Both Sides of the Table

NOVEMBER 14, 2017

This financial leader could well have come through the finance org at another startup or at a larger company but they often also can come from strategy consulting (Bain, BCG or McKinsey) or through investment banking (Goldman Sachs, Morgan Stanley, etc.).

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

YoungUpstarts

JUNE 16, 2020

Business valuation is defined as a way to determine the overall economic value of a company , and is a necessary component of a sound business plan and strategy. Any of these situations will demand a valuation to determine current and future projected value. . Three Methods of Valuation. Life happens to all of us.

Valuation 162

Valuation CPA Software Review Revenue 162

Steve Blank

MARCH 31, 2014

Companies horde cash and squeeze the most revenue and margin from the money they use. Metrics like Return on Net Assets, Return on Capital and Internal Rate of Return are the guiding stars of the board and CEO. Look at the valuations of companies like Tesla, Illumina, and Twitter.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

Startup Professionals Musings

SEPTEMBER 22, 2021

They need to believe your valuation, based on current revenue and intellectual property, and feel the equity offered gives them a real return for the risk. These show a focus on the business elements required for success, and metrics for ensuring accountability, management control, and feedback along the way.

Intellectual Property 352

Intellectual Property Equity Bootstrapping Valuation 352

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Cracking the Code

FEBRUARY 23, 2011

It would have been easy to explain the difference by changes in the 2010/2011 revenue growth projections but unfortunately that is not the case. revenues while large caps are trading at 6.4x. Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different?

Software Review 101

Software Review Technical Review Valuation Europe 101

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. There were no metrics. Him: On metrics. Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. People seem concerned about valuation. So a convertible note was easier.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

The Startup Magazine

APRIL 24, 2020

Whether you’re interested in selling a website you built from scratch, or want to sell your Amazon-based B2C brand, there are many different baseline factors that go into determining an appropriate website valuation number. While it’s true that valuations can get quite technical, the basics are relatively easy to understand.

eCommerce 91

eCommerce Valuation B2C Revenue 91

The Next Web

FEBRUARY 27, 2014

One of the questions I get, more often than not, is what is the appropriate valuation of my business. This is typically in conjunction with an upcoming financing or pending takeover offer. multiple interested investors competing for the deal, and driving up your valuation in the process). The more scarce a supply (e.g.,

Valuation 167

Valuation Forecast Seed Stage .Net 167

View from Seed

OCTOBER 15, 2014

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard. Finance is mission critical, for instance – it just appears on a recurring basis. The seed stage is all about traction.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

K9 Ventures

JUNE 5, 2015

Low supply of companies with traction drove the valuations and deal sizes up. In that presentation, I said that Seed is not the first round of financing any more and that K9’s investments were mostly “pre-seed”. Valuations are rising to match. In the 80s and 90s a company would go public when it hit $20M in revenue.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Genuine VC

MAY 29, 2014

Some are pre-product, while all the way on the other side of the spectrum, some have meaningful revenue and clear up-and-to-the-right metrics. The other is valuation of the next round of Series A financing. The risk associated with raising a subsequent round of capital are different for different profile startups.

Syndicate 166

Syndicate Syndication Seed Stage Valuation 166

Cracking the Code

DECEMBER 1, 2009

Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different? Yahoo Finance. S&M productivity (CAC ratio) for the SaaS 13 Index. Note: high CAC ratio means high productiviy (see blog post for definition). My Investments. CornerstoneOnDemand.

Software Review 48

Software Review Technical Review Cloud Europe 48

Steve Blank

SEPTEMBER 14, 2009

Five Quarters of Profitability During the 1980’s and through the mid 1990’s startups going public had to do something that most companies today never heard of – they had to show a track record of increasing revenue and consistent profitability. There was now a public market for companies with no revenue, no profit and big claims.

Silicon Valley 217

Silicon Valley IPO Technical Review Venture Capital 217

Feld Thoughts

OCTOBER 30, 2014

He’d gotten a random note asking about his valuation when we invested relative to another financing that was just announced. The other company, which was much smaller at the point of investment, got an 11x ARR valuation. My response to the specific situation was: Valuations have increased on a relative basis.

Valuation 143

Valuation Stock Angel Investor IPO 143

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. There were no metrics. Him: On metrics. Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. People seem concerned about valuation. So a convertible note was easier.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. Valuation caps can come into play in settings other than seed-stage convertible note financing rounds. Read on for a fuller explanation.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Cracking the Code

MARCH 12, 2010

Given the predictability of SaaS GAAP revenues on a quarterly basis, the fact that the 08/09 projections were unchanged is not a surprise. Given that the revenues are not growing very fast, this means that most of the companies have reduced their sales force and focused on productivity improvement. Finance Dissertation Help.

Software Review 63

Software Review Technical Review Cloud Forecast 63

Cracking the Code

NOVEMBER 13, 2008

The fact that SaaS valuations are being more affected by the downturn than the Nasdaq can be surprising given the supposed resiliency of the SaaS model (recurring revenues) but it translates the public investors belief that SMB software spend is going to be hit very hard by this recession. With this decline, the average EV/08 rev.

Software Review 48

Software Review Technical Review Valuation Portfolio 48

View from Seed

SEPTEMBER 25, 2019

Something standard like a SaaS company where the exits scenarios and valuations are well-understood may not need a slide here, but the more non-traditional or unique the venture is, the more information which a Founder can fill in the blanks of “what could be” are helpful. But the real significance of these figures is the exercise behind it.

