Startup Professionals Musings

SEPTEMBER 29, 2018

Cash flow is a basic survival metric for every startup. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. They understand startup realities. Desperate entrepreneurs lose their leverage and die young.

Burn Rate 223

Burn Rate Hockey Stick Startup Salary 223

Steve Blank

JUNE 27, 2017

As more and more companies face disruption from globalization, new technology, and startups that have more capital than the incumbents, the continuing cry from Wall Street investors is, “Why can’t companies be as innovative as startups?”. Here’s one reason why: Startups can do anything. Startups can do anything.

Startup 301

Startup New York City Valuation Distribution 301

The Startup Magazine

AUGUST 11, 2023

These investments are a tremendous help to your startup because they will serve as a stepping stone to reach your target eventually. Some return value must be offered to the investors for startup seed funding to be considered acceptable. When considered, “seed funding” describes the initial sums of funds a startup raises.

Seed Stage 137

Seed Stage Technical Review Early Stage Due Diligence 137

Steve Blank

APRIL 23, 2014

For decades large companies have gone shopping in Silicon Valley for startups. What can companies learn from others’ failed efforts to integrate startups into large companies? The answer - there are two types of integration strategies, and they depend on where the startup is in its lifecycle. The Innovation Portfolio.

Acquisition 333

Acquisition Intellectual Property Silicon Valley Startup 333

Both Sides of the Table

SEPTEMBER 22, 2012

I think I’ve read Paul Graham’s post on “ Startup = Growth ” three or four times now. “The growth of a successful startup usually has three phases: There’s an initial period of slow or no growth while the startup tries to figure out what it’s doing. I talked about some of that here.

Silicon Valley 390

Silicon Valley Venture Capital Startup Technical Review 390

Both Sides of the Table

NOVEMBER 14, 2017

Nearly every successful tech startup I’ve observed over the past 20 years has gone through a similar growth pattern: Innovate, systematize then scale operations. Innovate In the early years of a startup there is a lot of kinetic energy of enthusiastic innovators looking to launch a product that changes how an industry works.

Operations 286

Operations New York City Technical Review Startup 286

Startup Professionals Musings

SEPTEMBER 14, 2016

Cash flow is a basic survival metric for every startup. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. They understand startup realities. Desperate entrepreneurs lose their leverage and die young.

Burn Rate 120

Burn Rate Hockey Stick Startup Salary 120

Both Sides of the Table

JULY 6, 2016

I even prefer to fund entrepreneurs who have experience some level of set-backs in their careers or startups because I think it brings a humility to decision-making that I find healthy. You also ran the risk that if you hired employees quickly and then demand wasn’t as strong as expected it was incredibility hard to fire people.

South Korea 261

South Korea Silicon Valley Los Angeles Japan 261

Steve Blank

MARCH 17, 2020

With the Covid-19 virus a worldwide pandemic, if you’re leading any startup or small business, you have to be asking yourself, “What’s Plan B? Large companies are sending employees to work at home. If you’re running a startup or small business, your first priority (after your family) is keeping your employees and customers safe.

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

Startup Professionals Musings

MARCH 25, 2023

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Long-term stability requires revenue growth and profit. Both have worked. Traditionally, it was simple.

Valuation 235

Valuation Revenue Viral Retention 235

Hunter Walker

DECEMBER 13, 2020

If things are going great, you still may get a lower valuation or smaller round. It doesn’t matter what industry, what product, what revenue model, what stage of development. At Homebrew, we keep a list of coaches that work well with startups and then try to help match against need and personality type. How does this harm occur?

Technical Cofounder 144

Technical Cofounder Cofounder Startup Matching 144

Startup Professionals Musings

OCTOBER 5, 2014

Cashflow is a basic survival metric for every startup. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. They understand startup realities. Desperate entrepreneurs lose their leverage and die young.

Burn Rate 262

Burn Rate Hockey Stick Entrepreneur Salary 262

Startup Professionals Musings

NOVEMBER 26, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 270

Valuation Pre-Money Valuation NPV Intellectual Property 270

Startup Professionals Musings

NOVEMBER 21, 2016

After listening to hundreds of startup pitches, and reading even more business plans, most new venture investors develop their own favorite list of “red flags” that signal the beginning of the end of their interest. Every startup needs focus, due to limited resources, so setting irrational goals implies overall poor business acumen.

Intellectual Property 120

Intellectual Property Valuation Technical Review Equity 120

Startup Professionals Musings

AUGUST 25, 2018

Those that do it right also have the unprecedented opportunity to join the elite ranks of 250 unicorns (relatively new companies with a current valuation of over $1 billion). I suggest the following sequence of startup preparation steps: Create a business entity early to isolate business efforts.

Technical Cofounder 184

Technical Cofounder Intellectual Property Silicon Valley LLC 184

Startup Professionals Musings

MAY 4, 2016

The number of startups rose in 2015 for the first time in five years, with the largest year-over-year increase in two decades. Who would not want to joint the unicorns (recent startups with a current valuation of over $1 billion)? Rounding out the team with employees and freelancers.

