DemandTec, Salary.com, Aprimo and Constant Contact. This introduction was also the opportunity to illustrate the amazing growth of our software and saas portfolio in the past years, with aggregated revenues reaching $1.2B

Software Review 48

Software Review South Korea IPO Portfolio 48

Cracking the Code

OCTOBER 10, 2008

Save Asia for post-IPO Single instance, multi-tenant, single datacenter - Have only one version of the code in production. Be prepared to cross the desert - SaaS requires R&D and sales expense up front for a multi-year stream of revenue, so it demands enough investment capital to fund 4+ years of runway. Great list!

Software Review 48

Software Review North America Europe Metrics 48

K9 Ventures

APRIL 9, 2014

Threshold for an IPO is higher Ten years ago, if you had $20M in revenue you were ready to go public. If you have <$100M in revenue, you’re probably going to stay private. These companies now end up raising more capital in private rounds than they raised in public offerings 10-15 years ago.

Mezzanine 134

Mezzanine Seed Stage Early Stage IPO 134

Austin Startup

MAY 19, 2018

Don’t boomerang founders If you have specific metrics you look for in early stage companies. When founders get told to “come back when you have X customer or N revenue”, sure some of them will, but probably not the ones you’d really want to invest in. There is no such thing as “not right now” there is just “yes” and “no”.

Founder 75

Founder Early Stage Software Review Deal Flow 75

Startup Lessons Learned

AUGUST 24, 2009

Despite all the energy invested in talking to authors about the size of their platform, very few gatekeepers have a rigorous set of metrics for measuring it. The problem is that there are no other metrics they can look at to judge the content of a book to know if it’s worth reviewing. What is the right revenue model?

San Francisco 113

San Francisco Lean Technical Review Distribution 113

Pascal's View

NOVEMBER 15, 2011

Dan Primack posted an article in Term Sheet last week titled Yelp This: IPO Market Is Killing It. equity capital markets for emerging growth companies with market capitalizations below $500 million are structurally broken and systemically dysfunctional. .” Between 1991 and 200 80% of IPO’s raised $50mm or less.

IPO 31

IPO Term Sheet Marketing United States 31

Growthink Blog

MAY 23, 2011

With this seed capital – more often than not totaling between $100,000 and $1,000,000 - the company accomplishes a number of key technical milestones, gets a beta customer or two, and then goes on a "road show" to venture capitalists around the country for capital to “scale” the business. There are a lot of dark, hard days.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

K9 Ventures

OCTOBER 10, 2017

You see, Dan knows more about venture than most people; and if Dan isn’t aware that “pre-seed is a thing,” then I haven’t done a good enough job of explaining to the world what I and K9 do! If the Micro-VCs are looking for Series A-like metrics, what does a company do when it’s just getting started? Series A is the new Series B. (~6M-$15M

Seed Stage 82

Seed Stage Finance Later Stage Equity 82

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.] and walked through each proposed term and why it is or isn’t important. times the investment.).

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Cracking the Code

SEPTEMBER 2, 2008

The Deutsche Bank report has a very interesting chart on the topic presenting the Free Cash Flow margins vs. the revenue growth four years post IPO for select software leaders: As you can see, with 20% Free Cash Flow margin and a 50% growth rate, Salesforce is well positioned in the pack! Venture Capital. (3). internet.

Software Review 48

Software Review Software Technical Review Cloud 48

David Teten

MARCH 2, 2013

I recently had an extensive debate with Tom about why and whether small funds (like mine, ff Venture Capital ) tend to outperform large funds (like his). I argue that, just as with hedge funds and mutual funds, the larger the venture capital fund, the more difficult it is to generate strong returns.

LP 114

LP Securities and Exchange Commission Silicon Valley Venture Capital 114

This is going to be BIG.

MARCH 30, 2015

Because most internet business concepts were not capable of productively employing tens of millions of dollars of venture capital does not mean they were bad ideas." Because companies today have way more revenues than the companies that went public or had huge up rounds back then. Each month, they''d tick up just a little bit.

Hockey Stick 60

Hockey Stick Valuation Startup Maryland 60

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? There were no metrics. Him: On metrics. Revenue multiple? If we priced it based on any metrics your company would likely be worth less than 7 figures at your A round. Maybe an IPO – who knows? On the phone …. We raised a seed round. About $1 million. Me: With a cap?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Feld Thoughts

SEPTEMBER 9, 2015

If private capital is no longer available in the future, these companies will seek a public offering or acquisition. I once was on the board of a company that had generated lifetime revenue of $1.5m I think you can call two of them as unicorpses and one of them a unicorpse with nothing left but dust where the bones should have been.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70

Gust

NOVEMBER 4, 2011

The company was relisted on AMEX, financial performance and traffic metrics improved, and its stock price climbed from about $2/share in July 2004 to $12/share cash offered a year later by FIM, a newly created unit of News Corporation.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

BeyondVC

DECEMBER 23, 2003

” My answer is quite simple-every company we invest in must have IPO potential (IPO potential as defined by non-bubble metrics) but along the way if someone makes an offer for the company because it is an attractive, rapid growth business, we can evaluate it appropriately.

Exit Strategy 68

Exit Strategy Balance Sheet IPO Valuation 68