YoungUpstarts

JULY 31, 2019

Billions of dollars are being poured into companies that have yet to clear the value chasm, as entrepreneurs use early traction that isn’t necessarily financially-oriented, but shows a certain level of uptick or success, to raise capital and convince early stage investors that their horse is the one to bet on.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. The only thing worse than your early-stage company buying another early stage company is you trying to pull off a merger of equals. Want to sell early? You’re in control.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

SEPTEMBER 17, 2011

I recently wrote a post about why I didn’t think early-stage startups should have COOs. I know it’s much sexier to race around talking about buying up companies than it is tweaking your business operations to accelerate revenue, reduce churn and grow faster. Dilute your cash, equity or both. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

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

This is going to be BIG.

JANUARY 18, 2024

They might not understand how a pre-revenue startup could be worth anything, let alone be valued at $5mm. Governance Moreso than a lot of actual VCs, a lot of high-net-worth folks tend to ask for board representation—even in the super early stages of a company where boards tend to be a little less formal.

.Net 88

.Net Cap Table Startup Technical Review 88

Both Sides of the Table

SEPTEMBER 28, 2014

So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000. Plus, most early-stage M&A fails so this isn’t likely a good use of capital for a young company). Gross burn is the total amount of money you are spending per month.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

DECEMBER 11, 2022

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. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Both Sides of the Table

NOVEMBER 14, 2017

As an early-stage VC I love this phase. Throughout the first year we made many fixes and saw our revenue base in these markets accelerate so we felt we were ready to attack Los Angeles, amongst the most important storage markets in the country.

Operations 286

Operations New York City Technical Review Startup 286

YoungUpstarts

MAY 6, 2019

In this article, we will discuss why it is important to understand the whole startup stages concept before you start a business to get the most benefit. Early Stage. This startup stage starts from the day you decide to work on a startup idea. Here is the complete list of points available in early stage startup.

Startup 113

Startup Technical Cofounder Merger Early Stage 113

YoungUpstarts

SEPTEMBER 16, 2015

Raise too much capital at any given stage and suffer more dilution than is necessary – obviously not ideal. John Vrionis is a partner at Lightspeed Venture Partners who focuses primarily on early stage enterprise and consumer technology investments. It’s part art, part science. Set Quantifiable Goals.

Valuation 100

Valuation Dilution Chicago Technical Review 100

Startup Professionals Musings

MARCH 14, 2020

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. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Both Sides of the Table

OCTOBER 1, 2009

Consumer spending is 70% of the economy and will continue to be stretched – We can look all we want at tech innovation, VC funding cycles and hot M&A deals, but ultimately growth and therefore investment must be underpinned by revenue. This is tied to having consumers who feel confident enough to spend. million – take it.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

View from Seed

APRIL 30, 2015

Especially in the early stages, so much about the company may change in how they think about product or go-to-market — and change multiple times — before raising an institutional round. Traction and revenue? NVV: Is there any dilution? NVV: What do debt providers look for in a company’s track record?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

David Teten

AUGUST 21, 2019

Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. Less or no dilution.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Both Sides of the Table

JUNE 5, 2011

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. million post-money valuation with no revenue. It was early 2000. I raised my A round at a $31.5 That was market.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Austin Startup

MAY 8, 2018

Background reading: Founder Compensation: Cash, Equity, Liquidity Fatal Errors in Early Startup Hiring Early Hires: Options or Stock Given how deeply involved we are with early-stage startups hiring their first key employees, I figured it would be helpful to outline a few key principles to help entrepreneurs navigate the topic.

Employee 48

Employee Seed Stage Startup Equity 48

David Teten

JANUARY 21, 2021

This essay is part of a series on alternative VC: I: Revenue-Based Investing: a new option for founders who care about control. II: Who are the major Revenue-Based Investing VCs? III: Why are Revenue-Based VCs investing in so many women and underrepresented founders? IV: Should your new VC fund use Revenue-Based Investing?

Equity 78

Equity Revenue Cofounder Colorado 78

The Next Web

SEPTEMBER 13, 2013

But the problem with this is that most VCs in the Valley, especially early stage ones, only like to invest in companies that are within driving distance from their offices. The rest of Asia is still developing with far more angel and early-stage investors than mid-to-later stage folks.

