ProfessorVC: Burn Rate

Professor VC

Burn Rate. The burn rates of my portfolio companies is certainly top of mind right now, but thats not what this post is about. Since Im not a fan of any of those genres, I have been looking forward to the release of his latest work, Burn Rate. While there are certainly better books that chronicle the highs and lows of starting a company, Burn Rate does raise some interesting issues on the personal side of entrepreneurship. Burn Rate.

Making Financial Projections is Not Rocket Science

Startup Professionals Musings

In reality, you need to set these projections as goals for your own use, to convince employees as well as investors that you have a business which is challenging, but achievable. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup.

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Why Board Meetings Suck – Part 1 of 2

Steve Blank

Reinventing the board meeting may offer venture-backed startups a more efficient, productive way to direct and measure their search for a profitable business model. Yet boards of large companies exist to monitor efficient strategy and execution of a known business model.

Reinventing the Board Meeting – Part 1 of 2

Steve Blank

Reinventing the board meeting may offer venture-backed startups a more efficient, productive way to direct and measure their search for a profitable business model. Yet boards of large companies exist to monitor efficient strategy and execution of a known business model.

8 Ways An Investor Pitch Differs From A Product Pitch

Startup Professionals Musings

When pitching to investors, entrepreneurs always seem to start with a customer pitch, then add a slide or two about the business. In reality, they need a separate pitch about the business, carrying over only a slide or two about the solution.

No Accounting For Startups

Steve Blank

Startups that are searching for a business model need to keep score differently than large companies that are executing a known business model. Yet most entrepreneurs and their VC’s make startups use financial models and spreadsheets that actually hinder their success.

9 Metrics Every Entrepreneur Should Know About Their Business Offhand

Up and Running

Yet you might be surprised how easily business owners are stumped by questions like these. Renewal Rates. If you’re selling anything, understanding renewal rates is absolutely critical. After all, a sustainable business model requires repeat customers!

10 Incentives For Entrepreneurs To Bootstrap Their Startup

Startup Professionals Musings

Entrepreneurs who plan to complete a business plan the first month, find an investor the second, and roll out a product the third month are just kidding themselves. Count on several months of effort and costly assistance to court investors, with less than a 10% success rate.

3 Ways To Ensure Your Startup Has A Top-Notch Team

YoungUpstarts

While you absolutely need to keep an eye on earnings and burn rate, human capital is ultimately the fuel that makes the machine run. Your business plan needs to set the course for how you invest in your team. by Shawn Overcast , managing director at gothamCulture.

8 Ways To Prepare Your Startup For Obstacles Ahead

Startup Professionals Musings

Too many entrepreneurs tackle starting a business as a random walk into a business minefield, and they count on their street smarts, thick skin and pure determination to get them to their destinations alive. Funding is only one of the critical resources you need to start a business.

Adding Slides Does Not Enhance Your Investor Pitch

Gust

Remember the goal is an overview presentation that will pique investor interest enough to ask for the business plan and a follow-on meeting, not close the deal on the spot. Investors like $1B markets with double-digit growth rates. Business model.

What Most People Don’t Understand About How Startup Companies are Valued

Both Sides of the Table

Most venture capitalists who have been in this business for a long time foresaw this correction and have been talking about it privately for the better part of the last year or two. Huge funding increases lead to massive wage inflation, rent inflation and thus higher burn rates.

Customer Development for Web Startups

Steve Blank

Customer Development is a technique startups use to quickly iterate and test each part of their business model. How you execute Customer Development varies, depending on your type of business. I think his process models are pretty good.

Investors Beware: Today’s $100M+ Late-stage Private Rounds Are Very Different from an IPO

abovethecrowd.com

As these late-stage private companies digest these large fund raises, they are pushing profitability further and further into the future, as well as the proof that their business model actually works. If you want to know if the business model truly hunts, you must pay careful attention.

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Business Plan Financial Forecasts Test Your Savvy

Startup Professionals Musings

In reality, you need to set these projections as goals for your own use, to convince employees as well as investors that you have a business which is challenging, but achievable. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup.

