What every entrepreneur should know about financing right now

Version One Ventures

The ability to raise money no longer determines one’s fate. More money is flowing in from a new crop of angels, newly wealthy from a number of tech IPOs. And, we should expect angel activity to drop as new angels discover that returns from their seed investments aren’t so easy to come by. Any entrepreneur trying to navigate the financing landscape should be aware of the over-abundance of angel money compared with subsequent rounds.

How Investors Think About Valuation of Pre-Revenue Startups

SoCal CTO

They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. A lot of my time is spent helping early-stage companies get to proof points so that they can raise capital. Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. What are they really looking for?

Trending Sources

Should Startups Care About Profitability?

Both Sides of the Table

70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue. Revenue When I look at an income statement I start by focusing on the revenue line.

How to Decrease the Odds That Your Startup Fails

Both Sides of the Table

We also know that even though many of us who are experienced in startup successes & failures look at businesses and say, “That will never work” (as many people said about Uber) or “You can’t make any money in that business” (as many said about WhatsApp or Dropbox) and of course some entrepreneurs pull off extraordinary things we never thought possible. How much ad revenue does TripAdvisor make?

Should Startups Focus on Profitability or Not?

Both Sides of the Table

You have to understand whether they’re likely to yield revenue growth in the near term OR whether you have access to cheap enough capital to fund your losses until your investments pay off. million in revenue three years later is, “So effing what?”

Busted or Confirmed? 3 Common Myths About Starting A Business

crowdSPRING Blog

Fortunately, many startup myths revolve around three common topics (business plans, money, and unnatural hustle). Myth #2: You need a lot of money to start. Businesses do require some capital, but this doesn’t mean that every startup has to raise millions of dollars in seed money.

Is Canva the Company That Will Disrupt the Design World? Not Quite

crowdSPRING Blog

It launched in 2013 with $3 million in seed money from American and Australian investors, and offers a series of templates intended to make good design easier to execute and more accessible. Recent statements from Perkins regarding the direction of the company provide context: Canva cofounder and CEO Melanie Perkins said the startup hasn’t used a cent of the $15 million round it raised in 2015 because of strong revenue growth.

2009 VC Fundraising Strategy

Startup Economy

Investor shift focus on existing portfolio companies by allocating more follow-on reserve; thus, less money for new companies reduce risks in early/seed stage capital allocation set a higher bar in funneling investment opportunities advertisement-based business model is no longer a viable option for most companies in internet/mobile holds more negoting leverage on valuation. Tags: Investment Seed money business model venture capital early stage

Booming Companies That Should Inspire Entrepreneurs

Blogtrepreneur | Entrepreneur Blog

Uber Uber started out as a small San Francisco business that managed to generate $200,000 in seed money in 2009. SolarCity continuously exceeds revenue projections even though it works with an emerging technology that many people are still wary of.

A Year in Review: 2016

Version One Ventures

forward revenue in February 2016 (the low), they appreciated by 6% each month for the following six months. At the same time, seed money is still abundant due to the proliferation of micro VC over the past few years. They started with a simple question: if 100 startups raise a Seed round, how many of those will go on to raise a Series A, and then a Series B ? This has been an important year for us as a firm, as well as the market in general.

Why the New Seed Might Be a Bad Seed

This is going to be BIG.

About a year ago, I started hearing about the existence of a "pre-seed" round. The term "seed" implies the very beginning to me. If you can''t go to "seed" investors for your very first investment because you''re too early, that just seems weird to me.

Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

readwrite.com

Share on: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money. Lets All Shed Tears For The Crappy Startups That Cant Raise Any More Money. Well, nobody wants to give those dopes any more money. Sections. Social. Mobile. Enterprise. Cloud.

Mile-High disruption: Why Denver should be on your tech radar next year

The Next Web

In January, Denver will become one of the few American cities that allows its residents to purchase and recreationally consume marijuana, a move that is expected to create jobs and generate tax revenue.

Instead of sticking a fork in the venture market, realize. there is no fork

This is going to be BIG.

How else can you explain this headline matching a story about a professional social network still trying to explore revenues raising $17mm on an $80mm valuation? venture capitalists are now asking tougher questions about start-ups' revenue and profits.".

