Both Sides of the Table

MAY 28, 2018

A VC wants to know that you have a solid plan to execute a stand-alone business and if you require capital for an acquisition they’d rather evaluate it at the time rather than over-fund you now. One entrepreneur refrain I sometimes hear is “We want to raise some extra money for M&A activities.” This is a red flag for VCs.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

YoungUpstarts

JULY 31, 2019

But “fundraising debt” comes into the picture when you raise too much too early, diluting your business at the beginning of the venture, with no real plan or unrealistic projections for how your business will scale. This also applies in acquisition conversations.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

Startup Professionals Musings

OCTOBER 13, 2021

It’s easy to say “yes” to one more feature request after another, until the potential for real impact gets diluted. Yahoo has been an example of a company which expanded in all directions through 53 acquisitions, to the point where most customers were confused, and it was overtaken by Google as your main search engine.

Dilution 334

Dilution Metrics Acquisition Revenue 334

This is going to be BIG.

JANUARY 18, 2024

Instead of getting hung up on what their better-funded competition was doing, they focused on executing on their near-term goals, then setting new ones, then executing on those, and so on and so on, all the way up to a billion-dollar acquisition with very little dilution taken along the way.

.Net 88

.Net Cap Table Startup Technical Review 88

YoungUpstarts

MAY 6, 2019

If you are getting funded for the first time, which means that you have not diluted the shares of your company, you will be receiving Series A funding. Further Customer Acquisition. You need to improve your customer acquisition process. Acquisition. The money that you receive will fall in funding stages.

Startup 113

Startup Technical Cofounder Merger Early Stage 113

Both Sides of the Table

SEPTEMBER 16, 2010

As I’ve highlighted I believe we’re in a unique period similar to 2005-08 where the biggest tech firms of Silicon Valley (and some media companies) are scooping up small software companies as “talent acquisitions&# versus accretive revenue / profit generators. avoid being diluted). This is actually the norm.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Deal Flow 283

Hunter Walker

JANUARY 2, 2017

The total value of these deals might look higher than when a tech company makes an acquihire but the premium tends to go to retention rather than the cap table (especially since (a) the acquirer might not be seen as an ‘attractive’ place to work and (b) there’s assumption of less equity upside post-acquisition).

Technical Review 115

Technical Review Cap Table Acquisition Startup 115

Startup Professionals Musings

NOVEMBER 8, 2021

Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. There is no free lunch for money. Non-equity funding has to come from personal sources, or government grants, or bank loans. Business model to maintain lifestyle is the primary driver.

Entrepreneur 371

Entrepreneur Equity Dilution LLC 371

Both Sides of the Table

NOVEMBER 14, 2017

How long does it take me to pay back my original customer acquisition costs? Raise too soon and likely take on more dilution, wait and get valuation up (as our metrics continue to rise) but then run to a point where you have a lower cash balance and place more risks on the business. How profitable is my product or service?

Operations 286

Operations New York City Technical Review Startup 286

Up and Running

JULY 2, 2014

of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 33.3% ownership and never dilute. When fundraising for a startup, all investors dilute as additional investors join in on the deal. The deal we made with him was he’d get 33.3%

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

View from Seed

DECEMBER 4, 2019

At the same time, despite some realizations in recent years through M&A, PE acquisitions, and IPOs, the general sense I get from LPs is that the level of distributions don’t quite line up with the unrealized performance. This would suggest that TVPI would be performing well. The post How is the VC Asset Class Doing?

LP 256

LP IRR Distribution Portfolio 256

Startup Professionals Musings

NOVEMBER 6, 2020

Growth entrepreneurs quickly find themselves removed from day-to-day operations, and become more and more occupied by transactions with lawyers, investors, and potential acquisition partners. With major investors, your equity and return is diluted and delayed. Use flexibility to match your lifestyle.

Small Business 311

Small Business Small Business Administration SBA Equity 311

ReadWriteStart

JUNE 1, 2020

These phases are focused on inorganic growth, mergers, buyouts, acquisitions, and exit preparation for the business. Moreover, similar businesses of scale with varied market reach are easy targets for acquisition, which ensures an exit for the investor. Stages of Funding. If you know other such examples, mention them in the comments.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

ReadWriteStart

JANUARY 27, 2011

I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature. Jeff also described a compelling in-game offer-based customer acquisition model that is proving quite effective for him. Brainscape. Note, I said, validated.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

A Smart Bear: Startups and Marketing for Geeks

FEBRUARY 26, 2019

Instead, watch payback period for acquisition efficiency, watch retention for product/market fit, watch expansion revenue for long-term growth, and watch gross margin for long-term profitability. Find and focus on one reliable distribution mechanism before diluting your time diversifying. Your values are defined by what you tolerate.

Restful 202

Restful Founder Revenue Acquisition 202

Both Sides of the Table

SEPTEMBER 28, 2014

We want money to make some acquisitions (investors would prefer to fund M&A if they know specific deals – not to encourage bad behavior. We want a strong balance sheet (um, ok. but that’s our firm’s money on your balance sheet. if you have a good use for it and we’re excited about your company – fine.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

MAY 15, 2022

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale. Consolidation.

Dilution 355

Dilution Startup Merger Flash 355

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. Additionally, portfolio companies are able to access competitive and often non-dilutive financing by monetizing an unavoidable expense that is being paid to its current processors, thus yielding a mutual benefit for both parties. over next 12 months.

Revenue 60

Revenue Technical Review Software Review Equity 60

Both Sides of the Table

APRIL 14, 2012

“it’s smart to use an impending investment valuation to drive a higher acquisition valuation” I would like to amend her statement slightly to read, “it’s smart to use an impending investment valuation to drive an higher acquisition.” You just said, “nobody would take 1-2% dilution.”

