Mike Michalowicz

MAY 1, 2024

Conventional wisdom dictates that retaining every client and tirelessly pursuing new ones is the only approach to success, but this approach will only lead to diluting your resources, the identity of your business, and the muddling of your service. Cross off the clients who make you cringe when you hear their names. Grade away.

Dilution 78

Dilution Channel Demand Revenue 78

Startup Professionals Musings

FEBRUARY 14, 2021

The focus is diluted, it’s hard to keep up with individual product changes, and you will always be on the defensive. I recommend never naming more than three specific ones, and using each of these as representative of a group of competitors. Investors want focus and breakthrough innovation.

Intellectual Property 417

Intellectual Property Angel Investor Dilution Differentiation 417

Berkonomics

FEBRUARY 8, 2024

The investor organization is granted the seat if the investment remains, and the documents often name the first representative assigned by the investor group to the position. A seat on your board? Why these restrictions? In later insights, we will explore the legal and ethical responsibilities of board members.

Cost 62

Cost Covenant Angel Groups Angel Investor 62

Berkonomics

DECEMBER 7, 2023

One of his lessons remains clearly on my mind and is a variant of the old “You name the price and I’ll name the terms” challenge that works so well in negotiation. In a previous insight, we explored the common percentage of a company’s fully diluted stock that is often granted in the form of options for new employees.

Stock Options 62

Stock Options Stock Salary Dilution 62

Berkonomics

FEBRUARY 23, 2023

So, the question: load up with more equity and dilution? For young companies, often the question is whether to suffer a new round of dilution to stimulate growth, or to sell earlier and not share the (presumably) increased proceeds with additional investors. Or sell now?

Dilution 62

Dilution Valuation Early Stage Equity 62

Startup Professionals Musings

JANUARY 23, 2019

Always write in the future tense, what you will do, and name yourself as the key person responsible. For example, every business needs a company name and logo, incorporation, an Internet domain name and website, social media accounts, prototypes, intellectual property, and key executive positions filled.

Intellectual Property 248

Intellectual Property Dilution Cofounder Social Media 248

Both Sides of the Table

JANUARY 4, 2014

It either needed to get more aggressive in pricing, pivot to a new business or business model or raise more capital (and take the dilution) in order to have more time to figure things out. The company hadn’t performed well financially and need to make changes. We sat down the three of us.

Founder 340

Founder Sacramento Cofounder Technical Review 340

Both Sides of the Table

MAY 30, 2018

If a VC prices a flat or down round it means that management teams are often taking too much dilution. It’s a tough dance but I would suggest the following: In most cases don’t name an actual price Your job is to “anchor” by giving the VC a general range without saying it. Why shouldn’t most founders just name a price?

Valuation 324

Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

Mike Michalowicz

JANUARY 16, 2023

But, your messaging will be diluted if you are trying to speak to many needs. This is a name that changed my authorship journey: AJ Harper. There are many co writers who do not demand their name be included and some who prefer it. Speak to one person in the audience. This is the person who can best be served by your message.

Small Business 60

Small Business Audience Revenue Dilution 60

View from Seed

SEPTEMBER 23, 2019

For example, stating “angels” is fine, and even highlighting notable names can be useful, but it’s unnecessary to share an exhaustive list. Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. What not to include is directly stating valuation expectations.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Berkonomics

DECEMBER 31, 2020

The company was funded entirely by grants from the National Institute of Health, amounting to millions of non-dilutive dollars in all. No dilution to shareholders or the founders. I was chairman of a company that, for twelve years never took a dollar of outside investment. How refreshing! How grants are considered.

Equity 62

Equity Finance Dilution Founder 62

Both Sides of the Table

OCTOBER 11, 2009

You can go as high as 1% because they’re going to get diluted when you bring in VC. It’s OK to have the advisor slide where you glance quickly over the names. At a $2 million valuation this is 0.5% of the company – about right. Just don’t lay it on thick. Others must echo my experiences. What do you think?

