Startup Professionals Musings

DECEMBER 16, 2017

It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. There is a rarified brand of successful investors who can show average IRRs of 25 percent or greater over the years. All startups always need more money. They will need more money.

Angel Investor 190

Angel Investor Accredited Investor IRR Angel Groups 190

David Teten

JANUARY 19, 2021

From RBI, Flexible VCs borrow the ability to reap meaningful returns without demanding founders build for an exit. Every Flexible VC structure allows founders to access immediate risk capital while preserving exit, growth trajectory, and ownership optionality. . Flexible VC 102: Variations.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Startup Professionals Musings

MAY 9, 2014

It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. There is a rarified brand of successful investors who can show average IRRs of 25 percent or greater over the years. All startups always need more money. They will need more money.

Angel Investor 278

Angel Investor Angel Groups Accredited Investor IRR 278

Version One Ventures

SEPTEMBER 22, 2021

3x the invested capital net of fees over a period of about ten years for a net IRR in the low twenties). But returns like the ones for Version One are also driven by one big factor: everyone (investors and founders alike) has underestimated the size of the addressable market for tech over the past decade.

Venture Capital 201

Venture Capital IRR Private Equity Seed Stage 201

Startup Professionals Musings

JUNE 5, 2015

It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. There is a rarified brand of successful investors who can show average IRRs of 25 percent or greater over the years. All startups always need more money. They will need more money.

Angel Investor 120

Angel Investor Angel Groups Accredited Investor IRR 120

Hunter Walker

JULY 18, 2021

I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’ A couple of times I encountered very likable first-time founders who were operating in an interesting problem space but lacked strong product instincts or experience. Here’s 2 (and a half) mistakes I made that you should avoid.

Cap Table 140

Cap Table IRR Angel Investor IPO 140

Steve Blank

MARCH 31, 2014

Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption. If they don’t, then the management team has simply become caretakers of the founders’ legacy. This never ends well.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

Seeing Both Sides

SEPTEMBER 26, 2010

Thanks to their position as the wolf, founders (and angel investors) can often get liquidity from their late stage investors (particularly through Digital Sky Technologies – a Russian Bear in the transaction mix?). . But the VCs, and in turn their LPs, are left holding an illiquid bag.

IRR 36

IRR IPO Entrepreneur LP 36

David Teten

SEPTEMBER 16, 2014

Dave Kerpen, founder and CEO of Likeable Local , just published an interview with me on Linkedin, which I’ve included below. He’s the #1 LinkedIn Influencer of all time in page views, ahead of Bill Gates, Jack Welch, Mark Cuban, and President Barack Obama. Enter Dave: Angel investing is a great way to make a lot of money.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

Both Sides of the Table

OCTOBER 17, 2019

It proved to be fortuitous because it allowed me the time & space I needed to get to know tons of founders and VCs and to hone my craft. Some Teams Create, Others Scale (Some do both) There is so much focus these days on founders and whether they should always remain in the CEO seat.

IP 223

IP Intellectual Property IRR Cofounder 223

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Hippoland

NOVEMBER 13, 2016

These founders are really selling. A common intermediary milestone for most investors is IRR (internal rate of return) of the fund. So there are a lot of unrealized gains built into the IRR of an early fund. IRR calculations are based on two things — changes in a company’s value and the time-scale on which this happens.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Tim Keane

JANUARY 12, 2010

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   (If you plug in an IRR of 58.5%   Internal Rates of Return naturally compound, so a 50% IRR is 7.59 times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

APRIL 3, 2012

Another rule of thumb is a target of 50% IRR (a discounted cashflow calculation). Founder network. Expected return rate. Most venture capitalists tell you that they look for 30% annual return, or 10 times initial investment in 3-5 years. Successful serial entrepreneurs usually find it easier to raise money from venture capitalists.

IRR 248

IRR Term Sheet Startup Valuation 248

David Teten

JANUARY 28, 2013

The good news for Techcrunch readers: Every major study conducted to date has placed angel investors’ IRR between 18 and 38 percent, as summarized by my Partner John Frankel and Professor Robert Wiltbank in prior Techcrunch articles. Every major angel study conducted to date has shown high IRR.

IRR 114

IRR Angel Investor Angel Groups Cofounder 114

Hunter Walker

NOVEMBER 13, 2018

It’s essentially a private IPO where early investors, founders and employees get some liquidity and Softbank gets minority ownership, maybe a Board seat. So far at least these investments seem to contain some secondary sales. Which means as a seed investor, I’m thrilled to see Softbank invest. Yippee, go Masayoshi Son!!!

Cap Table 95

Cap Table IRR IPO Early Stage 95

David Teten

NOVEMBER 17, 2011

Such a model is particularly helpful for those founders looking for a co-founder or key employee. Since he graduated, he’s now Founder and CEO of a Latin America-focused based startup, Participa.me (“I participate”). Like me, he had the pleasure/pain of being trained as an investment banking analyst.

Employee 155

Employee IRR Startup Mexico 155

Startup Professionals Musings

NOVEMBER 11, 2010

Another rule of thumb is a target of 50% IRR (a discounted cashflow calculation). Founder network. Expected return rate. Most venture capitalists tell you that they look for 30% annual return, or 10 times initial investment in 3-5 years. Successful serial entrepreneurs usually find it easier to raise money from venture capitalists.