Asia 132

Asia Silicon Valley India Term Sheet 132

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. Some came from angel investors, but we also sought out industry experts to be early contributors in this stage, which leads me to tip number three.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

ReadWriteStart

SEPTEMBER 10, 2010

They already have several customers including some telcos, and are at about $350,000 in revenues. You can get cash without diluting your ownership in the company. Because customer financing equals revenue, not equity. That's why, I advised Gio to keep going with further execution on his business and build more revenue traction.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

VC Cafe

FEBRUARY 27, 2024

especially if the startup already has a product and revenue? To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples).

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Berkonomics

APRIL 26, 2018

Any disruption to the tedium of daily activity from weather, disaster, revenues slowdown or product problems will stress the company infrastructure if there is not a cushion to use during such times. Stress of this type always forces you or senior management to lose focus upon strategic issues and drop into day-to-day tactical mode.

Dilution 90

Dilution Acquisition Early Stage Book Value 90

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

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. This situation is not always in the best interest of founders.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

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. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. This situation is not always in the best interest of founders.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

Hunter Walker

JANUARY 15, 2016

I wish I could claim I deftly foresaw this, but I was just seeking recurring revenue to to cover OneMatchFire’s office expenses. By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue.

Technical Review 48

Technical Review Startup Cofounder SMS 48

Both Sides of the Table

SEPTEMBER 18, 2014

Revenue multiple? And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? How will you price the next round? Your A round? Him: On metrics. We’ll have some proof points by then. What proof points? How will the lead determine a value?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? Arthur: The usual royalty revenue sharing funding agreement is for an agreed period – and commences on the generation of revenues by the royalty issuer (company licensing the IP.)

IP 54

IP Intellectual Property Investment Bankers Product 54

Both Sides of the Table

APRIL 14, 2012

Let me remind readers as I outlined in this post , there are VERY FEW M&A transactions for early-stage startup companies above $100 million. You just said, “nobody would take 1-2% dilution.” .” You know, close your $100 million round so buyers will come in at $200 million. Hang on, Mark.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Startup Professionals Musings

SEPTEMBER 5, 2016

Don’t quit your day job until the revenue is flowing. Investors expect nothing less than a full-time commitment, even in the early stages when the business model has not yet been proven. Don’t let early funding increase risk and dilute your potential. Spread your equity internally to build the team.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? Arthur: The usual royalty revenue sharing funding agreement is for an agreed period – and commences on the generation of revenues by the royalty issuer (company licensing the IP.)

IP 48

IP Intellectual Property Investment Bankers Product 48

Venture Chronicles

MAY 26, 2010

This is why early stage companies that raise a lot of capital are valued richly, it’s a compromise between the company and investors summed up as “I know you will only sell 40% of the equity but you need a pretty big chunk of capital so we’ll give you $10m and value you at $15m pre money instead of $5m&#.

Lean 40

Lean Early Stage Valuation Startup 40

View from Seed

JANUARY 26, 2016

With that in mind, let’s look at an illustration of these trends below, which demonstrates what’s been happening to early-stage financing rounds over the last 15 years or so. Series A investors invested quite early, often before product/market fit. Also, the stage of the company tends to be very early.

Seed Stage 120

Seed Stage Early Stage Cofounder Finance 120

Both Sides of the Table

MARCH 21, 2010

Plus, we’re all allured by the false sense that our contract with BigCo is going to “make us&# because once they start using us it will spread like wildfire and the revenue will flow in. They negotiate a “master agreement&# to work with your company with some maybe minimum guarantees in terms of revenue.

Warrant 298

Warrant Dilution Startup Stock Options 298

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. Enter Raul: This capital table startup options valuation model was created with the purpose of valuing options for an illiquid, early-stage start-up. I couldn’t find one online, so I built it.

Employee 155

Employee IRR Startup Mexico 155

David Teten

NOVEMBER 10, 2011

This is designed to be a simple end-to-end financial model for an early-stage startup. The Income Statement sheet allows you to model expenses and revenues as they occur. He builds custom financial models for clients and is reachable at New Prospect Ventures. Download the template financial model in Excel here.

Balance Sheet 154

Balance Sheet Startup Equity Valuation 154