David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. From traditional equity VC, Flexible VC borrows the option to pursue and reap the rewards of an outsized exit. Flexible VC 101: Equity Meets Revenue Share. Equity Ownership. Yes, typically preferred equity.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

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. What a luxury in a startup to have the number one person in the business get to focus on just strategy? Dilute your cash, equity or both. I expected it to be controversial and it was. I find them strange. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

Startup Professionals Musings

JANUARY 4, 2020

They know from forums such as Shark Tank on TV that asking for either too much or too little will derail credibility in the eyes of the investor, and leave the entrepreneur with no money and a struggling startup. How much equity ownership are you willing to offer? How much do you really need for the next 12 to 18 months?

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

View from Seed

APRIL 30, 2015

There’s been a lot of digital ink spilled around the various types of capital available to startups today. As a startup grows, venture debt becomes a viable option to continue that growth. Glen is an active contributor to the local tech ecosystem and well-versed in how and when startups can use venture debt to their advantage.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Startup Professionals Musings

OCTOBER 7, 2022

They know from forums such as Shark Tank on TV that asking for either too much or too little will derail credibility in the eyes of the investor, and leave the entrepreneur with no money and a struggling startup. How much equity ownership are you willing to offer? How much do you really need for the next 12 to 18 months?

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Both Sides of the Table

MAY 28, 2018

There are many things a VC is looking for in reviewing your business plan but beyond things the like the quality of revenue, margins, OPEX and CAPEX there’s a really simple rule I call, “Cash In, Cash Out, Milestones Achieved.” Conversely many VCs believe that constraining cash can often lead to increases in creative solutions at a startup.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

www.avc.com

SEPTEMBER 22, 2011

Employee Equity: How Much? The most common comment in this long and complicated MBA Mondays series on Employee Equity is the question of how much equity should you grant when you make a hire. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Austin Startup

FEBRUARY 4, 2019

L to R: Tiara Zolniez (Co-Founder & Sales), Dr. Roshawnna Novellus (Co-Founder & CEO), Alisha Griffey (COO) The Forrest Four-Cast: February 4, 2019 Fifty diverse startups will aim to impress a panel of judges and a live audience with their skills, creativity and innovation at SXSW Pitch Presented by Cyndx.

Startup 50

Startup Cofounder Technical Review Equity 50

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

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. We spent our future since the equity was artificial. Consumer spending is where I’m dubious.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Business Plan Blog

OCTOBER 4, 2013

Aligning the Startup Team Strategy with the Capitalization Strategy. The single most important factor to raising capital for any tech startup is the management team. Furthermore, a startup works differently than a large corporation. Be sure to leave plenty of equity for investors. Early Stage. Seed to Series A.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

Both Sides of the Table

AUGUST 3, 2010

There is a telltale sign of an inexperienced startup entrepreneur. As a startup you shouldn’t focus on buying other companies until you’ve figured out your own business. A close friend of mine in LA who is 3 years into his startup called me about 2.5 How much dilution should I take for it?

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

JANUARY 4, 2014

Yesterday I wrote a post about “ the politics of startups ” in which I asserted that all companies have politics, which in its purest sense is just about understanding human psychology. Equity for the future? He felt the CEO was willing to “sell his soul” for revenue and wanted things to be more pure.

Founder 340

Founder Sacramento Cofounder Technical Review 340

The Startup Magazine

JULY 1, 2022

Technology startups are all the rage these days. But what many people don’t realize is that starting a technology startup is not as easy as it seems. This article will discuss some things that experts like Mark Stifler think technology startups should know about the business. Financing Your Startup.

Technology 137

Technology Venture Capital Finance Startup 137

Hunter Walker

JANUARY 2, 2017

And the narrative for 2017 is OLD ECONOMY COMPANIES WANT TO BUY YOUR STARTUP. When Satya and I started Homebrew in 2013 one of our bets for the coming decades was that non-traditional acquirers would become more aggressive in their pursuit of technology startups. Next Level: Buying Customers/Revenue/Distribution. So, is it true?

Technical Review 116

Technical Review Cap Table Acquisition Startup 116

discuss.joelonsoftware.com

NOVEMBER 1, 2010

where I can learn about how to build a sweat equity team? Rather, it is a proposal for sweat-equity investors. Mark Walsen Mark Walsen Thursday, October 09, 2008 Deleting … Approving … I think you would be better off hiring people, rather than trying to convince them to work for free in exchange for equity.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40

The Startup Magazine

MARCH 30, 2022

Every organization should be aiming to achieve growth, and this is a particularly important concern for startups that want to scale their operations consistently. So what is it exactly, and to what extent can you finance the growth of your startup using it? appeared first on The Startup Magazine. The advantages.

