Gust

OCTOBER 19, 2014

I always advise software startups to file patents to protect their “secret sauce” from competitors, and to increase their valuation. A lot of companies, like Lodsys above, buy up software patents that are over-broad, and hold startups hostage after the fact, through royalties and litigation.

Software Review 173

Software Review Software Technical Review Intellectual Property 173

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. Access to our 2010 and 2011 surveys can be found at 2011 Valuation Survey of North American Angel Investor Groups. 2012 Valuation Survey. pre-money valuation in US$ millions).

Angel Groups 169

Angel Groups Valuation Pre-Money Valuation North Dakota 169

Gust

JULY 12, 2012

In all four countries we met passionate entrepreneurs who were eager to discuss their exciting startups, as well as angel investors looking to support them. On Wednesday, April 18th, I gave a keynote speech on US Startup Valuation Trends for the 1st Irish Angel Meetup. We had a lovely time in Northern Ireland.

Community 121

Community Estonia Ireland Finland 121

Gust

JANUARY 25, 2016

Early-stage technology company valuations are generally a crap-shoot. This post builds on top of his work, and attempts to shed additional light on the valuation process. New founders may think that startup valuations work like this: I figure out what the value of my existing company is I figure. Read more >.

Valuation 70

Valuation Early Stage Startup Founder 70

Gust

JUNE 22, 2016

Gust announces acquisitions of Sharewave and Preferred Return; creates the most robust and affordable equity management solution for early-stage startups. The post Gust Launches Comprehensive Equity Management Platform for Cap Table Management and 409A Valuations appeared first on The Gust Blog. Read more >.

Cap Table 93

Cap Table Valuation Equity Management 93

Gust

OCTOBER 12, 2011

During the summer of 2010, I developed a workshop, A New ACEF Valuation Workshop for Angels and Entrepreneurs. 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. 2011 Angel Group Valuation Survey.

Angel Groups 125

Angel Groups Valuation Pre-Money Valuation St. Louis 125

Gust

DECEMBER 6, 2011

Idea, pre-seed, startup. Pre-seed, startup. Most for startups and growth stages. Startup and growth stages. Most for startups and growth stages. The figure below shows the number of investors by investment size for startup ventures. GEM Studies. Government Grants. $3 US Government. Angel Investors. $20

Angel Investor 179

Angel Investor Venture Capital Valuation Software Engineering 179

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. This method compares the target company to typical angel-funded startup ventures and adjusts the average valuation of recently funded companies in the region to establish a pre-money valuation of the target.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

Gust

JULY 23, 2014

So even if my own mother asked me to meet with you, and you were pitching me a biotech opportunity for a $10 million investment at a $90 million valuation, I might take the meeting, but it wouldn’t be particularly useful for either of us. And that’s how to get a meeting with David S.

Angel Investor 153

Angel Investor Elevator Pitch Pre-Money Valuation Technical Review 153

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. Valuation caps can come into play in settings other than seed-stage convertible note financing rounds. Read on for a fuller explanation. by February 2006).

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Gust

JUNE 17, 2012

Money to build the business is the number one challenge for most startups. A large percentage of startups never apply to either. You need to explore more common and more productive approaches for getting your startup moving forward. Self-funding is the preferred source of cash for your startup – if you can do it.

Technical Review 164

Technical Review Bootstrapping Venture Capital Incubator 164

Gust

FEBRUARY 19, 2014

Virtually every investor and serial entrepreneur I know will—in a heartbeat—take ‘smart, good’ money over ‘evil’ or ‘dumb’ money any day of the week, even if the valuations differ by 10x. Invested Interests investment offer startup term sheet valuation' Good luck with reviewing your offer!

Term Sheet 128

Term Sheet Valuation New York Curation 128

Gust

MAY 15, 2015

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices. After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation! Guess again! A Read more >.

Pre-Money Valuation 70

Pre-Money Valuation Silicon Valley Valuation Startup 70

Gust

DECEMBER 7, 2014

In my experience, that’s actually the worst way to start, for reasons I will outline here, and also the least common way, according to an authoritative survey of new startups. Even a small investor in the early days will take a large equity percentage, due to that pesky valuation challenge.