Intellectual Property 120

Intellectual Property Startup Angel Groups Social Media 120

Up and Running

SEPTEMBER 19, 2017

Capital investments are like gasoline on a startup business’s metaphorical fire. If you’re like most startup CEOs, your startup has been your personal fiefdom and baby. Background: Justin Klemm’s analytics and website uptime startup, Ghost Inspector , wants to revolutionize the way businesses manage their ecommerce funnels.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

JUNE 26, 2016

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $400B. Long-term stability requires revenue growth and profit. Both have worked. Traditionally, it was simple.

Revenue 145

Revenue Valuation Startup Viral 145

Both Sides of the Table

APRIL 26, 2016

There has been a lot of public debate over the past several weeks about whether it’s a good thing to be “gross margin positive” or not and commentary always reminds me that some people at startups don’t quite understand financial metrics or even how to think about which ones are healthy. I’m guessing much of this was 101 to many readers.

Metrics 150

Metrics Cost Acquisition Startup 150

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. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 308

Startup Professionals Musings

AUGUST 10, 2014

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked.Google reached $1 billion in revenue within five years of incorporation, and now has a market capitalization of over $400 billion. Long-term stability requires revenue growth and profit.

Revenue 246

Revenue Entrepreneur Valuation Viral 246

Steve Blank

APRIL 26, 2022

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. They offered desperate founders more cash but insisted on new terms, rewriting all the old stock agreements that previous investors and employees had. They’re Back.

Cram Down 414

Cram Down Founder Venture Capital Recapitalization 414

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. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

ReadWriteStart

JULY 15, 2020

Startup founders are trying to figure out how to fundraise through a pandemic and economic crash. New talk of capital efficiency is gratifying, but there was another lesson from pre-COVID-19 valuation struggles. Venture capitalists and early-stage investors have told all of us, founders are critical to a startup’s valuation.

Valuation 91

Valuation South Carolina San Jose Balance Sheet 91

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. Term-sheets and Valuations: Thinking about Negotiations. The Valuation Question. When companies seeking their first round of serious funding are good enough to receive a term-sheet from an investor, the first issue that always arises is valuation. Let’s start at the end.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Magazine

JUNE 1, 2023

By Daniel Sokolovksy, Co-Founder and CEO, WARP and Troy Lester, Co-Founder and CRO, WARP The dissolution of Silicon Valley Bank (SVB) was more than just a bank collapse, it was a reality check for both startups and the VCs that fund them. We’re hitting record revenue months, weeks, and margins. That includes us.

Early Stage 123

Early Stage Los Angeles Silicon Valley Cofounder 123

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” How much is NewCo worth to investors at this point (pre-money valuation)? This is the most concrete valuation element, usually called the asset approach.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

YoungUpstarts

MARCH 11, 2015

With the daily demands of running a business along with the financial pressures and challenges inherent in early-stage companies, a business valuation may not be the first thing an entrepreneur thinks of when he awakes each morning. When does a startup company need a business valuation?

Valuation 100

Valuation Stock Options CPA Merger 100

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. How They Make Money: Majority of Kayak’s revenue actually comes from advertising on their site (55%), not lead generation or referral fees to travel suppliers as you might think (more on this below). Financial Snapshot: 2010 Revenue: $170 million. How To Think About The Future.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The best thing to get is a “right sized&# valuation. A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Steve Blank

MAY 19, 2015

Startups focus on speed since they are burning cash every day as they search for product/market fit. While technical debt is an understood problem, it turns out startups also accrue another kind of debt – one that can kill the company even quicker – organizational debt.

Technical Review 120

Technical Review Salary Early Stage Software Review 120

Berkonomics

JANUARY 28, 2021

I can’t tell you how many times I’ve walked away from deals where the entrepreneur insists on a start-up pre-money valuation that is so high, no angel could expect to make a return upon the investment, even with a reasonable sales price for the company down the road. Why fight about valuation, or disappoint the founder at the outset?

Early Stage 62

Early Stage Valuation Pre-Money Valuation Cofounder 62

Startup Professionals Musings

OCTOBER 20, 2017

Due to the efficiencies of digital, it is now commonplace to have companies with billions of dollars of revenue and valuation, with few employees, and without years of building infrastructure. Pay-as-you-go provides infinite ability to scale every business. New competitors are built to be digital from day one.

Technical Review 136

Technical Review Demand Valuation Business Model 136

Steve Blank

MARCH 31, 2014

Just look at the disruptive challenges that businesses face today– globalization, China as a manufacturer, China as a consumer, the Internet, and a steady stream of new startups. Perhaps that’s because where established companies might see risks or threats, startups see opportunity. This is the kind most of us are familiar with.

Private Equity 329

Private Equity Metrics China Intellectual Property 329

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. Once you have assembled a core team that is operating the business, you need to move from art to science in terms of granting employee equity.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

YoungUpstarts

DECEMBER 14, 2016

In the current economic landscape, it’s common for startups and businesses to seek a buyout or acquisition — in fact, it’s frequently the goal from the start. Watch out for complex areas such as accounting for revenue, inventory, contingencies, equity instruments and consolidation. Employees and contractors. Books and records.

Acquisition 100

Acquisition Intellectual Property Technical Review Due Diligence 100