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. You need to know why and how they invest, and then focus on the ones who are the best match for your startup.

Angel Investor 322

Angel Investor Valuation Syndicate Syndication 322

Berkonomics

AUGUST 3, 2023

My experience with early valuations by founders for friends… I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round and had to “clean up” the cap table more than a few times over the years. Professional angels: This is the arena where I work and play.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. Myth #3: Take the Highest Valuation You Can Get. I was wrong.

Finance 205

Finance Silicon Valley Valuation Startup 205

K9 Ventures

JUNE 5, 2015

Low supply of companies with traction drove the valuations and deal sizes up. The risk here is what I refer to as the curse of over-capitalization. The Venture Capital industry as a whole does a terrible job of giving things the right name and so we end up keeping the same name, but changing the meaning out from under it.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Steve Blank

MARCH 31, 2014

As the venture capital business has come roaring back in the last 5 years, startups are awash in available capital. Companies horde cash and squeeze the most revenue and margin from the money they use. Instead of measuring success in dollars of profit, …firms focus on measuring capital efficiency.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

Steve Blank

FEBRUARY 10, 2016

Your product and company vision needs to match your appetite for funding. And know that just because a venture failed doesn’t mean that you’re a failure. He stressed that your product and company vision needs to match your appetite for funding: One thing that we learned very early on was, have a plan for fund-raising. …

Silicon Valley 120

Silicon Valley Ohio Columbus Entrepreneur 120

Steve Blank

JULY 15, 2010

If you take funding from a venture capital firm or angel investor and want to build a large, enduring company (rather than sell it to the highest bidder), this isn’t the decade to do it. The collapse of the IPO market and dysfunctional math in the venture capital community has stacked the odds against you. Here’s why.

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Seeing Both Sides

JULY 21, 2014

As a result, the full revenue for each deal was recognized in that quarter as soon as the software was shipped. This allowed our revenue to skyrocket from $1.8 But the downside to our business model was that we did not have hardly any recurring revenue. . I later came to realize that r ecurring revenue is magic.

Revenue 54

Revenue Valuation Churn Rate Portfolio 54

Cracking the Code

NOVEMBER 10, 2009

Cloud accounting is all about matching revenue and costs to consumption…well, except for professional services! In regards to calculatimg the "Magic Number" - should the amount included as sales and marketing costs match the length of the sales cycle? Detailed SaaS Spreadsheet (Valuation and CAC benchmark).

Software Review 48

Software Review Cloud Technical Review Sales Cycle 48

Startup Professionals Musings

MAY 13, 2016

The first step is to set your criteria, including a match for your sector type and stage, and then proactively seek out and contact the best candidates: Review profiles on professional social media sites. Friends and family are key at the idea and early development stages, when you have minimal business valuation.

Stealth 120

Stealth Startup Angel Investor Bootstrapping 120

Berkonomics

JUNE 8, 2017

It is most common to greatly overprice such a round of financing, valuing the enterprise well above what it may be worth at the moment for friends or related investors who do not have the sophistication or willingness to challenge the valuation. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Both Sides of the Table

NOVEMBER 4, 2009

Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation. Ventro was trading at $8 billion on sub $2 million of revenue. They raised $5 million in their B round. For most people it’s learn. It was 1999.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

The Equity Kicker

AUGUST 19, 2015

If you read this Techrunch post profiling 50 of the current YC companies you will notice that many of them are up and running with customers and revenues. Today, most new YC companies have been operating for a year or longer and have customers and revenue before starting. Hence they back companies with more ambition.

Later Stage 60

Later Stage Private Equity Venture Capital Valuation 60

Steve Blank

APRIL 1, 2020

Your revenue plans are no longer valid. What’s your monthly cash burn at your new low revenue level? The CEO should dial through as many of the largest existing customers to get a firsthand understanding of the magnitude of any revenue shortfall. Others are cutting their valuations. How many months of cash do you have?

South Korea 333

South Korea Salary Business Model China 333

This is going to be BIG.

NOVEMBER 7, 2011

Valuations. There are a ton of companies being funded at $500+ million valuations--seriously limiting exit opportunities. Facebook is doing billions in revenues. LinkedIn has great revenue growth. Are their valuations justified? The have actual revenues that are growing. stock market." A bubble burst?

Angel Investor 104

Angel Investor Valuation Startup Revenue 104

Ben's Blog

MARCH 24, 2011

Since so many distinguished people report a broad variety of qualitative bubble signs, let’s attempt to pattern match the quantitative data. As we do so, keep in mind that the relevant bubble statistic is not valuation. High valuations are fine if the underlying value is there. Venture capital flows.

