Startup Professionals Musings

JUNE 21, 2020

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Long-term stability requires revenue growth and profit. Both have worked. Traditionally, it was simple.

Revenue 434

Revenue Valuation Viral Retention 434

Gust

OCTOBER 18, 2011

This is the first of a six part series on different methods used by angel investors to arrive at pre-money startup valuations. It is one of the most useful methods for establishing the pre-money valuation of pre-revenue startup ventures. Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in

Valuation 174

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

YoungUpstarts

AUGUST 18, 2020

While this “balance sheet” valuation of your company overlooks important value factors such as revenue and earnings potential, it is a good place to start in determining the actual material value of physical property. Look at Revenues. Another way to do this would be to look at price/earnings (P/E) data.

Balance Sheet 165

Balance Sheet Valuation Software Review .Net 165

Gust

NOVEMBER 1, 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. It is one of the useful methods for establishing the pre-money valuation of pre-revenue startup ventures. Post-money Valuation = $ 2.125 million.

Venture Capital 161

Venture Capital Valuation Pre-Money Valuation Post-Money Valuation 161

Startup Professionals Musings

MAY 14, 2023

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 258

Burn Rate Hockey Stick Management Salary 258

VC Cafe

JUNE 10, 2022

According to new research by Pitchbook , the trickle down effect has already started in seed and series A startups with round sizes and valuations shrinking in size compared to 2021. But recently those round sizes and valuations have tumbled to about $10 million and $50 million, respectively, he said. Apple Roomplan API.

Valuation 151

Valuation Marketing Venture Capital 151

Austin Startup

APRIL 25, 2017

Revenue needs to grow 20x, and margins must expand dramatically. I won’t dive into cost structure in this blog post, but let’s think through how Snap could grow revenue 20x. I won’t dive into cost structure in this blog post, but let’s think through how Snap could grow revenue 20x. How can one justify a $20B valuation for Snap?

Valuation 48

Valuation Technical Review Forecast Social Network 48

View from Seed

NOVEMBER 18, 2020

You can read various articles out there which will give you the cursory facts about Airbnb like their overall revenue or profitability or how their business has faired here in 2020 in the COVID environment. But ops & customer support is another 17-20% of revenue and arguably you couldn’t run the business if you took that away.

North America 401

North America IPO Prospectus Europe 401

Gust

NOVEMBER 15, 2011

The Risk Factor Summation Method the fifth methodology for estimating the pre-money valuation of pre-revenue companies we have described in recent posts. Readers may have noted that both the Scorecard Method and the Dave Berkus Method considered a narrow set of important criteria for investment in arriving at a pre-money valuation.

Valuation 102

Valuation Pre-Money Valuation Ohio Early Stage 102

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. This calculator uses 25 questions to size up the progress of the new venture and calculate a pre-money valuation for investment purposes.

Valuation 87

Valuation Pre-Money Valuation Venture Capital Technical Review 87

Both Sides of the Table

SEPTEMBER 28, 2014

So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000. But those of us with longer memories remember that the revenue line can move south very quickly when the market overall turns south. Gross burn is the total amount of money you are spending per month.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

AUGUST 19, 2020

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 310

Burn Rate Hockey Stick Salary Angel Investor 310

Startup Professionals Musings

SEPTEMBER 16, 2023

Who would not want to join the unicorns (recent startups with a current valuation of over $1 billion)? Before you bring on partners, develop intellectual property, raise capital, or generate revenues, you need to establish an official business entity. Incorporating a business entity early through online services.

Intellectual Property 261

Intellectual Property Entrepreneur Angel Groups Social Media 261

YoungUpstarts

NOVEMBER 2, 2020

REASON 4: Digitally Driven Companies Have Greater Revenue Growth. A study by the Aberdeen Group found that the top 20 percent of companies as measured by their “quality of digital customer experience” enjoyed an average year-over-year increase in revenue of over 35 percent, compared to a 7.7 percent average for the rest.

Valuation 264

Valuation Technical Review Revenue Operations 264

The Startup Magazine

AUGUST 11, 2023

Analysts perform a valuation of the company in question before the beginning of any round of funding. The management of a company, its established track record, the size of the market, and the level of risk all play a role in determining a company’s valuation. What is the Evaluation of the Funding?

Seed Stage 125

Seed Stage Technical Review Early Stage Due Diligence 125

David Teten

AUGUST 20, 2019

A new wave of Revenue-Based Investors are emerging who are using creative investing structures with some of the upside of traditional VC, but some of the downside protection of debt. Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Realistic projections.

Revenue 60

Revenue Cofounder Founder Venture Capital 60

SiliconHills

NOVEMBER 9, 2023

Startups’ Valuations are down, and entrepreneurs must do more with less money and focus on their core business to become profitable.

Valuation 127

Valuation Demand Startup Revenue 127

Both Sides of the Table

JUNE 28, 2018

How could Bird really be worth the reported $2 billion valuation that I read about in this press? While I promised not to comment on the exact valuation you can assume that it is very large and perhaps the fastest rise from zero to what some have called a “unicorn” valuation. Forget the valuation?—?I

San Francisco 256

San Francisco Valuation Technical Review Los Angeles 256

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. Dave’s valuation model first appeared in a book published by Harvard’s Howard Stevenson in the middle nineties. Add to Pre-money Valuation. Zero to $0.5

Valuation 79

Valuation Pre-Money Valuation Intellectual Property Southern California 79

VC Cafe

OCTOBER 23, 2022

The CEO shared the revenue target for the year at X, and the revenue target for next year at 3X. One of the board members asked a simple question: “Why is revenue our North Star KPI? One of the board members asked a simple question: “Why is revenue our North Star KPI?”

