Startup Professionals Musings

AUGUST 9, 2020

Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Amount of venture funding provided. The challenge is for real co-founders to keep their equity percentage above 50%, or they effectively lose control of operational decisions.

Cofounder 435

Cofounder Technical Cofounder Equity Intellectual Property 435

Both Sides of the Table

JUNE 30, 2016

How much you raise determines valuation I know it sounds crazy but at the earliest stages of a company your valuation often is determined by how much money you raise. A $15–20 million valuation sounds better than an $8 million valuation, doesn’t it? But it’s actually not that silly.

Pre-Money Valuation 292

Pre-Money Valuation Valuation Early Stage Startup 292

Startup Professionals Musings

OCTOBER 14, 2022

For early-stage startups, the goodwill component can easily exceed the size of all the financial elements together, or can just as easily mark a company with good financials as not investable. In the investment community, these leadership elements are often called “goodwill.”

Technical Review 323

Technical Review Due Diligence Valuation Leadership 323

Both Sides of the Table

SEPTEMBER 28, 2014

Plus, most early-stage M&A fails so this isn’t likely a good use of capital for a young company). Valuation. I wanted to call out special attention to valuation in this debate. So a large part of your personal assessment on how much you can afford to burn also has to be your current valuation.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

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

Both Sides of the Table

JUNE 30, 2011

With more competition in early-stage many VCs are investing smaller amounts at earlier stages. Some are going later stage to not miss out on hot deals. I call this “stage drift.&#. What I’ve started to observe is that we’re certainly headed for a bit of a brick wall for early-stage companies.

Venture Capital 289

Venture Capital Early Stage Valuation Angel Investor 289

Both Sides of the Table

SEPTEMBER 25, 2010

I talked about this in my social proof post where I gave some suggestions about how to get the early guys off of the fence. Most early-stage entrepreneurs who have worked with me (either as an angel or as a seed VC) know that I don’t rely at all on the social proof of other investors. When I’m in, I’m in.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

SEPTEMBER 5, 2012

What the entrepreneurs were really saying is, “I don’t want to take a lower valuation now, while I don’t have customers or a full team. You rarely find full ratchets in early-stage deals any more. Nobody I know accepts multiple liquidation preferences in early-stage deals.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Steve Blank

APRIL 23, 2014

VCs like acquisitions as much as IPOs because the acquiring companies often can rationalize paying large multiples over the current valuation of the startup. However, these nosebleed valuations make it even more important in getting the acquired company integrated correctly.

Acquisition 334

Acquisition Intellectual Property Silicon Valley Startup 334

Steve Blank

MAY 29, 2011

Max and his partners interviewed and analyzed over 650 early-stage Internet startups. Today they released the first Startup Genome Report — a 67 page in-depth analysis on what makes early-stage Internet startups successful. longer to reach scale stage compared to a founding team of 2 and they are 2.3x

Technical Cofounder 335

Technical Cofounder Early Stage Startup Silicon Valley 335

Both Sides of the Table

JULY 23, 2014

We are in a bubble (with so many private $1bn+ valuations). pre-money valuation you certainly would want to exercise your right to continue investing if you had prorata rights. 15 years ago we were at the peak of Internet hype with the launch of many over-capitalized businesses with a market size & opportunity was limited.

Technical Review 398

Technical Review Venture Capital Valuation Pre-Money Valuation 398

Startup Professionals Musings

DECEMBER 20, 2019

There is additional encouraging news for aspiring entrepreneurs on many fronts, just in case you are thinking about joining the existing ranks: Valuations of successful startups have hit an all-time high. Funding for early-stage startups is more available than ever. The median deal size is back over $100 million.

North America 320

North America Incubator Initial Public Offering Valuation 320

Startup Professionals Musings

JUNE 26, 2013

Every early-stage startup should explore this new funding alternative. New “up-and-comer” VCs focus on early-stage companies. VCs are finding that they don’t need the “large” funds of $100M to $500M to support a portfolio, if they focus on early-stage startups.

Angel Investor 231

Angel Investor Entrepreneur Early Stage Silicon Valley 231

VC Cafe

FEBRUARY 27, 2024

In smaller funds, ticket sizes tend to be lower, so pre-seed is the only stage where micro funds are able to secure their minimum equity targets. Lower valuations and follow on valuation sensitivity – fundraising is a recurring event in the life of a startup.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Both Sides of the Table

OCTOBER 12, 2014

These tensions seep out in some angels or seed funds publicly or semi-privately deriding later-stage VCs for their “bad” behavior. I have seen bad behavior from later-stage VCs, believe me. But I have seen equally bad behavior from super early stage investors. As always a balanced perspective is in order.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Steve Blank

JUNE 27, 2017

Uber – current valuation >$70 billion – knew the day they started that their ridesharing service violated the law in most jurisdictions. Airbnb – current valuation $31 billion – allows people to rent out their homes, rooms or apartments to visitors. Here are some of the most visible examples.

Startup 306

Startup New York City Valuation Distribution 306

Both Sides of the Table

AUGUST 17, 2009

Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital. This is a BIG mistake many early stage companies make. I just wanted to list some of the most value destroying mistakes I see many early-stage entrepreneurs make.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

Startup Professionals Musings

MARCH 10, 2021

Often, the number one question that entrepreneurs fail to address is: “How much money do you need, and what valuation do you place on your company?” Don’t waste time talking to VCs for requests less than $1M, or very early stage, and don’t expect professional investors to jump in if you have no “skin in the game.”

