Up and Running

MARCH 6, 2019

Real businesses make profits like 7 percent, 9 percent, occasionally even low double-digit profits (stated as a percentage of sales). Rarely, some new innovative businesses will get to 20 percent profits to sales. But don’t quote me a damned IRR. Instead of that, validate sales by bottoms-up assumptions.

Net Present Value 87

Net Present Value Forecast IRR Oregon 87

David Teten

JANUARY 19, 2021

In all these cases, capital is provided to fuel forecasted growth without creating a commitment to a particular vision for future funding rounds, exit goals, and associated blitzscaling. Typically stable, high margins; repeatable sales model; clear path to profitability; and high growth potential. The State of Flexible VC.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

MAY 19, 2018

Or if you’re a VC raising from LPs you have to list all of your deals, your investment value, your carrying value, your multiples, your IRRs, TVPIs, DPIs, etc along with net cashflows plus your previous LPAs. Investors love to be able to see what you told them in forecasts in prior years and then compare with how you actually performed.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

SoCal CTO

MAY 19, 2010

In his recent post, Top 10 Ways to Win a Business Plan Competition , he says: #4 I wanted to push this further down the list, but I just bristle at this: the revenue forecast. Remember my day job, I'm past Chairman of the Tech Coast Angels and I see a lot of pitches with revenue forecasts. These are so detached from reality.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

Up and Running

MAY 2, 2012

But don’t quote me a damned IRR. I’ll judge your projections for realism and credibility, but that’s sales, costs, expenses, cash flow, and other basic numbers. ” I hate hearing about a $43 billion market, and even more so when you present a sales forecast validated by getting some percentage of that market. .”

Net Present Value 142

Net Present Value IRR Texas Global 142

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR.   Internal Rates of Return naturally compound, so a 50% IRR is 7.59

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68