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). Our returns are obviously very good, but in no way unique in today’s venture markets, especially among emerging managers that invest at the seed stage. So, is 10x the new 3x ?

Venture Capital 201

Venture Capital IRR Private Equity Seed Stage 201

Startup Professionals Musings

FEBRUARY 5, 2018

I just finished a new book, “ Shortcut Your Startup ,” by the entrepreneur brothers Courtney and Carter Reum, and I like their summary of five critical changes in the market that every entrepreneur should capitalize on: Pervasive computer usage is now the great equalizer. Tools allow marketing in a much more targeted way.

IRR 143

IRR Marketing Startup Angel Investor 143

David Teten

JANUARY 19, 2021

The value ascribed by subsequent investors (in a secondary); buyers (acquisition); or the public markets (IPO). This causes the cost of capital for Flexible VC, often calculated through IRR (similar to an interest rate), can be higher than that of venture debt or traditional RBI. 20-30% is a common target IRR for investors.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

David Teten

MAY 16, 2017

As an idea of how high the bar is for a GP, he says , “I dove into our fund log from the last couple of quarters and found that the mean IRR (among VCs listing one) was over 36%.” Chris Douvos is one of the very few LPs who blogs, at SuperLP.com. ” . See for example their interview with Brad Feld. .

Private Equity 60

Private Equity Venture Capital Technical Review Equity 60

Steve Blank

MARCH 31, 2014

Think about this; 7 years ago Nokia owned 50% of the handset market. Fast-forward to today—Apple is the most profitable Smartphone company in the world and in Spain Android commands a market share of more than 90%. Its worldwide market share of Smartphones has dwindled to 5%. Apple owned 0%. Think about this.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

View from Seed

JULY 15, 2020

This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. These businesses are not under existential threat, but have unfortunately hit the funding market at a bad time. Reshuffling the deck. These tend to vacillate a lot early on, but converge as portfolios mature.

Portfolio 215

Portfolio IRR Dilution Distribution 215

David Teten

SEPTEMBER 16, 2014

In 2013, 298,800 angels invested in 70,730 entrepreneurial ventures, according to the 2013 Angel Market Analysis by the Center for Venture Research at the University of New Hampshire. Source: Center for Venture Research – Angel Market Analysis Report. Sohl: “The Angel Investor Market in 2011: The Recovery Continues”.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

Steve Blank

MARCH 4, 2014

For example, the Boston Consulting Group 2 x 2 growth-share matrix was an easy to understand strategy tool – a market selection matrix for companies looking for growth opportunities. The product management process assumes that product/market fit is known, and the products can get spec’d and then implemented in a linear fashion.

IRR 335

IRR Startup Business Model Agile 335

Seeing Both Sides

SEPTEMBER 26, 2010

One of my favorite business school professors, Andre Perold , used to like to say that in ever transaction in the financial markets, there are only two types of actors: wolves and sheep. As you might expect, the wolves have the edge in the encounter, due to superior market information or negotiating position.

IRR 36

IRR IPO Entrepreneur LP 36

Tim Keane

JANUARY 12, 2010

Bottom Up Market Sizing » January 12, 2010. Good investors use the valuation discussions to gauge the business savvy of the management team and to understand their ability to appreciate and deal with economic market forces that set values.   Internal Rates of Return naturally compound, so a 50% IRR is 7.59

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Feld Thoughts

APRIL 21, 2016

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involved. As Bill points out, many funds are sitting on huge paper gains which translate into large TVPI, MOC, gross IRR, or whatever the current trendy way to measure things are.

Marketing 70

Marketing Down Round Startup IRR 70

Steve Blank

JUNE 23, 2016

As a consequence, corporations used metrics like return on net assets (RONA), return on capital deployed, and internal rate of return (IRR) to measure efficiency. They’re better than large companies at identifying customer needs/problems and finding product/market fit by pivoting rapidly.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

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

Up and Running

JUNE 17, 2013

We looked at the product, the market, and the management team, with some attention to defensibility and scalability, and we made our own intuitive comparisons of possible ROI. And Internal Rate of Return (IRR)? Finance angel investment IRR ROI venture capital' I trust my judgment on that. It’s a complete waste of time.

