Gust

DECEMBER 6, 2011

Depending on the company, important milestones may include being granted a patent, receiving a 510k FDA approval, completing a prototype, receiving positive customer feedback on a beta test, achieving first revenues, hitting the goal in annual revenues of $1 million , etc.

Angel Investor 179

Angel Investor Venture Capital Valuation Software Engineering 179

Gust

NOVEMBER 7, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. When a valuation range is provided, it could be as low as $480,000-$580,000 or as high as $36-44 million; so this tool is clearly not limited to use on pre-revenue companies.

Valuation 87

Valuation Pre-Money Valuation Venture Capital Technical Review 87

Gust

AUGUST 7, 2023

From your vantage point as the company’s leader—and perhaps its only employee—you can readily track the arrival and departure of customers, the growth or decline of revenues, and changes in profitability as costs rise or fall. When your startup is very small, it’s fairly easy to gauge its health.

Analytics 91

Analytics Metrics Revenue Employee 91

Gust

JUNE 17, 2012

Just don’t quit your day job before your new company is producing revenue. A related company may see the value of your product as complementary to theirs, and be willing to advance funding, which can be repaid when you develop your revenue stream. Friends and family. Partner with distributor or beneficiary. Commit to a major customer.

Technical Review 164

Technical Review Bootstrapping Venture Capital Incubator 164

Gust

OCTOBER 16, 2012

This means almost 1 out of every 5 startups have a product in development, whereas less than 10% are product ready, and even less are in revenue stage, which make up only 3%. Not surprisingly, many new startups across the world are in the development stage. Check back soon to read October’s edition of the map and trends analysis.

South Dakota 155

South Dakota Colombia Kentucky Hawaii 155

Gust

AUGUST 17, 2014

Keep these balanced and aligned between people (customers, employees) and process (quality, service, revenue), and keep the scope realistic (eliminating world hunger is too broad). No organization can manage more than 3 to 5 goals and priorities without becoming unfocused and ineffective. Segment the opportunity.

Entrepreneur 182

Entrepreneur Technical Review Angel Investor China 182

Gust

NOVEMBER 2, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. Best practice for angels investing in pre-revenue ventures is to use multiple methods for establishing the pre-money valuation for seed/startup companies.

Valuation 79

Valuation Pre-Money Valuation Intellectual Property Southern California 79

Gust

NOVEMBER 8, 2022

The most common failures are solutions looking for a problem, lack of a defined market, or an inadequate revenue model. I expect that should seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with major business model elements missing.

Business Model 91

Business Model Green Revenue Operations 91

Gust

OCTOBER 18, 2011

It is one of the most useful methods for establishing the pre-money valuation of pre-revenue startup ventures. The Venture Capital Method (VC Method) was first described by Professor Bill Sahlman at Harvard Business School in 1987 in a case study and has been revised since.

Valuation 174

Valuation Pre-Money Valuation Southern California Post-Money Valuation 174

Gust

JUNE 19, 2012

But in the real world, when you get to business numbers, sales are not accounts receivable and revenue isn’t income and people who read financial projections need to know that an apple is an apple, and not an orange. . Numbers are numbers, after all.

Startup 180

Startup Forecast Angel Investor Software 180

Gust

AUGUST 10, 2014

Aggressive revenue projections and growth rate. Revenue in the fifth year should be at least $20 million, with a growth rate average of 100% per year. In other words, revenue projections are not the place to be too conservative or wildly optimistic. Gross margins greater than 50%. Show red ink to match your funding request.

Liquidity Event 176

Liquidity Event Equity Venture Capital Exit Strategy 176

Gust

OCTOBER 16, 2012

This summer I conducted our third annual survey of the pre-money valuation of pre-revenue companies recently funded by angel groups in North America. For the first time, we asked for data from specific business sectors, as follows: All pre-revenue deals. Pre-revenue life Science, biotech and medical device deals. million).

Angel Groups 169

Angel Groups Valuation Pre-Money Valuation North Dakota 169

Gust

JUNE 3, 2012

I’ll try to offer some guidelines to address these issues, but I generally recommend you keep the day job until your new company is producing real revenue.

Entrepreneur 152

Entrepreneur Cofounder Angel Investor Salary 152

Gust

AUGUST 5, 2012

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Exit strategy.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Gust

FEBRUARY 2, 2014

The company now has more than 160,000 employees and revenues of $44 billion. As an entrepreneur, she grew EBay from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue, before moving on to HP. He built an overnight competitor to the U.S. Postal Service.

Entrepreneur 175

Entrepreneur Salary .Net Revenue 175

Gust

JULY 23, 2014

, answer all the standard questions (carefully, completely, thoughtfully and in good written English), provide all the financial figures (past investment, current burn, projected revenues, cash needed, etc.), Now comes the really tricky part: getting me to review all that stuff you just neatly uploaded.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Gust

JULY 8, 2012

Seed-stage means promising companies that don’t yet have a revenue stream, and may not yet have a proof of concept. Since the economic downturn started, neither angels nor VCs have given much attention to startups without a product and a revenue stream. For VCs, early-stage means customer revenue is less than $10M. Super Angels.

Early Stage 177

Early Stage Finance Seed Stage Entrepreneur 177

Gust

JANUARY 31, 2013

The first question is a fact-based analysis that involves reviewing Netflix’ public disclosures up until that time, determining the effects on revenue and earnings of the growth in hours streamed, etc.

SEC 158

SEC Prospectus United States Technical Review 158

Gust

JUNE 23, 2014

There’s also the opportunity to do some consulting with interested customers to provide needed revenue while the product is still under development. The best part is that all this is not a revenue drain. It’s never too early to start a dialog with customers, as long as you don’t mislead them about where you are in the cycle.