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Both Sides of the Table

APRIL 21, 2013

So I started noticing hot sauces more and the more I looked the more I noticed this funny rooster bottle with a strange sounding name I couldn’t pronounce and that familiar green cap. The company name sounded Chinese – Huy Fong Foods. He can’t trademark it since it’s the name of a city. Where was it from?

Vietnam 415

Vietnam Los Angeles Entrepreneur Thailand 415

YoungUpstarts

OCTOBER 17, 2018

For example, crowdspring helps entrepreneurs, small businesses, agencies, Brands, and non-profits with custom logo design, web design, print design, packaging design, product design, and even with unique business names and product names. The simplest version of a branded hashtag is your business name (#starbucks, #ikea).

Small Business 191

Small Business Marketing Social Media Social Network 191

Both Sides of the Table

NOVEMBER 14, 2017

MakeSpace (as he named it) would help you get your excess goods into low-cost warehouses. Raise too soon and likely take on more dilution, wait and get valuation up (as our metrics continue to rise) but then run to a point where you have a lower cash balance and place more risks on the business.

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

SEPTEMBER 10, 2021

A-Rounds used to be $3–7 million with the best companies able to skip this smaller amount and raise $10 million on a $40 million pre-money valuation (20% dilution). just to name a few! So in a way it’s self selecting.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Berkonomics

DECEMBER 14, 2017

A particularly strong advisor, especially if well known, may be named chairman of the advisory board, which is often just an honorary title, since the CEO is usually tasked with the planning of the full day meeting of advisors annually, and setting the agenda to match the needs of the corporate board and senior management.

Advisory Board 97

Advisory Board Dilution Vesting Stock 97

Both Sides of the Table

JUNE 5, 2011

But the reality is that you’re faced with two problems: 1) the earlier the stage the riskier and thus more write-offs so you need to have enough ownership percentage in your winners to make up for the losers and 2) the earlier stage your check the more likely the company will need many more funding rounds behind you and thus you face dilution.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Berkonomics

OCTOBER 12, 2017

One of his lessons remains clearly on my mind and is a variant of the old “You name the price and I’ll name the terms” challenge that works so well in negotiation. In a previous insight, we explored the common percentage of a company’s fully diluted stock that is often granted in the form of options for new employees. (See

Employee 97

Employee Stock Options Dilution Salary 97

Startup Company Lawyer

MARCH 14, 2010

If new investors get better rights in a future equity financings (such as registration rights, price-based anti-dilution, redemption rights, etc.), Anti-dilution protection. Deleting anti-dilution rights saves several pages of text in the Certificate of Incorporation. Name of security. Anti-dilution. Board seat.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Berkonomics

DECEMBER 21, 2017

The investor organization is granted the seat as long as the investment remains, and the documents often name the first representative assigned by the investor group to the position. Almost always, professional investors, including angel groups and venture capitalists, also require at least one seat on the corporate board.

Covenant 97

Covenant Cost Angel Groups Angel Investor 97

ReadWriteStart

JULY 18, 2011

Years later Clavier's name now comes up all the time when one of his portfolio companies finds success; his exits include Mint, Tapulous, and UserPlane, other investments include Mashery (a ReadWriteWeb sponsor), Rapleaf, Fitbit, bitly, GroupOn, Twitter and many more. The next stage is seed funding, and you should raise $500k-$1.5m

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

YoungUpstarts

JUNE 13, 2011

They end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service. His book “ Smart Growth: Building an Enduring Business &# was named a 2010 Top 25 Business Book for Business Owners by Inc. The problem is that too many entrepreneurs never learn to say ‘NO!’ magazine.

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

YoungUpstarts

AUGUST 8, 2013

After all, few families in recent history have more successfully branded themselves into a household name. Not only do the sisters work with competent, knowledgeable professionals when dealing with business matters, they all seem to have a very loud voice when it comes to products that bear their name.

Dilution 203

Dilution Open Source .Net Web 203

Startup Professionals Musings

AUGUST 14, 2014

The focus is diluted, it’s hard to keep up with individual product changes, and you will always be on the defensive. I recommend never naming more than three specific ones, and using each of these as representative of a group of competitors. Investors want focus and breakthrough innovation.