No Plan Survives First Contact With Customers – Business Plans versus Business Models

Steve Blank

We thought we’d take our plan and go raise seed money. We can’t raise money knowing our plan is wrong.”. This includes how the product gets distributed to your customers and how money flows back into your company. No campaign plan survives first contact with the enemy.

7 Things You Should Know About Angel Investors

Inc Startups

You have more opportunities than ever before to raise seed financing. In fact, they''re shifting the financing landscape-- making it harder for a seed-funded firm to raise a Series A round of VC money. Here''s what you need to understand first.

Making Sense of Seed Investment Data

Rob Go

In particular, a number of people commented on what looks like a dramatic rise and fall in seed deal volume over the past four years coupled with an increase in seed investment dollars. As a team, we’ve been thinking about what has been going on in the seed market in recent years. Answer first: we think that the seed market has settled somewhat, so charts like these don’t really cause much alarm but are generally consistent with what we’ve been seeing.

Startup Business Investments Around The World

YoungUpstarts

Unfortunately, a number of them had an early exit from the business scene due to ineffective business plans and/or unsustained revenue for their investment. They aim to help small businesses take off the ground, and at the same time, make money from loan profits.

3 Reasons Not to Crowdfund

Inc Startups

It is either a) the best thing to happen to start-ups since Red Bull; or b) while sometimes useful, it’s no serious substitute for other sources of money, including family & friends. Yes, crowdfunding is cool. It''s democratic. It''s disruptive.

SEC 25

The beginner’s guide to valuing and selling your app

The Next Web

If you’re reading this, you’re probably considering selling your app to someone else, hopefully for large sums of money. Money. You can then use the $1,200 as seed money to work on a new idea. It’s simply an asset, which you are exchanging for money.

Why the Series A Crunch Might Be a Good Thing

Inc Startups

In 2012, Rust and co-founder Garrett Johnson raised $2 million in seed funding in two weeks. Share of seed-funded companies that won''t be able to get follow-on funding: 61%Source: CB Insights That''s the story, anyway, and it has the start-up community vibrating with angst and debate.

Warby Parker of Shoes? Meet Beckett Simonon

Inc Startups

Using just $2,000 in seed money generated from Hasso, the company produced its first batch of inventory--1,000 pairs of shoes. Now, Beckett Simonon's revenue flow is allowing the founders invest in product development and in improvements to the website.

The Series A crunch is hitting now. Have we even noticed?

pandodaily.com

We know this: As many as a thousand companies who’ve received seed rounds won’t be around in a year — maybe six months. The number of seed and angel investors has exploded in recent years, buoyed up by a number of factors. Pando Daily. PandoMonthly. Video. PandoDigest.

Life As A Startup Consultant

Seed Stage Capital

Startups either a) have no money to pay you with, or b) have been trained to think that they should always be helped for free (a practice probably fostered by large law firms that defer fees for some period of time). If you want to work with startups, the money has to be secondary.

Getting a Micro Loan Just Got Easier

Inc Startups

The bill would create jobs, Maloney said, by using federal grants to help private investors loan money to entrepreneurs. Said Lee: "So many others in this country have ideas but what they’re lacking is the seed money to get there

How to Start a Startup

www.paulgraham.com

You need three things to create a successful startup: to start withgood people, to make something customers actually want, and to spendas little money as possible. The way a startup makes money is to offer people bettertechnology than they have now. Andyet theres a lot of money at stake. Microsofts originalplan was to make money selling programming languages, of all things.Their current business model didnt occur to them until IBM droppedit in their lap five years later.

3 Reasons to Look to the Angels for Start-up Funding

Inc Startups

But at the initial seed financing stage of your start-up, VCs are not always the better option In fact, angel investors often have more to offer. The flip side of that coin is that angels are by definition not professional money managers. VCs can pack a powerful punch.

Let’s Tax the Boy Scouts

Gregg Fraley, Author of Jack's Notebook

One must have at least seed money, or more, to get a start-up going. They are typically working people doing their best to save a bit of money, put together a stake, or buy the things they need and want. Credit Unions are more like James Stewart than Henry Potter.