IRR 225

IRR Startup Term Sheet Angel Investor 225

SoCal CTO

MAY 19, 2010

By way of background for the question, there’s a great post by Bob Aholt, a Pasadena Angel: An Angel Investor’s Thoughts on Valuation.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

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. I never thought of this until I became the Founder & CEO of my first startup company.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

This is going to be BIG.

DECEMBER 28, 2013

Every time he opens his mouth about founder diversity, he seems completely out of his league to address the topic. The biggest question I think VC''s face right now is whether or not, in the future, the best founders will look and act like the best founders of the past.

Venture Capital 152

Venture Capital Cofounder IRR Dilution 152

Eric Friedman

MARCH 15, 2017

This may not be the right trait for a founder that is working hard on a problem in their own space. Back to coachability — I do not have it all figured out Since evolving my own thesis for early stage founders for 2017 you will have to look back on the Expa Labs companies started in 2016 to judge whether or not this system worked.

IRR 60

IRR Early Stage Leadership Programming 60

Feld Thoughts

APRIL 21, 2016

“Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. The “Many Unicorn founders …” quote is the first of four emotional biases that Bill calls out. Fred Wilson’s daily post referred to the article in Don’t Kick The Can Down The Road.

Marketing 70

Marketing Down Round Startup IRR 70

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Don’t be greedy even if you can.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance. But should they? Less or no dilution.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Steve Blank

AUGUST 5, 2014

Kathryn has been the founding VP of Marketing of Oracle , a successful recruiter, a world class Venture Capitalist, a co-founder of a Venture Capital firm, a great board member, one of my mentors and most importantly a wonderful friend. Or one of the first women co-founders of a VC firm – “I co-founded a great firm.” But then, trouble.

Venture Capital 333

Venture Capital Silicon Valley Chicago Cofounder 333

Both Sides of the Table

MAY 25, 2013

The better way to think about VC returns is, do the firms consistently beat alternative asset clases on an IRR basis to adjust for the increased risk and lack of liquidity? I want to challenge the founders view. And if you call any founder I’ve backed – good and bad – they’ll tell you I don’t quit easily.

LP 374

LP Later Stage IRR Term Sheet 374

Growthink Blog

MAY 21, 2014

One reader reference Gust Founder David Rose’s new book - “ Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups ” and to Rose’s main contention that to access the 25% IRR potential of the asset class one must hold positions in not less than 20 companies. He asked, “ Is this practical advice?

San Diego 72

San Diego Warrant IRR Investment Bankers 72

Feld Thoughts

JULY 31, 2013

Dan Caruso, the co-founder/CEO of Zayo Group , is one of them. Our equity IRR has averaged around 50% since inception. I first met Dan around a decade ago when Howard Diamond, another incredible contributor to the Boulder startup community, introduced us. We raised $2.7B of debt and $870M in equity in three rounds.

Bandwidth 147

Bandwidth Colorado Startup IRR 147

Professor VC

MARCH 10, 2009

His latest venture, Bharosa, was sold to Oracle for a 6X multiple in 3 years to his angel investors, a sweet close to triple digit IRR. Certainly not to say they couldnt have raised more cash and built this in to a bigger company, but was nice to have the option of going either way and doing what was right for the founders and employees.

Bootstrapping 28

Bootstrapping San Jose Silicon Valley Software Review 28

ithacaVC

FEBRUARY 13, 2013

Negotiate a $20 million pre-money with a 19-year-old founder CEO. God said “I need somebody that can shave their head and hide their grey hair away, wear funny shoes and fit in with an age demographic of their grand-kids. Someone who will finish his forty-hour week by Tuesday noon. So, God made a VC! So, God made a VC!

Liquidation Preference 55

Liquidation Preference IRR Due Diligence LP 55

Both Sides of the Table

MAY 24, 2021

The culture is driven by the 20-something irreverent founder with huge technical chops who in a “David vs. Goliath” mythology take on the titans of industry and wins. But markets have changed and I think investors, founders and experienced executives who want to join later-stage startups can all benefit from playing the long game.

Venture Capital 363

Venture Capital LP Valuation Later Stage 363

Ben's Blog

AUGUST 17, 2020

When speaking with founders and private growth investors, we hear countless references to “multiples paid” on current or near-term revenue; both obsess over this because a higher multiple translates to a higher valuation. 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

Professor VC

JANUARY 17, 2008

If my math is correct, this is approximately a 31% IRR, which has to beat individual angel investments on aggregate and venture capital returns over the period of the study (1990-2007). There needs to be enough equity to go around for founders, early investors, later investors, and employees. return on investment after 3.5

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

K9 Ventures

MAY 14, 2011

As fiduciaries, the general partners of the uVC funds have to begin to focus on the dreaded VC I-word : IRR. The founders of these uVC funds are entrepreneurs in their own right – either as people who have founded successful startups before, or as the founders of their own venture funds – which are also startups.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Up and Running

AUGUST 19, 2014

Always look at the portfolio of investments the firm has made, and contact the CEOs and founders of those companies to find out what it’s like having those investors as a part of their company. Too many founders tread the fine line between arrogance and ignorance. I like to see a sense of responsibility when it comes to the.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

Steve Blank

JUNE 11, 2013

Here’s a simple test: If you’re the founder of a startup, go to a whiteboard and diagram how a VC fund works. What is an IRR? The day you raise money from a venture investor, you’ve also just agreed to their business model. How do the fund and the partners make money? How long is a fund’s life?

Venture Capital 333

Venture Capital IRR Liquidity Event Business Model 333