Intellectual Property 234

Intellectual Property Angel Investor Dilution Differentiation 234

Duct Tape Marketing

OCTOBER 11, 2023

But what the dilution, if you bring it down to it that even creator entertainers and educators have in common is it's this human element. 14:33): So thinking about how many conversations the sales team was able to capture, how many net new names do we get on to our list? Christie Horsman (22:32): Thank you so much, John.

B2B 81

B2B Marketing B2C Community 81

YoungUpstarts

OCTOBER 10, 2014

The more equity investment you use to develop the business, the more diluted your personal earning potential becomes. Some entrepreneurs take on equity investors as much for their expertise, industry knowledge and name credibility as they do for the money. Aside from paying your bills, you do not have to distribute profit to others.

Equity 176

Equity Limited Liability Company Vietnam Finance 176

www.inc.com

SEPTEMBER 24, 2011

Naming a Business. Besides the future potential earnings youre forgoing, youre also diluting your own ownership in the company. The offering to a consultant may affect your securities compliance in later offerings and will certainly add to further dilution to founders," Durkin says. Tools & Research. Newsletters. Subscriptions.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

MARCH 21, 2010

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. Future investors aren’t likely to mind that you had a PBW program because the dilution will be taken before they invest.

Warrant 298

Warrant Dilution Startup Stock Options 298

Berkonomics

FEBRUARY 9, 2017

Email readers, continue here…] For young companies, often the question is whether to suffer a new round of dilution to stimulate growth, or to sell earlier and not share the (presumably) increased proceeds with additional investors.

Dilution 48

Dilution Valuation Early Stage Naming 48

Berkonomics

MAY 8, 2014

The company has been funded entirely by grants from the National Institute of Health, amounting to millions of non-dilutive dollars in all. The company grows in value to its customers and to prospective buyers of the business, but without any dilution of control or ownership for the founders. How refreshing!

Finance 66

Finance Dilution Equity Naming 66

99u.com

DECEMBER 22, 2012

Founded in 2009, the 99U takes its name from Thomas Edisons famous. Assuming no dilution (which is not a good assumption), this means you need to sell for $200 million. If tenths of a percent of options for an advisor causes too much dilution, then youve failed anyway. Its not about ideas. Its about making ideas happen.

Turkey 40

Turkey Dilution Portfolio Exit Strategy 40

Both Sides of the Table

SEPTEMBER 12, 2010

Here is the email he received (reprinted without names with his permission). I’m an investor at [Big Name, Large Fund VC] and recently came across [Your Company]. Looking forward to speaking, Name [redacted]. He sent me an email asking whether the approach was real and whether he should take it seriously.

Programming 294

Programming Entrepreneur Private Equity Equity 294

Both Sides of the Table

SEPTEMBER 25, 2011

Pro-rata rights are designed to protect investors from being diluted in future rounds of financing, which is an important way for VCs to protect the investments they make early that turn out to be super successful. These investors often have internal policies that dictate that they own a minimum percentage of a company in which they invest.

Entrepreneur 310

Entrepreneur Dilution Finance Silicon Valley 310

Brandanew

JULY 11, 2015

The brand of course is an easily recognizable name that immediately tells people about a certain organization that manufactures certain products or renders certain services. Its existing premium customers won’t take it kindly as it dilutes the said image. 10 Branding Elements and What They Mean. Brand identity. Brand equity.

Virginia 100

Virginia Equity Differentiation Dilution 100

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. instrument (for a lack of a better name). However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54

This is going to be BIG.

AUGUST 13, 2015

Think of yourself as the "Uber for" when you don't even understand what makes Uber "Uber"--namely a commoditized, interchangeable workforce performing singular tasks whose demand is unpredictable geographically and schedulewise, that had lots of unused inventory. Copy the strategies of Facebook, Twitter, Snapchat, Instagram, Uber, etc.,

Dilution 60

Dilution Cofounder PR Demand 60