Startup Professionals Musings

AUGUST 1, 2016

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product 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

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. However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54

The Equity Kicker

MAY 14, 2012

There are certain types of events that investors look to as evidence that a company has overcome certain challenges and has therefore reduced risk in the business and become deserving of a higher valuation. achieving first revenues. breaking through revenue thresholds – e.g. run-rates of £1m, £5m, £20m and so on.

Finance 118

Finance Valuation Venture Capital Dilution 118

Up and Running

MAY 21, 2015

All the other sharks typically make a traditional equity investment; for example they’ll invest $100,000 at a $1,000,000 business valuation, and take 10 percent of the business. What this means, is that he gets paid not as a portion of the profit, but as a portion of the overall revenue, regardless of the profit.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

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

VC Cafe

JUNE 10, 2022

According to new research by Pitchbook , the trickle down effect has already started in seed and series A startups with round sizes and valuations shrinking in size compared to 2021. But recently those round sizes and valuations have tumbled to about $10 million and $50 million, respectively, he said.

Valuation 152

Valuation Marketing Venture Capital 152

View from Seed

JUNE 30, 2015

Over a third of our investments happen pre-product (so by definition, before PMF), and two-thirds are pre-revenue. For a marketplace or ecommerce business, you need to be doing well north of $5M in annual revenue or GMV to get an A round done. FWIW, at NextView, we invest from inception to strong PMF. We’re not at normal yet.

Seed Stage 120

Seed Stage Syndicate Syndication Dilution 120

Small Business Force

JANUARY 14, 2016

It is also less understood than it should be, with dilution and control issues being major points of concern. The point of it was that with any kind of equity distribution, dilution will always occur. Real world example of valuation Your 80% is now worth $5.6 Real world example of valuation Your 80% is now worth $5.6

Equity 20

Equity Dilution Distribution Valuation 20

abovethecrowd.com

APRIL 20, 2016

One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. By January of 2016, that number had ballooned to 229.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Professor VC

JUNE 20, 2011

The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. But of course, the model had us requiring only $10M equity to breakeven and to achieve $185M in revenues in 2008 (the magic Year 5 in all business plans).

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

NZ Entrepreneur

JULY 8, 2019

I waited for the ‘casino-like’ world of startup investing until I was 28 years old, putting $10,000 into a friend’s software distribution company – a tidy sum for me at that age. Soon after that first investment, I started my first business, and am now on my fifth (all $1m+ in revenue, but not all ‘successful’). Valuations.

New Zealand 42

New Zealand Entrepreneur Valuation Dilution 42

Lightspeed Venture Partners

SEPTEMBER 16, 2012

The founder wanted to take the offer, but he called his advisor (his business school professor) who told him it was too much dilution for this stage, so he turned it down. ” The other offer saw money coming off the top as a percentage of revenue. He was clearly trying to get the Sharks to collude to avoid driving valuation up.

Silicon Valley 163

Silicon Valley Salary Dilution Indiana 163

Up and Running

DECEMBER 9, 2014

Two, revenue. Many business owners today really think of financials as being about the past, how much revenue have we had, how much cost did we have. Inaudible 00:27:51] leading indicator to help you know where your revenue will be over the coming weeks and months but you can actually apply the same concept on the cost side as well.

Small Business 95

Small Business Finance Forecast Metrics 95