Seed Stage 166

Seed Stage Retention Restful Valuation 166

Cracking the Code

OCTOBER 9, 2009

This strong recovery has highlighted the resiliency of the recurring revenue model in a downturn as well as the stength of the shift to soaftware-as-a-service and cloud computing. In other words, how much of the decline in revenue growth is due to signing up fewer customer vs lower revenues from each new customer. Yahoo Finance.

Software Review 48

Software Review Technical Review Cloud Europe 48

The Equity Kicker

DECEMBER 2, 2015

Mahesh Vellanki from Redpoint put up an interesting post yesterday about ecommerce valuations. His major point is that revenue multiples aren’t that high, largely because the market is highly competitive and margins are low – often because of Amazon. revenue multiple because it’s strong on both these metrics.

Forecast 60

Forecast eCommerce Net Present Value Revenue 60

Cracking the Code

NOVEMBER 10, 2009

Get instrument rated, and trust the 6Cs of Cloud Finance (more.) Cloud accounting is all about matching revenue and costs to consumption…well, except for professional services! SaaS companies use different metrics to calculate renewals. Detailed SaaS Spreadsheet (Valuation and CAC benchmark). Yahoo Finance.

Software Review 48

Software Review Cloud Technical Review Sales Cycle 48

K9 Ventures

OCTOBER 10, 2017

This post is intended to be a dynamic document, and I will attempt to update it from time to time with new questions that may arise or as financing trends evolve. Q: What amount of financing is considered Pre-Seed? It’s a legitimate stage of financing in the venture eco-system as of this writing (October 2017).

Seed Stage 82

Seed Stage Finance Later Stage Equity 82

Up and Running

JULY 22, 2019

Be sure to demonstrate its potential by clearly documenting key performance indicators, highlighting key customers, and demonstrating realistic revenue projections. To help investors get an insider view on company growth, it’s important to share meaningful metrics consistently. Then, structure further financing after that.

Canada 78

Canada Early Stage Valuation Finance 78

A Smart Bear: Startups and Marketing for Geeks

MARCH 21, 2017

Revenue multiples, profit multiples, premium over the previous financing — these are metrics used by sellers to help determine a minimum acceptable price. Even for startups, it takes years for a new product to become good enough to demand many millions of dollars in revenue.).

Balance Sheet 242

Balance Sheet Vertical Acquisition Revenue 242

Ben's Blog

AUGUST 17, 2020

OH in South Park, San Francisco (or on Zoom from Big Sky, Montana): “OMG, crazy – that firm just paid 100x revenue to invest in [insert hot startup here] – what could they be thinking?” How valuation multiples work Why did multiples become a shortcut-heuristic for estimating valuations in the first place?

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

Cracking the Code

NOVEMBER 10, 2009

It is intriguing to see the M&A dynamics in the space, highlighting the interest of tech companies for recurring revenue streams - even SAP announced in their analyst call earlier this month that they were moving from perpertual licenses to five year term licences. Detailed SaaS Spreadsheet (Valuation and CAC benchmark).

Software Review 48

Software Review Technical Review IPO Cloud 48

The Next Web

DECEMBER 8, 2013

Yes, your firm must produce more revenue or cut costs in order to stay healthy – but the health of your agency is deeper than pure financial growth. Revenue: As a small agency, you are always in search of revenue. Keep in mind that the bottom-line isn’t always found in the ledger. Profit : Duh. This is what makes a business.

Cofounder 140

Cofounder Valuation Revenue Social Network 140

View from Seed

JUNE 30, 2015

A few weeks ago, Manu Kumar wrote an excellent post detailing the current state of the seed financing landscape. Over a third of our investments happen pre-product (so by definition, before PMF), and two-thirds are pre-revenue. For all of these, the metrics and growth need to be the result of legitimate PMF and execution, not tricks.

Seed Stage 120

Seed Stage Syndicate Syndication Dilution 120

Cracking the Code

JANUARY 22, 2009

For SaaS companies, we found that MRR is the best metric on which to base sales commissions. While it may make sense to offer very slight adjustments for favorable payment terms and one time revenue, net additions to MRR should dominate the sales rep’s thoughts. How do you clawback revenue from the sales guy? Cindy said.

Software Review 91

Software Review Clawback Sales Salary 91

cdixon.org

AUGUST 3, 2012

. - For consumer startups with transactional models, e.g. e-commerce, the number of users required is often far lower because revenue is the more important metric. Hence, many early-stage consumer startups are switching to transactional models. - VCs are increasingly focusing on B2B for early-stage investments.

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. LTV / CAC, revenue growth, etc.) THEREFORE: we don’t need to be valuation-sensitive.

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Cracking the Code

FEBRUARY 25, 2008

As I was building the spreadsheet, I also included the revenue multiples for this set of companies, both for the trailing 12-month (TTM) and the forward 12-month (FTM). Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different? Yahoo Finance.

Software Review 48

Software Review Technical Review Europe Venture Capital 48

Both Sides of the Table

MAY 23, 2012

Yes, it’s true that FOMO (fear of missing out) is driving some irrational behavior and valuations amongst uber competitive deals and well-financed VCs. Try charging customers for your product when you have 12 competitors giving the product away free finances by $20 million of VC. The Exit Problem.

Venture Capital 347

Venture Capital Technical Review LP Mobile 347

David Teten

FEBRUARY 9, 2015

The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital. If you are testing the market to see what terms you can get, just say, “We are targeting to raise $X at pre-money valuation of $Y.”

Venture Capital 60

Venture Capital Pre-Money Valuation Prospectus Early Stage 60