Startup Professionals Musings

AUGUST 31, 2012

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 260

Intellectual Property Sweat Equity CTO Hire Fractional CTO 260

Steve Blank

MARCH 31, 2014

Companies horde cash and squeeze the most revenue and margin from the money they use. Look at the valuations of companies like Tesla, Illumina, and Twitter. The first will be commodity businesses that are valued for their ability to execute their current business model.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

VC Cafe

JANUARY 27, 2021

As teams become increasingly distributed, video communication is important for both internal alignment and external business development. But within two weeks its Israeli founders managed to pivot their product into the virtual events world and have concluded 2020 with 100% growth and tens of millions of dollars in revenue.

Vertical 148

Vertical Video Technical Review Europe 148

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Flexible VC: Revenue -based. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Startup Professionals Musings

JUNE 17, 2011

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 253

Intellectual Property Sweat Equity CTO Hire Fractional CTO 253

Startup Professionals Musings

MARCH 14, 2020

That approach may work for an entrepreneur who just sold a successful business for a huge profit, but it doesn’t work for the rest of us who are not proven successes yet, or don’t even have a business yet. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

ReadWriteStart

JULY 17, 2023

In the financial year ending in March this year, the startup generated a revenue of $18.5 Furlenco’s innovative business model has disrupted the traditional furniture industry in India. For Furlenco, the acquisition will provide access to Sheela Foam’s extensive distribution network and marketing expertise.

India 104

India Acquisition Merger Curation 104

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

MAY 22, 2010

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 222

Intellectual Property Sweat Equity CTO Hire Fractional CTO 222

Austin Startup

OCTOBER 15, 2017

What seems to be the best way to create customers and revenue may result in a business model that is out of vogue with the investment world and shortchanges you on enterprise valuation. He forgot a major highlight of the business model, and the damage was done. No further conversations ensued.

Technical Review 48

Technical Review Software Review Nevada Silicon Valley 48

Lightspeed Venture Partners

OCTOBER 7, 2012

He had been at it for 6 months and had no sales or distribution lined up yet. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard. They won a design award at a trade show, but have no revenue and no orders. The last company was a bit of a puzzler.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

VC Cafe

SEPTEMBER 16, 2021

Many of the creator economy startups have conjured different ways for creators to generate revenue outside of advertising, which has been the bread and butter of ‘influencer’ platforms like Instagram, Youtube, TikTok etc. “The Creator economy is in crisis, now lets fix it”, Li Jin’s newsletter.

Startup 207

Startup Social Media Venture Capital Audio 207

Startup Lessons Learned

SEPTEMBER 22, 2008

Lessons Learned by Eric Ries Monday, September 22, 2008 The three drivers of growth for your business model. The AARRR model (hence pirates, get it?) He also has a discussion of how your choice of business model determines which of these metric areas you want to focus on. Choose one.

San Francisco 167

San Francisco CPA SEM CTO Hire 167

Startup Professionals Musings

JULY 27, 2018

This implies high odds of a scalable business, simply needing an investment to lead to success. Business model showing costs, pricing, and margins. Potential investors love to see gross margins in the fifty percent range or greater, with recurring revenue through subscriptions, follow-on sales, or services.

Product 145

Product Intellectual Property Liquidity Event Exit Strategy 145

Steve Blank

SEPTEMBER 14, 2009

Five Quarters of Profitability During the 1980’s and through the mid 1990’s startups going public had to do something that most companies today never heard of – they had to show a track record of increasing revenue and consistent profitability. There was now a public market for companies with no revenue, no profit and big claims.

Silicon Valley 217

Silicon Valley IPO Technical Review Venture Capital 217

Steve Blank

MARCH 18, 2011

The signals are loud and clear : seed and late stage valuations are getting frothy and wacky, and hiring talent in Silicon Valley is the toughest it has been since the dot.com bubble. VC’s worked with entrepreneurs to build profitable and scalable businesses, with increasing revenue and consistent profitability – quarter after quarter.

Internet 334

Internet IPO Silicon Valley Agile 334

crowdSPRING Blog

NOVEMBER 30, 2012

Start With a Business Model, Not a Business Plan | WSJ – [link]. The danger of waiting to long to find a business model? … Checking In on Foursquare’s Valuation – [link]. How PRWeb Helps Distribute Crap Into Google & News Sites – [link]. Just got acquired?

Social Media 100

Social Media Small Business Central African Republic Design 100

Startup Professionals Musings

AUGUST 1, 2016

That approach may work for an entrepreneur who just sold a successful business for a huge profit, but it doesn’t work for the rest of us who are not proven successes yet, or don’t even have a business yet. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Startup Professionals Musings

AUGUST 7, 2015

How the solution and business model work to fund the business. Every customer understands that your solution has to generate more revenue than cost, but you should not put that data in a customer pitch. Investors will impatiently expect a winning business model, customer segment definitions and volume projections.

Product 120

Product Intellectual Property Liquidity Event Burn Rate 120

ReadWriteStart

MARCH 8, 2016

The hottest open source companies are focused on big data, with companies like DataStax, Cloudera , and MongoDB bagging billion-dollar valuations as they earn ever-increasing revenues. Both companies offer Hadoop distributions, but Cloudera has been much more willing to offer proprietary add-ons to complement its open source platform.

Software 60

Software Open Source Valuation Analytics 60

www.inc.com

SEPTEMBER 24, 2011

But with the help of Grahams company, which specializes in creating tech systems for start-ups, Jumpstart grew to more than $50 million in revenue--enough to make it an attractive acquisition for media conglomerate Hachette Filipacchi. Arizona Bay has also blended equity payments with revenue-sharing deals. Graham liked the idea.

