Startup Professionals Musings

JULY 27, 2018

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. Five-year financial projections of revenue and expenses. Discussion of likely liquidity events and exit strategy.

Product 145

Product Intellectual Property Liquidity Event Exit Strategy 145

Up and Running

SEPTEMBER 19, 2017

That is to say, they’d want to be able to control costs and revenues at a high level. Private equity investments are an important part of many startup business’s plans for accelerating growth or providing founders with a liquidity event. Conclusion.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

AUGUST 13, 2012

Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Industry & market sizing. Explain the business model.

Business Plan 283

Business Plan Sweat Equity Exit Strategy Intellectual Property 283

Gust

AUGUST 10, 2014

Projecting the financials should be the last step of your business plan preparation, since it assumes you already know the opportunity size, customer buying habits, pricing, costs, and competition. Aggressive revenue projections and growth rate. Gross margins greater than 50%. Show red ink to match your funding request.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

Steve Blank

JUNE 23, 2016

Intel under their last two CEOs delivered more revenue and profit than any ever before. All of Intel’s resources – fabs, manufacturing strategies, and most importantly executive mindset — were geared towards large, expensive x86 processors, not low-cost mobile cores of someone else’s design. But it’s not over for Intel.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Berkonomics

MARCH 21, 2019

If you are a going business with a track record of revenues, then the importance of accurate current financial statements cannot be overstated. If there is no record of revenues, see the “The Berkus Method” available with any search query for valuing the business before revenues. Let’s start with the basics.

Hockey Stick 63

Hockey Stick Liquidity Event Valuation Balance Sheet 63

Startup Professionals Musings

MAY 13, 2011

Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Industry & market sizing. Explain the business model.

Business Plan 290

Business Plan Sweat Equity Exit Strategy Intellectual Property 290

Startup Professionals Musings

AUGUST 7, 2015

Every customer understands that your solution has to generate more revenue than cost, but you should not put that data in a customer pitch. Projected revenues and expenses over the strategic period. The entrepreneur needs to show a strategy for such an event, and a projected value and return to the investor.

Product 120

Product Intellectual Property Liquidity Event Burn Rate 120

Startup Professionals Musings

FEBRUARY 13, 2016

The business model has to clearly define who is your customer, market penetration expected, how much customers pay versus total costs and the investment required to sustain cash flow. What are your forecasts for revenue, expenses and cash flow? If you don’t plan a liquidity event, you won’t find many investors interested.

Sweat Equity 120

Sweat Equity Advisory Board Liquidity Event Startup 120

Gust

AUGUST 5, 2012

Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Industry & market sizing. Explain the business model.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Steve Blank

MARCH 18, 2011

VC’s worked with entrepreneurs to build profitable and scalable businesses, with increasing revenue and consistent profitability – quarter after quarter. The reward for doing so was a liquidity event via an Initial Public Offering. For VC’s and entrepreneurs the gold rush to liquidity was on. The New Exits.

Internet 334

Internet IPO Silicon Valley Agile 334

Steve Blank

APRIL 10, 2019

We slept under the tables, and pulled all-nighters to get to first customer ship, man the booths at trade shows or ship products to make quarterly revenue – all because it was “our” company. Essentially the company sells them the stock at zero cost, and they reverse vest. Today that’s less true.

Stock Options 334

Stock Options Stock Vesting Common Stock 334

Startup Professionals Musings

APRIL 22, 2010

Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Industry & market sizing. Explain the business model.

Business Plan 186

Business Plan Exit Strategy Sweat Equity Intellectual Property 186

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

The Next Web

SEPTEMBER 29, 2013

Investors are always thinking about growth mode because that’s the path to where they want to go – liquidity event. Some metrics that I like to look for are: Lifetime value of a customer, average revenue per buyer, cost of a paying customer, registration rates, etc. How do you do that? Your company will die.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Both Sides of the Table

SEPTEMBER 27, 2010

My wife worked at Google so while we had good income in Silicon Valley it’s hardly the life of luxury given the costs of housing. If the company is moderately successful, growing and has great prospects for the future than a small liquidity event will help founders & venture capitalists to be aligned.