IRR 71

IRR Flash Angel Investor Venture Capital 71

Both Sides of the Table

OCTOBER 17, 2019

Just as I was getting the swing of things the world shifted beneath my feet and the stock market went into a free fall and venture capital all but shut down for nearly a year. Jason was a creator and saw a market opportunity that others didn’t. Gregg was built to scale large companies and build the processes and team to enable it.

IP 223

IP Intellectual Property IRR Cofounder 223

Both Sides of the Table

MAY 19, 2018

When you raise money from investors you produce information that you are told they want and care about: A fund-raising deck that articulates your company strategy, plans, team, market, competitors and so forth. These collective sets of documents form the basis of what somebody looking at investing would call “financial due diligence.”

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

SoCal CTO

MAY 19, 2010

For example, TCA’s evaluation criteria first bullet is: A market opportunity sufficiently large to create a business that can grow to at least $50 million in annual revenues. Bob is heavily focused on ROI (and team/product). But it seems like Bob would be a candidate. But, this is not my experience with Angel groups.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

This is going to be BIG.

JULY 30, 2015

If you could return investors nearly triple their money and mid 20's returns consistently, compared to the 8% long term return in the public equities market, they'd more than accept that. If you're following on in the A round, then you shed a full 500 basis points on your IRR. 20% of the Seeds get acqu-hired at the 6 post.

Venture Capital 60

Venture Capital Pre-Money Valuation IRR Valuation 60

David Teten

MAY 8, 2012

As Steve Case has said, it’s ridiculous that anyone can gamble and be guaranteed to lose money, but there are strict regulations around who can invest in early-stage private companies and earn (in some cases) a 27% IRR on their capital. *. The Entrepreneurs Access to Capital Act helps to redress this. Start now! *

Securities and Exchange Commission 148

Securities and Exchange Commission IRR Entrepreneur Angel Investor 148

David Teten

NOVEMBER 17, 2011

Projections were based on dozens of operational assumptions related to pricing, production, marketing spend, etc. Market assumptions including market share and macroeconomic data were also in order. In banking, a lot of my time was spent on modeling cash flows.

Employee 155

Employee IRR Startup Mexico 155

Growthink Blog

JUNE 3, 2014

Over the last three weeks, we have discussed the various factors that drive the 25% IRR return potential of the startup and emerging company investing class. To not be swayed nor frightened by the financial industry’s omnipresent marketing machine. The word that best describes a state of affairs like this is institutional.

Omaha 91

Omaha Accredited Investor IRR Silicon Valley 91

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. So I joined Oracle when it was about 20 people, eventually becoming VP Marketing. But then, trouble.

Venture Capital 333

Venture Capital Silicon Valley Chicago Cofounder 333

K9 Ventures

DECEMBER 14, 2008

Unlike investing in public markets, investing in early stage companies happens before those companies have a real business, when it is just a concept and a team, and sometimes not even a whole team. Lets assume that Shylock Ventures is capable of producing a 20% IRR on a $100M fund.

IRR 99

IRR Bandwidth Venture Capital Early Stage 99

Growthink Blog

MAY 21, 2014

Some suggested that the blame for this lied more with the very difficult market and deal conditions of the past decade than with the VC investment model itself. A wise man once said that all businesses fundamentally do is “bridge the gap” between markets for labor and those for products and services. Investment Flexibility.

San Diego 72

San Diego Warrant IRR Investment Bankers 72

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? It’s a market, after all. And I’ll know in 18 months whether we have product / market fit. Here the data is not always kind to VCs.