Technical Review 78

Technical Review Venture Capital Valuation Database 78

Berkonomics

JANUARY 20, 2010

It is most common to greatly overprice such a round of financing, valuing the enterprise well above what it may be worth at the moment for friend or related investors who do not have the sophistication or willingness to challenge the valuation. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Up and Running

AUGUST 19, 2014

And what have been the pros and cons of taking venture capital? I’m impressed when entrepreneurs know their numbers inside and out and are realistic about their valuations. Entrepreneurs impress me when they demonstrate a proven revenue stream before asking for capital. What impresses angels? Tweet This Tip.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

Steve Blank

FEBRUARY 26, 2020

There are two reasons to raise money: You have a killer idea that is only partially validated, that you think can get to $50M+ of revenue in 5 years with 80%+ gross margins (if margins are lower, you need a lot more revenue)and you need money to get to product-market fit, or. Not all startups need outside investment to grow.

Cofounder 429

Cofounder Seed Stage Valuation Metrics 429

Steve Blank

NOVEMBER 5, 2009

This post describes how companies using the Customer Development model can increase their credibility, valuation and probability of getting a first round of funding by presenting their results in a “Lesson Learned&# venture pitch. Get back up and running.

Customer Development 262

Customer Development Developer Customer Silicon Valley 262

reidhoffman.org

NOVEMBER 12, 2013

Friendster’s valuation set the tone for the entire social networking space. Neither is a particularly good backdrop for trying to raise capital, because. we had no revenue. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue. Investors see a lot of pitches.

Entrepreneur 111

Entrepreneur Revenue Viral Networking 111

VC Cafe

NOVEMBER 30, 2022

Companies have raised record amounts of venture capital money in 2020 and 2021. According to Pitchbook’s Q3 2022 European VC Valuations Report , Europe minted 40 unicorns in the first 3 quarters of 2022. It matched the rate of unicorn creation in Q1 and Q2, before dipping in Q3, which only saw 4 new unicorns created.

Europe 97

Europe Balance Sheet Valuation 97

dondodge.typepad.com

JANUARY 15, 2011

The entrepreneur expects the company to be worth many times this valuation and so does the investor. The key is to have several VCs or investors competing for the deal to arrive at a "fair" valuation. So they will give you a pre-money valuation somewhere around the amount you raise. That is how much you should raise.

Equity 40

Equity Employee Dilution Valuation 40

www.paulgraham.com

OCTOBER 23, 2010

They all use the same simple-minded model.They seem to have approached the problem by thinking about how todo database matches instead of how dating works in the real world.An Venture investments are usually described in terms ofthat number. The next round of funding is the one in which you might deal with actual venture capital firms.

Startup 105

Startup Cofounder Software Stock 105

www.currentlyobsessed.com

MAY 28, 2010

Snapvine was my first experience being in the driver’s seat of the fund-raising process, and in the 3 years prior to our acquisition we raised over $10mm in venture capital. Valuation is an important aspect of VC deal terms, and a major determinant of your ultimate outcome. Or is it?

Valuation 42

Valuation Channel Pre-Money Valuation Term Sheet 42

Austin Startup

MAY 19, 2018

The number of those VCs who didn’t know our stage or who had some other part of their thesis that we didn’t match was also staggering. It drives up valuations, creates interest in the category among other investors, and in a new space a well funded competitor is usually out there educating audiences about the very problem the startup solves.

Founder 75

Founder Early Stage Software Review Deal Flow 75

This is going to be BIG.

SEPTEMBER 7, 2012

In the late 90's, it wasn't surprising that companies with no revenue that were funded at 100 million dollar valuations didn't survive. What I'm not good at--or, rather, simply haven't done yet, is sit on a board for seven years helping a company go from $20mm in revenue to $100 million in revenue. Down from what?

Later Stage 99

Later Stage Down Round Pre-Money Valuation Early Stage 99

Ben's Blog

MAY 24, 2021

billion multi-stage venture capital firm focused on IT-related investments… I also serve on various investment committees, including for the St. Jude Children’s Cancer Hospital and the Stanford Medical Center, and teach entrepreneurship and venture capital at the Stanford Graduate School of Business.

SEC 36

SEC Accredited Investor IPO Technical Review 36

abovethecrowd.com

JUNE 2, 2021

Investment banks simply do not match supply and demand. Electronic order matching systems that match all supply and demand for securities to determine a fair market price have been used in our financial markets since the early 1980s (approaching 40 years).

IPO 82

IPO Customer Matching Silicon Valley 82