Liquidity Event 308

Liquidity Event Silicon Valley Seed Stage Finance 308

Gust

SEPTEMBER 5, 2012

Turn the question on its head: How could it make sense to lend money to a brand new, seed-stage company with no revenue, no products, and no collateral? (You This adds cost and administrative complexity, especially with multiple closings on different dates. How can this possibly make sense? You won’t see banks doing that.)

Finance 134

Finance Convertible Security Equity Seed Stage 134

Startup Professionals Musings

MARCH 13, 2020

Find some credible opportunity statistics that can support your own revenue expectations of between $20 million and $100 million in the fifth year. Even if you work harder than everyone else, you probably won’t stay ahead of rising costs and new competitors. > > Market penetration and revenue targets related to opportunity size.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

Berkonomics

SEPTEMBER 6, 2018

New products, new geographic territories, elimination of a competitor, increase in revenues, consolidation savings, new talent, new distribution channels, and more are good reasons for a start. We assume that you intend to sell the enterprise at some point in the future. Odds that an acquisition will be a success.

Acquisition 48

Acquisition Distribution Channel Operations 48

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. The Flipper’s executives usually have significant equity holdings, either actually owned or reflected in stock options.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Berkonomics

SEPTEMBER 10, 2015

They knew their revenues were getting ready to grow – and possibly explode. This one ends up costing most entrepreneurs and their investors a lot of money, because most of the time CEOs and boards wait until it’s pretty clear that the company’s value has peaked before starting the exit process. Dave’s book on exits.

Vertical 48

Vertical Finance Valuation Global 48

Steve Blank

JUNE 11, 2013

The test is: If you add one more sales person or spend more marketing dollars, does your sales revenue go up by more than your expenses? What are revenue strategy and pricing tactics? What are revenue strategy and pricing tactics? And what are its costs? How much do they need to own at a liquidity event?

Venture Capital 334

Venture Capital IRR Liquidity Event Business Model 334

Steve Blank

JUNE 11, 2013

The test is: If you add one more sales person or spend more marketing dollars, does your sales revenue go up by more than your expenses? What are revenue strategy and pricing tactics? What are revenue strategy and pricing tactics? And what are its costs? How much do they need to own at a liquidity event?

Venture Capital 226

Venture Capital IRR Liquidity Event Business Model 226

Steve Blank

JULY 2, 2009

Thanks for sharing the lessons you’ve learned, especially the ones where the cost is measured in years. You can be an Independent studio or do “work for hire&# (either a revenue share or buy-out model) - If you’re an independent studio you have a set of choices for distribution channel and marketing models. -

Silicon Valley 120

Silicon Valley Technical Review RSS Software Review 120

Both Sides of the Table

MARCH 3, 2013

Obviously that barrier has been brought down with low-cost ability to capture, stream and distribute content over the Internet. VC can’t don’t invest in these kinds of companies because they can’t get out (no liquidity event). ” No royalty paid until there is revenue. Then there is a royalty rate.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. Of course, for that to be true, you need to reach a liquidity event (IPO or M&A) at or above the last round valuation with no incremental dilution from new rounds.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.quora.com

JANUARY 16, 2011

What did you take from idea on the back of a napkin to liquidity event? Today's "Minimum Viable Product" *must* have scalability / capacity planning and security baked in, *not* postponed until revenue starts to come in. Now we turn it around. It's the developer's turn to ask the Biz Guy.

Developer 42

Developer Technical Review Cofounder Technical Cofounder 42

VC Cafe

NOVEMBER 9, 2011

Below we bring you the main soundbites from the event: Larry Leibowitz took the lead: ‘In 2010, there were $270 billion awarded to IPOs; but in the first 9 months of 2011, IPOs only generated half that much. The US markets have generally proven themselves as giving better valuations, and long term liquidity.”. Also more expensive.

IPO 92

IPO Cofounder Europe 92