Arizona 40

Arizona Equity Iowa Venture Capital 40

www.forentrepreneurs.com

FEBRUARY 2, 2010

Business Model I would like to propose that in addition to team, product, and market, there is actually a fourth, equally important, core element of startups, which is the need for a viable business model. It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring revenue model.

Acquisition 103

Acquisition Cost Customer Entrepreneur 103

Agile VC

NOVEMBER 6, 2013

So their revenue figures, pre IPO financing and ownership, and other info is all widely available. I thought I’d provide a little analysis of Twitter based on their S-1, but also strive to put it in a broader context of other consumer internet businesses and where we are in the current tech cycle.

IPO 194

IPO Aggregator B2B Internet 194

Up and Running

JULY 22, 2019

Early investors will also be looking for insight into the growth potential of your business. Be sure to demonstrate its potential by clearly documenting key performance indicators, highlighting key customers, and demonstrating realistic revenue projections. Ask for what you need in order to prove that your business model works.

Canada 78

Canada Early Stage Valuation Finance 78

Austin Startup

MARCH 23, 2017

Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. I point back to Fred Wilson’s blog, specifically a guest post by Andy Sack on revenue based financing. The most frustrating answer to almost any question is “it depends”.

Dilution 54

Dilution Equity Warrant Distribution 54

Lightspeed Venture Partners

OCTOBER 22, 2012

The company has gotten off to a fast start, $150k in revenue in the first two months, with all the marketing coming from social media. This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). There was a lot of discussion about competition.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Agile VC

JANUARY 13, 2016

Was this simply a shift in sentiment among the tech & business media? A realignment of valuations by late stage investors? Potential for instant global distribution (mobile app stores, Facebook, etc). It used to take 5-10 years for a great startup to go from $0 to $75-100M+ in annual revenue. What happened?

Technical Review 157

Technical Review .Net Revenue Software Review 157

Austin Startup

SEPTEMBER 17, 2017

A business model must be created out of whole cloth, and generally it’s a compilation of assumptions piled on top of other assumptions. Every model has a happy outcome when a founder is trying to convince himself or herself, a team, an investor, or even a spouse that the venture ahead is a good idea.

Valuation 48

Valuation Forecast Seed Money Business Model 48

Lightspeed Venture Partners

DECEMBER 10, 2012

Revenue is driven by children’s parties, which cost $600-$4,000 for a two hour party for 15 kids, which apparently is the market price for kids parties in LA. The space can host 6-9 parties per weekend, and they generated $350,000 in revenue last year. Almost all of the sharks got indignant about valuation.

Covenant 162

Covenant Warrant Southern California Los Angeles 162

David Teten

DECEMBER 3, 2019

Technographics vendors such as Builtwith , Datanyze , HG Data , Stackshare, and Stacklist help CEOs identify the right tech platform on which to build their business; they’re also helpful for investors to due diligence a company’s tech stack choices. Lighter Capital, a Revenue Based Investing VC, offers a Cost of Capital Calculator.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Steve Blank

FEBRUARY 26, 2020

There are two reasons to raise money: You have a killer idea that is only partially validated, that you think can get to $50M+ of revenue in 5 years with 80%+ gross margins (if margins are lower, you need a lot more revenue)and you need money to get to product-market fit, or. Team, Product, Traction, Business Model and Market.

Cofounder 429

Cofounder Seed Stage Valuation Metrics 429

Seeing Both Sides

AUGUST 3, 2012

Facebook and Google would be obvious choices for this, but so much has been written about each of them and they represent such special business models, I worried that it would be both hard for entrepreneurs to relate and hard for me to develop new insights. The first year of revenue (1999) was $4 million – a remarkable achievement.

Distribution 49

Distribution Lean Massachusetts Cofounder 49

Up and Running

FEBRUARY 17, 2016

Where in your area will you find land or a building with the right zoning, size, facilities, and access for bringing in raw materials, attracting customers, and/or shipping out finished beer for distribution? How wide do you want to grow production and distribution, or do you want to focus on selling over your own bar?

Oregon 60

Oregon Jordan SBA Cofounder 60

www.pakman.com

SEPTEMBER 27, 2012

To build the online media giants of tomorrow, companies need models where the costs of both content and distribution are near zero. Google, Facebook, Twitter, Instagram, Pinterest and countless others employ this model. These models allow scale to emerge at very low-cost. But that’s because they choose that model.

Social Media 47

Social Media Vertical Advertising Distribution 47

Up and Running

MAY 15, 2019

These products will be distributed to remote yet extremely viable areas, where the market is appreciative of readily-available, good-quality brew. With this money, they plan to expand its distribution to selected metro areas within the state of Oregon. There’s no one model—or one business plan—for breweries.

Oregon 24

Oregon Jordan Software Review Distribution 24

Professor VC

JUNE 20, 2011

I took a look back at our original financial model we presented to VCs in 2004. The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. I am an active angel investor and on the board of Sand Hill Angels.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

Tim Keane

APRIL 24, 2006

As an example, we had an advanced manufacturing business that achieved excellent early results. However, the distribution channel we had planned to use lacked the sophistication ultimately required by the product design, and the manufacturers adoption cycle was insufficient. If it does not work, get out. If it does not work, get out.

Wisconsin 60

Wisconsin Angel Investor Bootstrapping Venture Capital 60