Metrics 179

Metrics Revenue B2C Portfolio 179

ReadWriteStart

JANUARY 28, 2022

This article will assist you in gaining a fundamental understanding of equity valuation, kinds of equity, and other related topics. The market regards equity as an ownership “share” in a corporation’s income revenue stream. Importance of equity valuation. Select an appropriate valuation method.

Valuation 108

Valuation Equity Warrant Common Stock 108

Feld Thoughts

JULY 9, 2019

This was before the IPO Summer of 2019 when all conventional valuation metrics have entered the land of “suspension of disbelief” which is short-term good and long-term well-we-will-see-…-eventually. We ended up talking about using Gross Profit, instead of Revenue, to do valuation analysis.

Revenue 179

Revenue Valuation .Net IPO 179

YoungUpstarts

NOVEMBER 19, 2020

EBITDA is the most important profitability metric to consider as many valuations are based on a multiple of this metric. Generally, companies sell for either a percentage of revenues or a multiple of EBITDA. That being said, it makes sense that when business is booming, your valuation will be higher.

Exit Strategy 246

Exit Strategy Intellectual Property Valuation Metrics 246

Startup Professionals Musings

NOVEMBER 28, 2020

Who would not want to join the unicorns (recent startups with a current valuation of over $1 billion)? Before you bring on partners, develop intellectual property, raise capital, or generate revenues, you need to establish an official business entity. Incorporating a business entity early through online services.

Intellectual Property 404

Intellectual Property Startup Angel Groups Social Media 404

Both Sides of the Table

MAY 28, 2018

There are many things a VC is looking for in reviewing your business plan but beyond things the like the quality of revenue, margins, OPEX and CAPEX there’s a really simple rule I call, “Cash In, Cash Out, Milestones Achieved.” Every VC knows that the amount you raise is often a proxy for your valuation. Happy raising.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

A Smart Bear: Startups and Marketing for Geeks

MARCH 21, 2017

Revenue multiples, profit multiples, premium over the previous financing — these are metrics used by sellers to help determine a minimum acceptable price. Even for startups, it takes years for a new product to become good enough to demand many millions of dollars in revenue.). Yet mobile advertising revenues were paltry.

Balance Sheet 242

Balance Sheet Vertical Acquisition Revenue 242

VC Cafe

SEPTEMBER 26, 2022

ValuatIon should be a function of value, not ego. Kawasaki’s Law of Pre-Money Valuation: for every full-time engineer, add $500,000; for every full-time M.B.A., But valuations, especially those in the private market, are not necessarily a predictor of growth/ success. Our goals, their goals. subtract $250,000. 9M Seed: $20M ?

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Growthink Blog

MAY 20, 2011

So, Mike tells me he wants to raise a first round of venture capital based on a $100 million valuation. Getting a $100 Million valuation is impossible for a startup. In fact, getting above a $10 Million valuation is also virtually impossible unless you have at least some traction (e.g., Maybe you have $1 million in revenues.

Venture Capital 109

Venture Capital Valuation NDA Non-disclosure Agreement 109

Steve Blank

SEPTEMBER 5, 2018

Tech IPO prices exploded and subsequent trading prices rose to dizzying heights as the stock prices became disconnected from the traditional metrics of revenue and profits. And if the company does go public, the valuations are at least 10x of the last bubble. Some have labeled this period as irrational exuberance.

Lean 335

Lean Burn Rate Startup IPO 335

Startup Professionals Musings

MARCH 25, 2023

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Long-term stability requires revenue growth and profit. Both have worked. Traditionally, it was simple.

Valuation 235

Valuation Revenue Viral Retention 235

Berkonomics

JANUARY 3, 2013

Most every business can take advantage of continuing, recurring revenues from its customer base. Sometimes, products are designed to make all of their profit upon the recurring revenues from supplies or support. Usually that amount exceeds 50% of total revenues, and is often much more.

Revenue 79

Revenue Software Review Vertical Valuation 79

Steve Blank

JUNE 27, 2017

Its employees and investors don’t depend on an existing revenue stream. Uber – current valuation >$70 billion – knew the day they started that their ridesharing service violated the law in most jurisdictions. Airbnb – current valuation $31 billion – allows people to rent out their homes, rooms or apartments to visitors.

Startup 275

Startup New York City Valuation Distribution 275

The Startup Magazine

FEBRUARY 21, 2024

As an investor, these experiences have honed my ability to see beyond spreadsheets and valuations, to the core of what makes businesses thrive: the people, the vision, and the relentless pursuit of excellence. Are there new revenue streams you can tap into? It is also the time to take a hard look at your business model.

Technical Review 133

Technical Review Due Diligence Bankruptcy Intellectual Property 133

Startup Professionals Musings

SEPTEMBER 29, 2018

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 223

Burn Rate Hockey Stick Startup Salary 223

SoCal CTO

FEBRUARY 2, 2011

Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. Bill Payne is an expert on how early-stage investors should look at valuation. He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. What are they really looking for?

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

Startup Professionals Musings

OCTOBER 14, 2016

The fact is that valuations are largely set by top venture capital investors and financial firms, and they all have their own proprietary formulas for assigning value. If your new venture is still in the idea or development stages, don’t even think about a high valuation. You have to earn a billion-dollar valuation, not declare it.

Intellectual Property 120

Intellectual Property Valuation Merger Exit Strategy 120

VC Cafe

AUGUST 2, 2022

billion valuation) to invest in the Metaverse and build the future of digital entertainment Epic owns Fortnite, one of the most popular multiplayer games, enabling users to interact with each other online in an immersive way to play, socialise, attend to virtual concerts. billion revenue in 2021 for Epic Games and was played by 83.3

IP 206

IP Cofounder Valuation Acquisition 206