Startup Professionals Musings

JANUARY 18, 2016

Due diligence is going the next step, to meet and interview all key members of the team, visit the business location and follow-up with early customers and advisors. Customer and market interaction. Investors will test your relationship with real customers, based on the data you provide. Business structure and financial risks.

Technical Review 120

Technical Review Due Diligence Cap Table Intellectual Property 120

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

David Teten

SEPTEMBER 6, 2018

HOF Capital has stitched together our workflow across Google Suite , Slack , Airtable , Asana , Copper , and some other tools (leveraging Zapier for basic 3rd party integration, in addition to custom development for certain other integrations). 8) Monitor and report investments. 9) Accelerate portfolio company value.

Technical Review 60

Technical Review Private Equity Management Cap Table 60

David Teten

SEPTEMBER 6, 2018

HOF Capital has stitched together our workflow across Google Suite , Slack , Airtable , Asana , Copper , and some other tools (leveraging Zapier for basic 3rd party integration, in addition to custom development for certain other integrations). 8) Monitor and report investments. 9) Accelerate portfolio company value.

Technical Review 60

Technical Review Private Equity Management Cap Table 60

Hunter Walker

DECEMBER 11, 2023

Is it an evolution or a revolution for your business and customers? Our customers were growing and hiring quickly, and as a result our business was growing fast. HW: We’re going to see many more software CEOs (and cap tables) look for private equity exits like yours. Now AI has promised to take that even further.

Private Equity 78

Private Equity Equity DC Leveraged Buyout 78

Both Sides of the Table

MAY 19, 2018

Your historical trading information including financials and a “customer file” which shows the history of your transactions so that investors can run “cohort” analyses Customer reference, personal references, key team members, compensation, cap table, stock option plan, etc. It felt like heresy. It would be rude!?!

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

David Teten

DECEMBER 3, 2019

This provides us more time to develop meaningful relationships with prospects and customers. A number of analysts have particular focus on serving the customers of technology companies, e.g., Gartner and 451 Research , and their work is also relevant for investors. 3) Raise capital. 6) Due diligence. 7) Negotiate .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

OnlyOnce

OCTOBER 28, 2021

And for the most part, the same is true about our cap table. No installed base of customers with contracts or pricing we no longer like or offer. No institutional debt like a messy cap table, legacy people issues, leases for offices we don’t want or need any more. No mountains of tech debt and legacy code bases.

Cap Table 62

Cap Table Early Stage Cofounder Leadership 62

Steve Blank

APRIL 8, 2010

When were done we followed your advice and got out of the building and started talking to potential users and customers.” He replied, “Well the customers are not acting like we predicted in our plan! No Plan Survives First Contact With Customers. We even entered it in the business plan competition. Here’s why. It’s static.

Business Model 328

Business Model Business Plan Customer Cap Table 328

OnlyOnce

DECEMBER 1, 2021

Another telltale sign that you might need a CFO is more tangible: Are you spending too much of your own time managing fundraising, debt, investors, and cap table questions and issues? These are all telltale signs that your financial situation may be under duress, and a full-time CFO can be a solution.

Hiring 117

Hiring Cap Table Finance Equity 117

David Teten

MARCH 18, 2021

These firms also sometimes target startups that serve a specific kind of customer (e.g. “Index the Best” – Only invest in companies that have brand name firms on the cap table and/or as leads. For example, Point Nine Capital focuses on B2B SaaS and marketplaces at the seed stage, across many industries.

Technical Review 78

Technical Review Cofounder Venture Capital Deal Flow 78

Austin Startup

AUGUST 20, 2017

Your Cap Table is something that deserves constant care and attention. Messy cap tables can come back to haunt you when you do a financing or sell the company. Your original business plan will probably go out the window when you land your first customer. Customers are choices made by your startup.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

VC Adventure

MAY 10, 2020

The language of the act requires companies to certify that the uncertainty of current economic conditions makes it necessary to apply for the PPP loan to support its ongoing processes but it was not clear what “necessary” actually meant. Exactly what this means isn’t clear.