5 Reasons to Avoid Silicon Valley

Inc Startups

Too much seed money. You must be scratching your head now and asking yourself: How can too much money be bad? That sounds great but it also means that those “lucky” seed money recipients will be on their own from the moment they cash the check.

Forget Angels, Try Your Parents or Piggy Bank – The Accelerators – WSJ

Campus Entrepreneurship

My team at Duke University worked with Raj Aggarwal of University of Akron and Krisztina Holly at the University of Southern California to research the backgrounds of 549 entrepreneurs whose companies had made it past the begging-for-seed-money stage and were generating real revenue. A much smaller number raised money from business partners, bank loans, friends and family, and other sources.

SkySQL Raises €3 Million Series A Round

ArcticStartup

The company was founded October 2010 and has been funded to date with seed money from OnCorps, as well as Open Ocean Capital. ”We SkySQL is already delivering solutions to a number of top companies and increasing their revenues significantly. SkySQL a Finnish provider of affordable MySQL & MariaDB database solutions, has announced that it has raised $4 million (€3 million) in Series A investments. The funding round was led by Finnish Industry Investments Ltd. (a

Disruption Comes (Finally!) to Commercial Real Estate

Inc Startups

What Freedman does not want to get out of these meetings is the one thing most people seem to think he wants: money. That's because he believes that you should take as little money as possible early on, to protect the value of your shares down the road, when you really need the cash.

It Doesn’t Matter How Much Money You’re Raising, It’s Still Hard

Instigator Blog

More and more companies are raising money , and valuations seem to be skyrocketing. And in many cases the amount of money you’re looking to raise isn’t particularly relevant. When VCs are ready to get a new fund off the ground they have to jump to our side of the table and raise the money. Big money. Alan Patricof of Greycroft wrote a telling article for Business Insider titled: You Think It’s Hard To Raise Money For A Company?

6 Ways To Make Your Startup More Attractive To Investors — Even With A Criminal History

YoungUpstarts

But he chose to move forward with a positive attitude, raise seed money for his company, and network his way to a profitable future. Start small, generate revenue, and create a profitable business before you approach an investor.

Why You're Not Getting the Most Out of Your Board

Inc Startups

If you’re a venture-backed tech company or even an early-stage business fueled by angel or seed money I assume you have a good group of board members or advisors who will give you time to be helpful and they want to be helpful.

Should Founders Be Allowed to Take Money off the Table?

Both Sides of the Table

If a company has reached a level of success, has been around for a few years and you believe the company has potential to break out into a much bigger company then you should let the founders take money off of the table. Not FU money, but “feed the family&# money. On a panel that I sat on with Ron in LA in 2008 he stated that there were no circumstances in which the founder should take money off of the table. >50% of our revenue in now viral.

To Follow On or Not to Follow On

This is going to be BIG.

In the late 90's, it wasn't surprising that companies with no revenue that were funded at 100 million dollar valuations didn't survive. That's why I constantly remind companies that when you do an outsized financing price or size-wise, you expose yourself to getting hit bad in a downtown unless you're conservative about how you use the money. If you're doing seed deals, how often does a down round in a seed deal even happen? Some VCs just toss in seeds as options.

VCs in seed clothing: Chris Dixon, Mark Suster, and Naval Ravikant interviewed

Venture Hacks

The topic was VC signaling in seed rounds — and how these signals help or hurt your ability to raise money in the next round. SlideShare: VC signaling in seed rounds. Chris Dixon: The problem with taking seed money from big VCs. VC signaling in seed rounds.

How to Fund a Startup

www.paulgraham.com

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. At Viaweb we got our first $10,000 ofseed money from our friend Julian, but he was sufficiently richthat its hard to say whether he should be classified as a friendor angel. The advantage of raising money from friends and family is thattheyre easy to find. There never has to be atime when you have no revenues.

Startup/MicroISV Digest for 2/14/2011

47 Hats

IRS taxes with 0 revenue in first year. We talk about the growing global startup community, why successful startups want to pay it forward to the next batch of startups, how Sprouter got its seed money and why and plenty more. The CatBoard - for Real cat lovers!