Software Review 307

Software Review Due Diligence Elevator Pitch Early Stage 307

Both Sides of the Table

MAY 28, 2018

There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. It’s true that some later-stage private equity firms like to fund “roll ups” (a company that acquires many related companies in it sector), but this is seldom the domain of VCs.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Startup Professionals Musings

AUGUST 4, 2014

Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Amount of venture funding provided. A friend or family investor thus might get 20 percent of the equity, even with no business activity contribution.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

Startup Professionals Musings

MAY 1, 2023

Investors may not be called cofounders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Amount of venture funding provided. The challenge is for real cofounders to keep their equity percentage above 50%, or they effectively lose control of operational decisions.

Technical Cofounder 247

Technical Cofounder Equity Distribution Cofounder 247

Both Sides of the Table

FEBRUARY 12, 2019

And with so many new funds in the market and looking to put capital to work it’s no surprise that there was an even bigger boom in the numbers of deals being funded in the early-stage markets. I launched my first startup in 1999 so I know the economics of launching from first-hand experience. thus the rise of “pre seed” investing).

Venture Capital 328

Venture Capital Technical Review Seed Stage IPO 328

Startup Professionals Musings

SEPTEMBER 30, 2013

Intellectual property is a large element of most early-stage company valuations, and this value determines what percent of the company an investor will expect to get for his money. These are things that can cost very little money, but go a long ways in convincing someone that you are making progress.

Intellectual Property 281

Intellectual Property Entrepreneur Sweat Equity CTO Hire 281

The Startup Magazine

AUGUST 11, 2023

I will tell you brief details about seed stage funding, and deal sourcing on this page, so read the conclusion until the end. The following is a condensed explanation of seed funding: Seed money is a form of early-stage financing that new businesses receive from investors in exchange for a share of ownership in the company.

Seed Stage 148

Seed Stage Technical Review Early Stage Due Diligence 148

Startup Professionals Musings

SEPTEMBER 10, 2018

Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. Amount of venture funding provided. The challenge is for real co-founders to keep their equity percentage above 50%, or they effectively lose control of operational decisions.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

Startup Professionals Musings

NOVEMBER 17, 2013

Often, the number one question that entrepreneurs fail to address is: “How much money do you need, and what valuation do you place on your company?” Don’t waste time talking to VCs for requests less than $1M, or very early stage, and don’t expect professional investors to jump in if you have no “skin in the game.”

Software Review 265

Software Review Due Diligence Elevator Pitch Startup 265

ReadWriteStart

JUNE 1, 2020

These usually play a role in the very early stage of your business, primarily pre-revenue. The seed stage is focused on building the core team, product optimization, exploring avenues for monetization. ? Early-stage. An early-stage investor usually looks at a return of 10 to 15 times.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Startup Professionals Musings

AUGUST 31, 2012

Intellectual property is a large element of most early-stage company valuations, and this value determines what percent of the company an investor will expect to get for his money. These are things that can cost very little money, but go a long ways in convincing someone that you are making progress.

Intellectual Property 260

Intellectual Property Sweat Equity CTO Hire Fractional CTO 260

Startup Professionals Musings

JUNE 17, 2011

Intellectual property is a large element of most early-stage company valuations, and this value determines what percent of the company an investor will expect to get for his money. These are things that can cost very little money, but go a long ways in convincing someone that you are making progress.

Intellectual Property 253

Intellectual Property Sweat Equity CTO Hire Fractional CTO 253

Both Sides of the Table

JULY 25, 2010

Rincon is part of the new breed of Seed Stage VCs and with the leadership of Jim Andelman has charted out the most authentic early-stage investment strategy in Southern California. Any SoCal entrepreneur raising early-stage money should put Rincon on their short list.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Both Sides of the Table

FEBRUARY 25, 2010

million at a $15 million pre-money valuation. Morgan Stanley had proposed a higher valuation to let them in. I’ve offered to fund an early stage company where I promised cash in bank in less than 30 days. million at a $15 million pre-money valuation. Morgan Stanley had proposed a higher valuation to let them in.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

Startup Professionals Musings

OCTOBER 10, 2012

Often, the number one question that entrepreneurs fail to address is: “How much money do you need, and what valuation do you place on your company?” Don’t waste time talking to VCs for requests less than $1M, or very early stage, and don’t expect professional investors to jump in if you have no “skin in the game.”

Software Review 250

Software Review Due Diligence Elevator Pitch Entrepreneur 250

Startup Professionals Musings

AUGUST 9, 2011

Often, the number one question that entrepreneurs fail to address is: “How much money do you need, and what valuation do you place on your company?” Don’t waste time talking to VCs for requests less than $1M, or very early stage, and don’t expect professional investors to jump in if you have no “skin in the game.”

Software Review 246

Software Review Due Diligence Elevator Pitch Early Stage 246

Startup Professionals Musings

JUNE 25, 2012

After bootstrapping, friends and family are the most common funding sources for early-stage startups. Use this approach before you have a real valuation, a real product, or any real customers. Just don’t quit your day job before your new company is producing revenue. Friends and family.

Technical Review 257

Technical Review Bootstrapping Venture Capital Incubator 257

Startup Professionals Musings

DECEMBER 26, 2013

There is additional encouraging news for aspiring entrepreneurs on many fronts, just in case you are thinking about joining the existing ranks: Valuations of successful startups have hit an all-time high. Funding for early-stage startups is more available than ever.

IPO 273

IPO Entrepreneur Social Media Startup 273

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. We have lower costs to create companies – leading to more early stage innovation. It doesn’t seem too irrational for seed or A deals, just a bit higher than the norm.

Venture Capital 347

Venture Capital Technical Review LP Mobile 347

VC Cafe

OCTOBER 31, 2022

But even in the seed market the bar could get higher: I wouldn’t be surprised to see valuations drop and for VCs to have rising expectations about the level of traction they expect to see before funding. Growth investors seek bargains and many shifted their focus to earlier stage. The later the stage, the bigger the impact.

Founder 173

Founder Technical Review Down Round Liquidation Preference 173