Finance 134

Finance Dilution Green Revenue 134

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. 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. Who are the major Revenue-Based Investing VCs?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

ReadWriteStart

JANUARY 27, 2011

And, oh by the way, we also really like the idea of the 1M/1M entrepreneurs building valuation and negotiating leverage through these business development efforts, instead of signing off large chunks of their company in form of equity early on. million in revenue. I would never take investment in a startup from a hedge fund.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

Up and Running

JULY 1, 2020

Lenders and equity investors are less emotionally involved in the plan as people within the company. Once again, the components of a startup business plan are useful for these expansions. The investment expenses precede the revenues they will ultimately produce and may lead to cash or profitability constraints.

Business Plan 152

Business Plan Forecast Operations Dilution 152

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Common shares. Preference shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

David Teten

OCTOBER 1, 2015

Not surprisingly, the list above also is ranked from least to most equity stake in an investment for the investor, relative to the cash they invest. How would one set up such a startup to eventually raise capital from outside VCs, who will be wary of ‘dead equity’ (i.e., equity that belongs to departed cofounders)?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Startup Professionals Musings

SEPTEMBER 5, 2016

In my experience as an advisor to aspiring entrepreneurs, I often encounter the myth that an initial startup requires investors. Outside funding is not a startup entitlement. You don’t have to fight for your equity, and no one can slow you down in decision making. Startups need to stay nimble and adapt to change.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Austin Startup

FEBRUARY 13, 2019

A pivotal startup milestone? Bootstrap if you can, for as long as you can As a startup you’ll likely fail. 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. Not really.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

ReadWriteStart

JULY 18, 2011

Clavier spoke last week at the International Startup Festival in Montreal on the topic of raising money - with a special emphasis on the numbers that a startup should keep an eye on. Clavier began his presentation at the beginning of a company's lifecycle, asking how many co-founders a startup ought to have.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Both Sides of the Table

MARCH 21, 2010

This is part of my ongoing series on Startup Advice. As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. Large companies can be strange sometimes. Sometimes it actually does.

Warrant 298

Warrant Dilution Startup Stock Options 298

ReadWriteStart

SEPTEMBER 10, 2010

They already have several customers including some telcos, and are at about $350,000 in revenues. Whether it is credit or equity, funding is very, very tight. You can get cash without diluting your ownership in the company. Because customer financing equals revenue, not equity. Kir Devries. Very encouraging!

Cloud 115

Cloud Silicon Valley Incubator Finance 115

The Next Web

FEBRUARY 27, 2014

George Deeb is the Managing Partner at Chicago-based Red Rocket Ventures , a startup consulting and financial advisory firm based in Chicago. your equity in a hot new patented technology business), the higher the demand (e.g., revenue, cash flow or net income multiples from recent M&A transactions in your industry.

Valuation 167

Valuation Forecast Seed Stage .Net 167

David Teten

NOVEMBER 10, 2011

(This is the second of three blog posts on financial models for startups. We started with a sanitized version of a financial model I had developed for startups I have run. This is designed to be a simple end-to-end financial model for an early-stage startup. Here you will see listed assets, liabilities, and equity.

Balance Sheet 154

Balance Sheet Startup Equity Valuation 154

Version One Ventures

FEBRUARY 6, 2019

Over the past year, some of the most interesting and intellectually-stimulating pitches we heard have come from startups in biotech, specifically companies developing therapeutics. This aggressive ownership target is one reason more and more founders are looking for capital from IT/tech VCs who don’t demand as much equity.

Dilution 132

Dilution Artificial Inteligence IPO Valuation 132

Startup Professionals Musings

OCTOBER 29, 2013

Startups ask me “How much money should I ask for?” Angels might be interested during “early stage” if you have a prototype, but VCs won’t bite until you have a product, customers, and revenue. The most common case is an equity investment, but there are many terms that can impact what request size is credible. Investment terms.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

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

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay. By Tim Keane, Angel Investor, Golden Angels Investors, LLC.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

JUNE 9, 2010

Startups ask me “How much money should I ask for?” Angels might be interested during “early stage” if you have a prototype, but VCs won’t bite until you have a product, customers, and revenue. The most common case is an equity investment, but there are many terms that can impact what request size is credible. Investment terms.

Valuation 227

Valuation Early Stage Warrant Common Stock 227

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? “But lawyers will charge much more for equity.” Try doing THAT with equity. Startup Lessons' How will you price the next round? Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

David Teten

NOVEMBER 17, 2011

This is the third of three blog posts on financial modeling for startups. The first was on best practices in building financial models , and the second was a template financial model for a startup. Download the Startup Options Valuation model here. Valuing startups is a far fuzzier process. Participa.me

Employee 155

Employee IRR Startup Mexico 155