SBA 79

SBA Affiliate Los Angeles Cap Table 79

OnlyOnce

NOVEMBER 2, 2017

” In the spirit of deeply understanding our customers’ businesses in order to better serve them, I thought the same would be true of our investors and Board members – that educating our team on the inner workings and economics of our investors would lead to greater empathy of one of our other key stakeholders.

Venture Capital 116

Venture Capital Cap Table Entrepreneur Startup 116

VC Adventure

JULY 27, 2011

We meet with various company managers, talk to other people in industry to get their take, call current and prospective customers, exercise our own network of contacts to get background on the idea and team, perform reference checks on key management, etc. Before Foundry makes an investment we perform extensive due diligence.

Technical Review 120

Technical Review Due Diligence Cap Table Portfolio 120

Hunter Walker

SEPTEMBER 24, 2017

This was a man who, despite agreeing to take the meeting, established within the first few minutes of their conversation that he wasn’t someone who was likely to end up on her cap table and even more importantly, probably someone she didn’t want there.

Founder 126

Founder Cap Table Conversion Operations 126

Hunter Walker

JULY 18, 2022

Are you indispensable for customers? You literally just showed me a deck that said your TAM was 10,000 customers. A $10b+ outcome feeds *everyone* on the cap table and the collective belief that an extraordinary number of startups could reach and eclipse this milestone drove a lot of the momentum investing of 2019–2021.

Valuation 116

Valuation Cap Table Startup Later Stage 116

Gust

JANUARY 30, 2014

External validation (ideally traction and/or passionate customers). Viable business structure and cap table. Provable product need. Scalable business model. Competitive advantage. Platform/partnership/bizd ev/API strategy. Reasonable valuation. Proven team (tech/product/design/mark eting/sales/domain/etc.).

Cap Table 119

Cap Table API Valuation Startup 119

The Startup Toolkit

AUGUST 29, 2012

You don’t need to collect the full set (tech, industry, product, customer, etc). If you aren’t taken seriously by customers & partners , a highly credible industry advisor will be able to open every door for you. You probably don’t need to get the cap table involved in that.

Technical Review 38

Technical Review CTO Hire Cap Table Software Review 38

The Next Web

OCTOBER 21, 2013

In these cases, the equation is basically unsolvable and doing a round with a venture investor risks entangling the founders in endless meetings and conference calls with their angel backers to find a compromise that will allow them essentially to rewrite their cap table.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

NZ Entrepreneur

JUNE 21, 2022

Do your research to understand what pain points your product is solving for your target customer and what other solutions are out there currently trying to solve the same problem, both locally and worldwide. Don’t underestimate how difficult it is to enter a new market and how hard your competitors will work to keep you out of it.

Founder 88

Founder Cap Table Cofounder New Zealand 88

Startup Lessons Learned

MAY 4, 2021

And you can really tell even as a customer, as an outside vendor, which of the companies whose kind of first reaction was to take care of their key stakeholders and which reaction was kind of to look out for themselves first and people are paying attention in a crisis. Then talk to the customers, improve the product.

IPO 113

IPO Cofounder Technical Review Government 113

David Teten

AUGUST 19, 2019

At least 12 months of customer history, generally 20+ enterprise customers or 200+ SMB customers. FFCP-approved companies receive revenue-based loans of up to $1 million to support the implementation of a customized 5-year growth playbook for their businesses. Limited amount of existing debt and a clean cap table”.

Revenue 60

Revenue Technical Review Software Review Equity 60

Berkonomics

AUGUST 3, 2023

My experience with early valuations by founders for friends… I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round and had to “clean up” the cap table more than a few times over the years.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Both Sides of the Table

JANUARY 21, 2010

I’ve seen startup CEO’s send requests like, “can you please update our Cap Table with the latest stock option allocations approved at the board meeting?&# My email response (in my head, not sent), “can you please waste more money having expensive lawyers do something that you could / should easily do for free?

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Gust

NOVEMBER 15, 2012

But by far the biggest issue is that the very essence of public markets (and what makes them “public”) is that the SEC mandates an enormous amount of transparency, including complete quarterly financial statements, complete publication of the company’s cap table including all significant shareholders, and so forth.