Bootstrapping 191

Bootstrapping Entrepreneur Startup Burn Rate 191

Gust

MAY 15, 2015

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices. After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation! Guess again! A Read more >.

Pre-Money Valuation 70

Pre-Money Valuation Silicon Valley Valuation Startup 70

Gust

MARCH 8, 2014

While it sounds tautological, the most important thing a law firm brings to the startup table is… a knowledge of the law surrounding everything having to do with founding, financing and operating a startup! Invested Interests attorneys business entrepreneur law firm startups'

Warrant 156

Warrant Startup Valuation Finance 156

Gust

SEPTEMBER 27, 2014

Browse through the many hundreds of video answers to startup questions that we’ve filmed from the world’s leading VCs and angels. You really should have spent a heck of a lot of time beforehand in thinking through all of the issues surrounding your startup.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

Gust

NOVEMBER 3, 2013

Based on my experience as a mentor and an entrepreneur, if you fail on your first startup, you are about average. Every young entrepreneur knows implicitly that startup success is a long hard road. Statistics show that the failure rate for new startups within the first 5 years is higher than 50 percent. Inexperienced team.

Intellectual Property 183

Intellectual Property Startup Viral Early Stage 183

Gust

AUGUST 17, 2015

With all the news about hundred million dollar rounds and billion dollar valuations, it can be hard not to look at the world of entrepreneurship and angel investing as a thrilling ride that only has one stop: success. The post The Startup Failure Rate Among Angel-Funded Companies appeared first on The Gust Blog.

Angel Investor 70

Angel Investor Startup Valuation Entrepreneur 70

Gust

DECEMBER 21, 2011

Boston, New York City, Seattle and Southern California spawn many exciting startups…but do not exceed the Valley in any measure of entrepreneurial achievement. And, while being the undisputed leader in breeding and growing startups, the Valley is not the only place in the world (or the US) where entrepreneurs thrive.

Silicon Valley 107

Silicon Valley Southern California Tucson Seattle 107

Gust

JANUARY 30, 2014

Reasonable valuation. Startup experience. Invested Interests David Rose entrepreneur funding invest startup' Viable business structure and cap table. Proven team (tech/product/design/mark eting/sales/domain/etc.). But most important of all , it must have an entrepreneur on whom I’m willing to bet. Operating skills.

Cap Table 119

Cap Table API Valuation Startup 119

Gust

SEPTEMBER 30, 2012

By way of a definition, a business or startup incubator is a company, university, or other organization which provides resources to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. A few are still trying to make money doing it, but it is hard to make money off startups.

Incubator 147

Incubator Entrepreneur New York City Silicon Valley 147

Gust

DECEMBER 1, 2011

For years there has been a pervasive opinion across the entrepreneurial landscape that the US has a shortage of capital required to startup and grow new ventures. Dr. Carl Schramm, Kauffman CEO , recently said that startup formation is stagnant or even decreasing in the US in the second half of 2011.

SBIR 120

SBIR Startup New York City Angel Investor 120

Gust

APRIL 19, 2014

For a sophisticated investor, there are none, because an uncapped note just doesn’t make sense (see my answer to “If a startup’s valuation is $x, how much larger should its cap on a convertible note be?” Invested Interests convertible note entrepreneur investors startup uncapped'

Valuation 155

Valuation Entrepreneur Startup Marketing 155

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. The simplest illustration is the first VC funding round of a new startup. Suppose it raises $2 million at a $6 million pre-money valuation.

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

Gust

JULY 23, 2012

To qualify for a deduction, the donation must be accompanied by an independent valuation appraisal. These challenges can include finding the right charity, time to facilitate the internal transfer process as well as retaining a valuation or tax expert to confirm tax savings and optimize the donation amount. in excess of $25,000).