8 Pieces of Advice For CEOs That Need To Scale Their Startups

YoungUpstarts

While certain processes and strategies may have worked for a business early on, a rapidly increasing customer base and the increased bandwidth needed in response will often bring those very same process to their natural breaking point. It will elevate your business immensely.

Adding Slides Does Not Enhance Your Investor Pitch

Startup Professionals Musings

Remember the goal is an overview presentation that will pique investor interest enough to ask for the business plan and a follow-on meeting, not close the deal on the spot. Investors like $1B markets with double-digit growth rates. Business model.

Four Easy Steps to Credible Startup Financials

Startup Professionals Musings

In reality, you need to set these projections as goals for your own use, to convince employees as well as investors that you have a business which is challenging, but achievable. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup.

It Must Be A Marketing Problem

Steve Blank

The Customer Development process is the way startups quickly iterate and test each element of their business model , reducing customer and market risk. In Discovery startups take all their hypotheses about the business model: product, market, customers, channel, etc. Six is a Proxy for Burn Rate. Later I realized six salespeople without revenue to match was a proxy for an out of control burn rate that now had the boards serious attention.

Crisis Management by Firing Executives – There’s A Better Way

Steve Blank

Notice that the traditional product introduction model leads to a product launch and the execution of a revenue plan. The revenue numbers and revenue model came from a startups original Business Plan. that make up a business model.

Your Financial Model Is A Work Of Fiction; Build It Anyway

Seed Stage Capital

skip to main | skip to sidebar 04 January 2011 Your Financial Model Is A Work Of Fiction; Build It Anyway Startup Financials Series Startup financial models are a pain in the ass. Yet building a solid financial model is absolutely one of the best things you can do for your startup.

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10 Reasons for a Startup to Skip Outside Investors

Startup Professionals Musings

Entrepreneurs who plan to complete a business plan the first month, find an investor the second, and roll out a product the third month are just kidding themselves. Count on several months of effort and costly assistance to court investors, with less than a 10% success rate.

Is Your Startup Dangerously Rushing to Scale

Early Growth Financial Services

I see it all the time: businesses striving to scale, to accelerate the growth of their business as quickly as possible—consequences be damned! Scaling is certainly a goal for businesses at some point, but scaling as soon as possible isn’t the answer. If you haven’t yet found a viable business model that will allow you to acquire customers at a lower cost than the lifetime value of that customer, you simply are not ready to scale.

Limit an Investor Pitch to 10 Pages and 10 Minutes

Startup Professionals Musings

Remember the goal is an overview presentation that will pique investor interest enough to ask for the business plan and a follow-on meeting, not close the deal on the spot. Investors like $1B markets with double-digit growth rates. Business model.

When to step on the gas and go for it?

Will Price

When should you grow the burn rate- add headcount, marketing spend, operating capacity? Such an answer requires the characterization of market size, revenue potential, strategic value, Lesson: spend resources to develop answers to customer demand, market size, financial model, etc. The extra time allowed us many cycles to iterate towards a well-defined business model, and, importantly, it also allowed for the serendipity required to get to the all important a-ha moments.

Being an Angel for Fun and Profit: Three Ways to put “Profit” back in the Equation

startupengineering

Now of those, how many would be likely to go into business with, or buy from, your entrepreneur? Instead, if you want to be an angel, and also want to make money, try focusing on these three things: 1) Systematically help your portfolio companies de-risk their businesses. Instead, help portfolio companies do the structured work they need to do in customer discovery and in building a valid business model, in order to de-risk.

Managing Startups: Best Posts of 2011

Platforms and Networks

Business Models Alex Osterwalder, coauthor of Business Model Generation , which introduces the business model canvas widely used by entrepreneurs, lists eight questions you should ask about your business model. David Skok analyzes key factors for success with the SaaS model. My 10-part series on business model analysis covers a range of topics. Andrew Chen collects retention rate metrics from several sources.

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Do capital efficient businesses exist anymore?

Startup Economy

We keep hearing from both investors and entrepreneurs that building a capital efficient business is the key to survival in this economy. We heard that plenty of times, but do capital efficient businesses exist? I put some number around what I call "capital efficiency index" that measures the value created by a firm divided by the total capital going into the business. So what exactly is a capital efficient business?

