Both Sides of the Table
MAY 28, 2018
Founder: “$8–10 million” VC: “What’s your current burn rate?” VC: “So at a constant rate of burn rate you’d be raising enough for 2.5–3 It’s true that some later-stage private equity firms like to fund “roll ups” (a company that acquires many related companies in it sector), but this is seldom the domain of VCs.
Feld Thoughts
NOVEMBER 18, 2013
Here’s the punchline: if you run your company as if you have closed a VC equity financing round even though you actually closed a convertible debt round, you’ll be in much better shape when it comes time to raise your Series A financing. So why would you treat your debt investors (somewhat) like equity investors?
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Both Sides of the Table
SEPTEMBER 29, 2009
High burn-rates fueled by over investment – One of the most damning things that happened to the start-up markets in 97-00 and 05-08 was the overfunding of technology companies. Bu when you start to worry that the world is ending (as it seemed it was in late 2008 / early 2009) you tend to get worried about large burn rates.
Version One Ventures
MAY 31, 2016
Debt funding is an interesting option for start-ups in two scenarios: you can increase your funding base while times are good in order to maximize growth or you can use it stretch your runway when equity raises are tougher (or you don’t want to price your equity). A number of banks that are focused on start-ups ( SVB , Comerica , etc.)
Steve Blank
APRIL 26, 2022
At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. This article previously appeared in TechCrunch.
philipsmith.typepad.com
SEPTEMBER 24, 2011
Two Tales of "Working For Equity". Working for equity only is, realistically, the way most startups have to get going. a year burn rate and your equity is worthless due to numerous recapitalizations and bridge loans from investors then either you don't get it or I'm stupid to do it. Don't get me wrong.
Both Sides of the Table
AUGUST 9, 2011
Finance where needed. Companies raised too much money in 2005-08 and had high burn rates. On the positive side, corporate profits are up, their balance sheets have been repaired and they have recapitalized themselves to have lower amounts of debt relative to equity. And the equity in their house isn’t rising.
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