Startup 174

Startup Cofounder Social Media SEO 174

Gust

NOVEMBER 29, 2012

If not, and they have neither savings nor parents to help them out, they need to find a paying gig (either a traditional job, or a revenue-generating lean startup such as Travis Corrigan describes) to fund their living expenses while they get the next startup off the ground working nights and weekends.

Seed Capital 121

Seed Capital Entrepreneur Lean Revenue 121

Gust

JANUARY 5, 2014

Your revenue model has to make sense. Many of the Internet business plans I see these days say the service is free, and revenue will come later from a huge user base. I recently knew a founder whose sales pitch was always the next generation of his product, and he never understood why customers always decided to wait.

Business Model 171

Business Model Sales Customer Distribution 171

Gust

JANUARY 15, 2013

in Revenue Stage. New startups creation stages remained steady and in line with the rest of the year, with 13.1% in Concept Stage, 43.2% in Development Stage, 34.5% in Product Ready Stage and 9.2% The trend noticed last month of Product Ready companies declining appears to have dissipated as all stages regained their balance.

India 171

India United States Startup Restful 171

Gust

OCTOBER 12, 2011

To provide some reference points, I surveyed thirteen angels groups in North American to determine their recent experience in negotiating the pre-money valuation of pre-revenue companies. See the 2010 data reported here: Current Pre-money Valuations of Pre-revenue Companies. Pre-money Valuation of Pre-revenue Companies.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

Gust

JUNE 14, 2014

A significant change in stage, if that was one of the stated reasons for passing (such as “we only invest in post-revenue companies”). .” A major, public, positive event affecting the company. A direct re-recommendation from a highly trusted source who is aware of the earlier pass and recommends a re-look.

Early Stage 128

Early Stage Revenue Entrepreneur 128

Gust

SEPTEMBER 25, 2012

If we zoom into the US, we find California is the leading state across all stages, which includes products in concept, development, fully ready, and revenue. 28% of California startups have a product fully ready and 25% are in revenue stage. We look forward to presenting September’s startups and sharing the next trend map!

Brazil 134

Brazil India Startup Florida 134

Gust

NOVEMBER 3, 2013

Even a non-profit has to generate revenue (or donations) to offset operating costs. Don’t quit your day job until new revenue is flowing. Take heed of the words of an old country song, “if you don’t where you’re going, you might end up somewhere else.”. Business model doesn’t make money. Too little focus on marketing.

Intellectual Property 183

Intellectual Property Startup Viral Early Stage 183

Gust

JANUARY 15, 2013

They could punt on revenue indefinitely because their investment dollars were their revenue. Earlier, entrepreneurs didn’t need a real monetization strategy,” said Brian O’Malley, an early investor at Battery Ventures. They could fund their start-ups with funding versus customers. And this one: Part of the problem is simple math.

Due Diligence 119

Due Diligence Startup Angel Investor Early Stage 119

Gust

JUNE 22, 2014

There’s also the opportunity to do some consulting with interested customers to provide needed revenue while the product is still under development. The best part is that all this is not a revenue drain. It’s never too early to start a dialog with customers, as long as you don’t mislead them about where you are in the cycle.

Startup 125

Startup Cofounder Social Media SEO 125

Gust

AUGUST 19, 2012

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Project both revenues and expense totals for next five years, and past three years. You need data from industry experts like Forrester or Gartner for credibility. Business model. Implicit in this is the go-to-market strategy.

Exit Strategy 146

Exit Strategy Elevator Pitch Burn Rate Merger 146

Gust

NOVEMBER 22, 2011

At this stage, your startup better be selling a commercial offering, have price and cost validated, with significant customer sales and a real revenue stream. This normally means more then 30 employees, and more then $1 million in revenue. Lesser amounts remain in the angel realm. Growth stage. Exit stage.

Venture Capital 171

Venture Capital Investment Bankers Angel Investor Initial Public Offering 171

Gust

MARCH 19, 2014

Other reasons have to do with the fact that H1B visas (which is probably what you are talking about) are available only to foreign nationals who are already employed by an existing US company, and require documentation you are unlikely to have.

Venture Capital 122

Venture Capital Business Plan Green Entrepreneur 122

Gust

OCTOBER 26, 2014

In most cases there is a direct correlation between the quality of your decisions and the size of your revenue stream. Understanding your business totally will give you much better operational control. For minimum risk, you must understand fully this cause-and-effect correlation.

Bootstrapping 176

Bootstrapping Startup Merger Salary 176

Gust

DECEMBER 14, 2014

For example, more customer leads are predictive of more sales revenue later. Hold the lagging measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). Define a compelling scoreboard.

Entrepreneur 189

Entrepreneur Founder Revenue Startup 189

Gust

JULY 6, 2014

I tell new entrepreneurs not to quit their “day job” until they have real revenue. In fact, most startup founders pay themselves no salary for the first year or two, and investor money is hard to find. Going “from” rather than “to”.

Startup 183

Startup Salary Employee Entrepreneur 183

Gust

NOVEMBER 15, 2012

And there are others that people think are teeny little wannabes with a dozen or so employees…that have $25 million in highly profitable revenues with hockey stick growth and zero debt!

Seed Stage 131

Seed Stage Hockey Stick Cap Table Liquidation Preference 131

Gust

NOVEMBER 18, 2012

Particularly valuable are recurring revenues, like subscription amounts, that don’t have to be resold every period. NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M. This one doesn’t help NewCo just yet.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Gust

DECEMBER 18, 2012

We are also going revenue-first because we believe in privacy and we’re willing to trade a smaller, slower-growing audience for it. For us, mobile is not that place, which is why our new product is going to be launching web-first in the next couple months, with mobile as a companion app.

Web 144

Web Mobile Audience Government 144