Seed Stage 131

Seed Stage Hockey Stick Cap Table Liquidation Preference 131

OnlyOnce

MAY 26, 2022

Do you spend a lot of your time dealing with finance-related issues like fundraising, debt, investors, or cap table questions? Do they spend time in-market with customers, partners, or vendors? Are you on the hot seat during board meetings on finance-related questions, metrics, runway, cash burn, or other issues? Trust your gut.

Cap Table 62

Cap Table Forecast Finance Metrics 62

Haystack

DECEMBER 17, 2019

2/ Luxury Productivity SaaS: Another benefit to entrepreneurs of “prosumer being the new consumer” is that these customers have a willingness to pay for better software products. Email is a tool nearly everyone uses daily, across devices, from their personal to work life — obviously. There are many reasons for this.

Cap Table 113

Cap Table Finance Database Software 113

David Teten

DECEMBER 12, 2017

Our proprietary data science tool cumulatively looks at 100+ factors within 6 macroscopic categories: Team, Financial Performance, Customer and PR traction, Industry and Competition, Product and Brand value, Valuation, and Exit probability, to quantify an investment “Merit Score”.

Early Stage 60

Early Stage Technical Review Software Review Venture Capital 60

YoungUpstarts

NOVEMBER 17, 2016

Plus, if the business doesn’t raise enough the capital in the first round to become self-sustaining, the crowdfunding round’s cap table and/or terms may make the deal unattractive or not doable for follow-on, institutional investors. Timeframes are defined and short. What kind of business is being launched?

Equity 100

Equity United Kingdom Cap Table Oklahoma 100

YoungUpstarts

JUNE 26, 2014

It allows you to truly focus on your product/idea instead of cap tables and keeping investors happy. You’d be surprised at how much you can learn from your potential customer. Consider working part-time as a transition into entrepreneurship. I’m a big fan of bootstrapping a business instead of beginning with seed rounds.

Cap Table 162

Cap Table Bootstrapping Naming America 162

Haystack

OCTOBER 2, 2019

What I will say is many institutional investors require them, and fair or not, most investors view the pitch deck as a proxy for how the founders will present to customers. Maybe an accelerator should take lower cap table ownership unless they deliver investors who convert? We won’t get into that here.

Deal Flow 106

Deal Flow Cap Table Early Stage Institutional Investors 106

Hippoland

APRIL 10, 2016

You have to productize the research, build partnerships, sell to customers, etc – presumably none of which you have done pre-incorporation. You will have tremendous difficulty raising money with this kind of cap table, and investors will make you restructure your cap table.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

BeyondVC

NOVEMBER 17, 2016

West coast founders now fully understand why having a NYC investor on their cap table pays huge dividends and west coast VCs are regularly leading Series A and B rounds in NYC. We continue to have the courage to be first on your cap table and the conviction to move swiftly to close rounds.

Cap Table 60

Cap Table Cofounder Dividend Institutional Investors 60

www.informationarbitrage.com

FEBRUARY 24, 2010

It is generally a soft touch at the beginning of the development process, perhaps identifying 1-2 early alpha/beta customers to help flesh out use cases to be built upon over time. While I know I can add value, I also know when and how I can add value. Lack of confidence? Camaraderie? Perhaps all of the above. Lack of confidence? Camaraderie?

CTO Hire 40

CTO Hire Founder Cap Table Vesting 40

venturehacks.com

FEBRUARY 24, 2010

The best sellers can sell to customers, partners, investors, and employees. All our products Pitching Hacks , Cap Table , and Co-founder Interview. If being ethical was lucrative, everyone would do it! One builds, one sells The best builders can prototype and perhaps even build the entire product, end-to-end. Learn more.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101

VC Adventure

JULY 27, 2011

We meet with various company managers, talk to other people in industry to get their take, call current and prospective customers, exercise our own network of contacts to get background on the idea and team, perform reference checks on key management, etc. Before Foundry makes an investment we perform extensive due diligence.

Technical Review 48

Technical Review Due Diligence Cap Table Portfolio 48