VC Cafe

JUNE 10, 2022

As a result, founders are accepting increased dilution of the stakes they hold in their own companies. While these prices are still high compared to what we see in Israel, Investors have putting a stronger focus on revenue growth (and in particular startups that can reach substantial revenue targets) especially before series A.

Valuation 151

Valuation Marketing Venture Capital 151

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.” Usually that’s the point in the meeting where a VC realizes that this meeting isn’t going to go very well.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Both Sides of the Table

MARCH 19, 2013

The line of reasoning goes, “Services businesses are not scalable and the market won’t reward this revenue so make sure that third-parties do your implementation or clients do it themselves. We only want software revenue.” If you’re an early-stage enterprise startup services revenue is exactly what you need.

Technical Review 403

Technical Review Software Review Startup API 403

Both Sides of the Table

MARCH 21, 2013

I think it’s important for enterprise startups to layer in professional services into your revenue stream. deliver profitable revenue that while on gross margins of 50% vs. software at 85-95% it is still profits to help you cover fixed costs. Control Size of PS Revenue Relative to Software Business. rollout support.

Software Review 321

Software Review Software IP Technical Review 321

Gust

NOVEMBER 1, 2011

We recently started a series of posts on establishing the pre-money valuation of pre-revenue startup companies for purposes of investment by seed and startup investors. It is one of the useful methods for establishing the pre-money valuation of pre-revenue startup ventures. Then: Post-money Valuation = Terminal Value ÷ Anticipated ROI.

Venture Capital 161

Venture Capital Valuation Pre-Money Valuation Post-Money Valuation 161

YoungUpstarts

JULY 31, 2019

Founders need seed capital to get their operations up and running, and to begin generating revenue. But “fundraising debt” comes into the picture when you raise too much too early, diluting your business at the beginning of the venture, with no real plan or unrealistic projections for how your business will scale.

Cofounder 127

Cofounder Burn Rate Technical Cofounder Seed Capital 127

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. But those of us with longer memories remember that the revenue line can move south very quickly when the market overall turns south. 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

OCTOBER 13, 2021

It’s easy to say “yes” to one more feature request after another, until the potential for real impact gets diluted. Obsessive sales – must meet revenue goals. Otherwise, your most innovative and disruptive product thinking will be diluted and lost, killing your dream of a better world.

Dilution 334

Dilution Metrics Acquisition Revenue 334

SoCal CTO

SEPTEMBER 27, 2011

I've talked about this topic before in How Investors Think About Valuation of Pre-Revenue Startups. The reality is that an early employee in a pre-funded startup that eventually raises a few rounds of capital will be diluted significantly, is down the line in preference, and will likely be locked up for a while to harvest it.

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

ReadWriteStart

JANUARY 27, 2011

I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature. million in revenue. Hicham has already brought about 3,000 hotels from the MENA region, but another 30,000 remain to be harnessed.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

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

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. They might have a more flexible time horizon than a VC because the money doesn’t come from a fund with a limited lifespan. The first thing you need to get straight with a high net worth individual—what is their return expectation?

.Net 88

.Net Cap Table Startup Technical Review 88

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Growth can dilute a business’s culture and customer value proposition and put the business in a different competitive space.

Dilution 209

Dilution Virginia Management Washington 209

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

Startup Professionals Musings

NOVEMBER 7, 2022

There is no point incubating an innovative new venture if you don’t have the funds to launch and expect quick self-sustaining revenue. Don’t let early success dilute your focus, or demand that the new venture quickly meet your mainline financial and growth metrics. Commit a source of internal or external seed funding.

Advisory Board 359

Advisory Board Incubator Dilution Agile 359

Both Sides of the Table

NOVEMBER 14, 2017

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. An example of the systems companies build are pricing & revenue management tools to best help to optimize yield.

Operations 286

Operations New York City Technical Review Startup 286

Startup Professionals Musings

OCTOBER 7, 2022

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection.

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

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. It has awesome features that my main competitor doesn’t have. I can save tons of development time and I think I can buy it for all equity. Most likely you’ll fail – most companies do.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

SEPTEMBER 17, 2011

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. But it will not help your business grow faster. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

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. There are four problems: First, as the company raises more money, the value of your initial stock option grant gets diluted by the new money in.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

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

Startup Professionals Musings

MARCH 12, 2023

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. How big is your startup opportunity? If your targeted business plan opportunity is not at least a billion dollars, most VCs won’t even be interested.