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Startup Professionals Musings

JANUARY 26, 2019

Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. There is no free lunch for money. Non-equity funding has to come from personal sources, or government grants, or bank loans. Business model to maintain lifestyle is the primary driver.

Startup 194

Startup Equity Dilution LLC 194

Berkonomics

APRIL 26, 2018

Speaking of which, those companies with cash in the bank and cash available are the ones to scoop up the bargains, from suppliers and in acquisitions especially during tough times. A fast-growing but undercapitalized company is not highly valued in an acquisition. And oil is a lubricant…. Such bargains; so little time.

Dilution 90

Dilution Acquisition Early Stage Book Value 90

Startup Professionals Musings

MAY 18, 2015

Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

ReadWriteStart

SEPTEMBER 10, 2010

You can get cash without diluting your ownership in the company. Her main questions were around customer acquisition and financing. As far as customer acquisition is concerned, we discussed, again the power of organic search engine optimization. In 1M/1M, our preferred financing strategy is customers.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. You'll need to decide what kinds of decisions the board makes, and which ones it won't. What happens if one of us leaves the company?

Cofounder 128

Cofounder Founder Equity Dilution 128

Hunter Walker

AUGUST 8, 2023

Regardless, even in rounds with no punitive structure, the quickest way to underperformance as a fund is by increasing your ‘dilution before exit’ portfolio model assumptions by 1000-5000 basis points. Soft Acquisition Market. And that’s what’s happening here.

Portfolio 98

Portfolio Cap Table LP Valuation 98

Startup Professionals Musings

JANUARY 6, 2021

In reality, too many choices actually dilutes customer interest in your existing market, and makes your job of production, marketing, and support much more complex. In most companies, maintaining momentum requires the right strategic partners and acquisitions, in lieu of short-term price adjustments and special sales.

Technical Review 400

Technical Review Technical Cofounder Advisory Board Cofounder 400

View from Seed

APRIL 24, 2019

Couple that noise with the flurry of AI/messaging startups from a few years back (set off by Facebook’s WhatsApp acquisition), in conjunction with app developers’ notification euphoria… all of which have resulted in a state on our mobile phones where “ our brains being overloaded with push notifications about nothing.”.

SMS 207

SMS San Francisco Channel Dilution 207

View from Seed

SEPTEMBER 14, 2021

Seed investors are being compensated for the risk because later-stage investors are paying higher prices, and diluting early-stage investors less. My hypothesis is that one of the biggest drivers of extreme outperformance for less mature funds is outlier acquisitions that happen early in a fund’s life. .

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

Hearpreneur

JANUARY 30, 2022

Many businesses are discovering that the key to successful marketing is interacting two-way with customers, not simply shouting marketing messages at increasingly dilute audiences. . For example, the platforms carry out a deviation-detection analysis to provide customer acquisition and retention solutions. . 28- Use technology more.

Entrepreneur 124

Entrepreneur Green Technical Review Social Media 124

Both Sides of the Table

JUNE 17, 2017

That management team might have decided that they wanted to maintain more control of their company, didn’t want new board members and didn’t want to take dilution. Amazon is continuing to grow at such a rapid pace that of course it should take some of today’s profits and reinvest them in growth (or acquisitions).

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Gust

AUGUST 30, 2012

Team, Business Model, Traction, Customer Acquisition, Scalability, Defensibiity, Capital Efficiency, Churn, Time to Breakeven, Exit Strategy. Integrity, Passion, Startup Experience, Domain Expertise, Functional Skills, Leadership, Commitment, Vision, Pragmatism, Flexibility, Personality. Characteristics of the Venture.

Founder Vesting 144

Founder Vesting Option Pool Exit Strategy Vesting 144

View from Seed

SEPTEMBER 14, 2021

Seed investors are being compensated for the risk because later-stage investors are paying higher prices, and diluting early-stage investors less. My hypothesis is that one of the biggest drivers of extreme outperformance for less mature funds is outlier acquisitions that happen early in a fund’s life. .

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Both Sides of the Table

JULY 25, 2010

Anything requiring lead generation and/or customer acquisition I call Matt Coffin. I’d far rather dilute 10% early and get some investor traction than to wither for another 3-6 months trying to get my seed round together. We all want authorities who are smarter on specific topics than we are.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

ReadWriteStart

JULY 18, 2011

At this stage, the founders pay for the dilution of the shares and the funders will take 20 to 25% of the company. Unit economics to look at are comparable companies, the lifetime value of a customer, revenue per active daily user, rough acquisition costs per channel (search engine marketing, Facebook campaigns, pay per install).

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Berkonomics

MAY 27, 2021

They protect the company by overseeing the expenditure of company money for expansion, acquisitions, purchases of large assets, hiring of senior management and more. Often, a board meeting is entirely devoted to issues of growth, with members chiming in to help the CEO with marketing issues or customer acquisition.

Stock Options 62

Stock Options Dilution Acquisition Stock 62

Startup Professionals Musings

NOVEMBER 4, 2013

They don’t realize that this option would likely be their worst nightmare, since it costs millions for the road show, usually dilutes your equity to a tiny fraction, and takes away all your entrepreneurial control. With the more popular Merger & Acquisition (M&A) exit strategy, the control stays with the new entity.

IPO 224

IPO Founder Exit Strategy Investment Bankers 224

The Startup Toolkit

NOVEMBER 4, 2011

Roughly 33% dilution for full round ($2mm pre-money). 40% dilution for full round (roughly $2mm pre-money). What’s the dilution? The former means your friends won’t hear about your company until the acquisition. 500k now, plus commitment to help close $500k more from other angels. 1.25mm total. Looks good.

Term Sheet 31

Term Sheet Dilution Participating Preferred B2C 31