Stock 114

Stock Capital Gains Warrant Stock Options 114

Gust

DECEMBER 18, 2013

That said, the primary entrepreneur-friendly reason for doing a Convertible Note (and the reason that no serious investor under regular circumstances will therefore do an uncapped note) is: The valuation negotiation is put off until the next round. million valuation provided by the 20% discount of the note.

Valuation 150

Valuation Founder Seed Money Common Stock 150

Gust

APRIL 30, 2014

Having now invested in over 85 startups, and finding that my personal metrics are very similar to aggregated industry ones, it is clear that (a) there is little to no correlation between my home runs and my personal favorites, and (b) angel investing done correctly really *can* produce a consistent IRR in the 25%-30% range.

Angel Investor 148

Angel Investor IRR Due Diligence Aggregator 148

Gust

SEPTEMBER 29, 2011

The most successful serial entrepreneurs in the world may found three or four, perhaps even eight or ten venture-backed startups over the course of their careers. For more on working with startup lawyers, see Mark Suster’s classic post, How To Work With Lawyers At A Startup.). Knowledge is power.

Finance 178

Finance Term Sheet Preferred Stock Bridge Financing 178

Gust

JUNE 21, 2014

Therefore, if the maximum market cap we can hope for from a company is $2 million at the end of the day, and our investment needs to return 30x, that means the post-money valuation after our investment needs to be $2m ÷ 30, or $66,666.

Angel Investor 127

Angel Investor Post-Money Valuation Valuation Time Value of Money 127

Gust

DECEMBER 13, 2011

In fact, my sense is that in most regions, angels and VCs are cooperating and sometimes co-funding startups. Typical VC round size is dropping and the competition (as measured by valuation and reported at 2011 Valuation Survey of North American Angel Groups ) for seed stage deals in NYC Metro appears to be increasing.

Seed Stage 162

Seed Stage Southern California San Diego Silicon Valley 162

Gust

AUGUST 30, 2012

Integrity, Passion, Startup Experience, Domain Expertise, Functional Skills, Leadership, Commitment, Vision, Pragmatism, Flexibility, Personality. Characteristics of the Entrepreneur. Characteristics of the Venture.

Founder Vesting 144

Founder Vesting Option Pool Exit Strategy Vesting 144

Gust

SEPTEMBER 6, 2012

So, if I were just going to buy stock in your company today, we would agree on a valuation today, I’d give you the money today, you’d give me the appropriate percentage of the company’s stock, and we’d be all set. So how do we solve this problem?

Valuation 117

Valuation Equity Stock Angel Investor 117

Gust

OCTOBER 25, 2012

” Because convertible notes are designed to give investors an equity interest in a company that will eventually be worth much more than their investment, the intention on their part is always to convert into equity (after all, if they were just after the interest on a loan, they could find much less risky things to invest in than a startup.).

Bankruptcy 121

Bankruptcy Valuation Equity Finance 121

Gust

NOVEMBER 28, 2011

Fortune 1000 CEOs usually don’t make good startup CEOs, and vice versa. The startup road is guaranteed to be long and hard. What if you can’t convince Jim Clark (Silicon Graphics, Netscape, WebMD, MyCFO, Juniper Networks) to run your startup? The size of the race is also important. Bundles of energy, money, and talent.

Startup 147

Startup Bootstrapping Social Network Internet 147

Gust

OCTOBER 18, 2011

Valuation fantasies. But, you can’t look investors straight in the eye with an absolutely preposterous opening offer on valuation. I’ve seen people get around this problem by not specifying valuation, but that’s hard. Investors want new fresh ideas, not battle-scarred victims. This is a tough one. Circled wagons.

Intellectual Property 124

Intellectual Property Valuation Partner Revenue 124

Gust

NOVEMBER 22, 2011

Different types of investors look for startups at different levels of maturity. If your startup is at the wrong stage for the investor you are approaching, fishing for money is a waste of time for both of you. You also will find that the stage your startup is in dictates where you go to seek funding. Early or embryonic stage.

Venture Capital 171

Venture Capital Investment Bankers Angel Investor Initial Public Offering 171