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Mike Michalowicz

JANUARY 16, 2023

If you’re like me, you may be inundated with emails and ads for TED talks, keynote speeches and small business books from thought leaders offering to help your small business increase revenue. It increases your small business revenue by leaps and bounds too.). Thought sharing is serving. And I think we all want to do that.

Small Business 60

Small Business Audience Revenue Dilution 60

Both Sides of the Table

SEPTEMBER 16, 2010

As I’ve highlighted I believe we’re in a unique period similar to 2005-08 where the biggest tech firms of Silicon Valley (and some media companies) are scooping up small software companies as “talent acquisitions&# versus accretive revenue / profit generators. avoid being diluted). But it is. So know that going in.

Cap Table 283

Cap Table Angel Investor Liquidation Preference Deal Flow 283

Startup Professionals Musings

OCTOBER 16, 2021

This allowed him to learn enough from all his early mistakes to hit it big ($10 million revenue) with a global beauty tools company called Tweezerman. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time. Do you love antiquing?

Entrepreneur 304

Entrepreneur United States Dilution .Net 304

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

YoungUpstarts

SEPTEMBER 16, 2015

Raise too much capital at any given stage and suffer more dilution than is necessary – obviously not ideal. The best entrepreneurs raise enough money to achieve a set of interim milestones and then raise capital again at a significantly increased valuation. It’s part art, part science. Set Quantifiable Goals.

Valuation 100

Valuation Dilution Chicago Technical Review 100

A Smart Bear: Startups and Marketing for Geeks

FEBRUARY 26, 2019

Instead, watch payback period for acquisition efficiency, watch retention for product/market fit, watch expansion revenue for long-term growth, and watch gross margin for long-term profitability. Find and focus on one reliable distribution mechanism before diluting your time diversifying. Fix that now. Even just a few people.

Restful 202

Restful Founder Revenue Acquisition 202

Gust

OCTOBER 18, 2011

It is one of the most useful methods for establishing the pre-money valuation of pre-revenue startup ventures. in the case of one investment round, no subsequent investment and therefore no dilution). Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation. (in The Dave Berkus Method.

Valuation 174

Valuation Pre-Money Valuation Southern California Post-Money Valuation 174

The Startup Magazine

AUGUST 9, 2022

The SoStereo firm that Salo helped build not only streamlines the way Fortune 500 Brands use music on their ads, but also helps indie artists build a musical middle class and earn extra revenues. One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted.

Cofounder 149

Cofounder Founder Miami Marketing 149

Startup Professionals Musings

JANUARY 4, 2020

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection.

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Both Sides of the Table

JUNE 17, 2017

70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue. Revenue When I look at an income statement I start by focusing on the revenue line. You need to understand the “quality” of the revenue.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

ReadWriteStart

JUNE 1, 2020

The primary source of your funds should be your paying customers, i.e., your business should generate enough revenues and profits to fund the growth and expansion. These usually play a role in the very early stage of your business, primarily pre-revenue. Reasons for funding. ? Incubators and Accelerators. Government programs.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

The Startup Magazine

MARCH 30, 2022

Growth financing can also be described as revenue-based financing, which essentially allows you to upfront your annual recurring revenue (ARR) and make it available right now, rather than forcing you to wait weeks or months until your end-of-year earnings are accessible. A quick overview of growth financing.

Finance 137

Finance Dilution Green Revenue 137

YoungUpstarts

MAY 6, 2019

How much revenue are you generating on an annual basis? If you are getting funded for the first time, which means that you have not diluted the shares of your company, you will be receiving Series A funding. These partnerships need to bring in more revenue. What type of funding do you require and how you require it?

Startup 113

Startup Technical Cofounder Merger Early Stage 113

Up and Running

JULY 1, 2020

The investment expenses precede the revenues they will ultimately produce and may lead to cash or profitability constraints. Will marketing for the expansion dilute marketing of your brand or other products? Expansions often decrease profits before increasing them and require large initial investments.

Business Plan 152

Business Plan Forecast Operations Dilution 152

View from Seed

APRIL 30, 2015

Traction and revenue? Typically, the gross margins aren’t there compared to software, so revenue isn’t quite as important in the early stages of getting to market. NVV: Is there any dilution? The fact that the process can be much smoother and quicker can actually be a benefit. Business model? Previous capital raised?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120