LP 374

LP Later Stage IRR Term Sheet 374

Feld Thoughts

JULY 31, 2013

Over the last decade, I’ve gotten to know Dan, watched as he’s built an incredible $6 billion market cap company headquartered in Boulder, while contributing relentlessly to the Boulder startup community. Our equity IRR has averaged around 50% since inception. It’s great – and follows. We raised $2.7B

Bandwidth 147

Bandwidth Colorado Startup IRR 147

Up and Running

MARCH 6, 2019

And just so you understand, market need and solutions aren’t boring, especially when you show them in stories rather than alleged facts. The new ideas, creating new markets, really smart people, that’s all fascinating. Not just disruptive , but also game changing , market-leading , and viral , and pivot. I’m not alone in this.

Net Present Value 87

Net Present Value Forecast IRR Oregon 87

Growthink Blog

MARCH 29, 2010

Try that new marketing strategy. Startup investing has outperformed every major investing class, with IRRs of over 27.3% (click here to learn more). Compare this to the Dow Jones (returned less than 1% annually these last 10 years), or real estate (2%), or the current cash/money market yield (0.7%). Click here to learn more.

IRR 59

IRR Entrepreneur Washington Government 59

crowdSPRING Blog

AUGUST 7, 2011

In addition, as long as investors can earn higher returns on T-notes, they will expect higher returns from alternative investments in equities and VC’s may follow suit for similar reasons and expect a higher IRR from their invest,ends in new ventures. Uncertainty may abate.

Small Business 86

Small Business IRR Government United States 86

Up and Running

DECEMBER 22, 2015

So, investors look for businesses that will grow fast and sell out to a bigger business, or register their stock for trading on one of the public stock markets, which is when the early investors cash out. And it gets worse—a lot of angels, in a lot of tech business markets, prefer high growth and deficit spending to profits.

Angel Investor 60

Angel Investor IRR Software Review Startup 60

David Teten

AUGUST 21, 2019

The RBI investor is motivated to help the company grow because that speeds up the pace of revenue payback, and therefore IRR. A company with that mindset is dramatically less risky, because it’s not dependent on the financing markets for continued viability. Aligned incentives.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Andrew Payne

MARCH 25, 2009

For too long, venture’s been over-funded and over-staffed with homogeneity: the same kinds of partners, operating with the same fund model, looking at the same investments, in the same markets. Hopefully we’ll see some innovative fund models, looking at new markets, and funding companies in new ways.

Venture Capital 40

Venture Capital IRR Capital Call Distribution 40

Both Sides of the Table

MAY 24, 2021

The Valley has obsessed with a quick up-and-to-right momentum story because we were thought to live in “winner take most” markets. 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. It literally drove FOMO.

Venture Capital 363

Venture Capital LP Valuation Later Stage 363

Ben's Blog

AUGUST 17, 2020

While multiples are indeed often an input for valuing mature, slower growing companies, in the private, high growth tech market, entry multiples tend to be a byproduct of the valuation process: What investors are really trying to understand are possible exit values. A multiple is a company value divided by a metric. Not too shabby!

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

Seeing Both Sides

APRIL 10, 2011

In May 1996, Open Market completed a successful IPO and more than doubled on the first day of trading, ending with a $1.2 billion market capitalization. Matrix had a fund in 1998 that yielded an eye-popping 514+% IRR. Macroeconomic choppiness is holding back more dramatic market euphoria. We had recorded $1.8

IPO 48

IPO IRR Brazil Government 48

Up and Running

AUGUST 19, 2014

what’s behind your financials, your go-to-market strategy, your current traction in the marketplace, your competition and why you’re better, your intellectual property or “secret sauce,” your exit strategy, etc.). What follows next are projections and marketing plans—every start-up has them of course.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

Occam's Razor

OCTOBER 14, 2014

See step four in the process for creating your Digital Marketing and Measurement Model.]. Any big changes in your marketing/customer acquisition strategy over the last time period (more money doing Search, less money in Email, elimination Facebook as it does not work, etc., Outcomes of the conversations with your Finance team and Sr.

Analytics 133

Analytics Vertical Metrics Web 133