25 Best Startup Failure Post-Mortems of All Time

www.chubbybrain.com

We’d love to see these given the number of businesses you see and ultimately invest in. If you are an entrepreneur seeking funding, try our free Funding Recommendation Engine to identify a list of angels, venture capital and state grant programs that best match your business. created a vastly higher cost structure; I had 80 people mostly on base salaries under $100,000 and was bringing in revenue at the rate of $20 million annually. We had the wrong business model.

Steve Blank's SLL Keynote – It's a “Must Watch”

Startup Marketing Blog

Some of my favorite quote are: Role of the Entrepreneur Your job as an entrepreneur in a startup is to search for a repeatable and scalable business model. When you find it, your job is to build a company around that business model. Search for a business model rather than write a business plan. Biz model is how a company makes money. Customer and agile development is how you search for a business model.

Lessons Learned: Don't launch

Startup Lessons Learned

In some businesses, especially in certain industries like traditional enterprise software, you simply cannot bring a new product to market on your own. Figuring this out takes time, and few entrepreneurs have the patience to wait it out, because the business plan does such a good job of explaining what customers are going to think. The problem is that customers dont read your business plan. You have to know your business model. Valuable lessons for any business.

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allensblog: Entrepreneurs: Important to Understand When Are You.

Allen's Blog

Venture Startup Economics -- The "Crowd-scaled" Business Model » March 31, 2012. ", that is, how many months of burn rate do I need to have before I run out of money.  allensblog. Thoughts from a startup sherpa. Archives. Profile. Subscribe. « Smartphones Have Replaced. Entrepreneurs: Important to Understand When Are You "Really" Out of Money?

Strategy Roundtable For Entrepreneurs: Non-dilutive Financing Through Revenue Sharing

ReadWriteStart

This partnership speaks to a core philosophy of the program where we encourage entrepreneurs to get as much customer validation as possible before raising too much money, use other people's channels if you can get to them, don't burn too much cash, and all that good fiscal conservative stuff.

What is Growth Equity, Anyway? And When Do You Need It?

Inc Startups

All that remains is to scale the business, file for your IPO, and start shopping for your jet, right? When the markets were favorable, a company with a $25 million run-rate and a sexy story could IPO and ride the micro-cap sector to glory.

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Why Content Favors the Old (Entrepreneur)

pandodaily.com

But it’s possible that as the secret sauce of new media swings farther from disruptive technology and business models to a focus on curated and quality content, it’s the older entrepreneurs who are in the pole position. That’s the beauty of a great content business. While a 21-year-old with no mortgage, no girlfriend and a low-burn rate may have nothing to lose, a 40-year old with a career, a mortgage and kids has everything to lose.

Starting A Business: A Financial Checklist

YoungUpstarts

Depending on the type of business, this includes everything from legal, machinery, equipment, inventory, overhead, and domain name, to web services. Penalties for failing to register a business can be very costly. This will also prepare your business for filing taxes.

Raise What You Need, and Then Some

Mark Birch

Continuing from that discussion, you need to consider five key factors; major expenditures, average monthly burn rate, breakeven point, contingency and funding capacity. depending on your business model.

Customer Development Manifesto: The Path of Warriors and Winners.

Steve Blank

This post describes a solution – the Customer Development Model. In future posts I’ll describe how Eric Ries and the Lean Startup concept provide the equivalent model for product development activities inside the building and neatly integrates customer and agile development.

ProfessorVC: Waah.Do I have to build a financial model?

Professor VC

I have to build a financial model? To that last one, there is certainly some truth as the standard time vs. revenue chart in most business plans looks like this: Im not teaching Entrepreneurial Finance this semester for the first time since Fall 2007. Is the model consistent with the business plan? Does the business model make sense? Do you understand the business and market? I have to build a financial model? Burn Rate.

What's Wrong With Today's Board Meetings: Part 1

ReadWriteStart

Reinventing the board meeting may offer venture-backed startups a more efficient, productive way to direct and measure their search for a profitable business model. Yet boards of large companies exist to monitor efficient strategy and execution of a known business model.