Both Sides of the Table

SEPTEMBER 29, 2009

Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. High burn-rates fueled by over investment – One of the most damning things that happened to the start-up markets in 97-00 and 05-08 was the overfunding of technology companies. I argued for literally a year to slash burn.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

VC Cafe

JUNE 6, 2024

Key Metrics for B2B SaaS Startups: Annual Recurring Revenue (ARR) Definition: ARR is the yearly value of a company’s recurring revenue from subscription-based services. Monthly Recurring Revenue (MRR) Definition: MRR is the predictable revenue a company expects to receive monthly from subscription-based services.

B2B 97

B2B Burn Rate Generative AI Retention 97

David Teten

NOVEMBER 26, 2019

Sean Colrock, Director of Client Partnerships at Wiss & Company , suggests at a minimum you track: cash on hand; fume date; and burn rate. Andreas Rothe, CFO, Fragomen , observed, “One of the reasons for a budget is to align the various resources of the firm to projected revenues from clients and company objectives.

Agile 60

Agile Management Forecast Silicon Valley 60

Berkonomics

AUGUST 10, 2017

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. What most managers miss is that every month cut from the time it takes to perform such tasks cuts the cost by the value of a month’s worth of fixed overhead or burn.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Steve Blank

APRIL 26, 2022

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. This article previously appeared in TechCrunch.

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Up and Running

APRIL 22, 2020

This does not mean that you need 2-3 years’ worth of documents showcasing your revenue and cost of goods sold, but you’ll likely need reports that show at least 12-months of financial activity. Just keep in mind that the qualifications may be relaxed but you may need to supply greater collateral or work with a higher interest rate.

SBA 139

SBA Forecast Software Review Business Plan 139

Up and Running

APRIL 30, 2020

Financing options: Can I get an emergency payroll loan? Each scenario combines the key numbers in the hypothetical case and explores the impact on the bottom line, and helps you define your cash burn rate and runway. What if it lasts six months? Does that impact your business? How does that impact the numbers?

Forecast 120

Forecast Balance Sheet Burn Rate Software Review 120

Feld Thoughts

SEPTEMBER 16, 2011

Since SayAhh is in the pre-launch development stage, the company doesn’t have any revenue yet. This results in a gross margin of $0, where gross margin is revenue – cost of goods sold. The default Quickbooks setup uses “Income” to refer to “Revenue”.

Balance Sheet 125

Balance Sheet Fractional CTO Burn Rate Salary 125

ReadWriteStart

JANUARY 27, 2011

For a more elaborate explanation of the deal, please read my blog post 1M/1M: Alternative Financing For Startups Using A Sales Channel Partner. I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

ithacaVC

OCTOBER 29, 2011

Here is the next iteration of Brad Feld’s Finance Friday’s. As Brad points out, most startups start with a cash forecast to track expenses because it takes a bit of time to figure out how to best project revenues (the top line of the financial projections). This post covers cash forecasts and financial projections.

Revenue 49

Revenue Finance Burn Rate Forecast 49

abovethecrowd.com

FEBRUARY 24, 2015

Historically, different financial institutions specialized in different stages, because the assessment of risk and opportunity was considered unique at each stage — for example, a seed investor was unlikely to do late-stage financing, and vice versa. You must subtract it from your top-line revenue.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

K9 Ventures

MAY 28, 2015

At K9 we invest in companies which have a clear/direct revenue model and typically don’t invest in companies that follow the Ubiquity first Revenue Later (URL) revenue model made famous by Eric Schmidt in 2007. I call this Revenue Development and have written about it before. >$0/month. That’s real money.

Revenue 48

Revenue Startup Burn Rate Cofounder 48

ReadWriteStart

APRIL 30, 2020

Many fail because they fail to keep their burn rate in check and then run out of investors who are willing to fund their operations. They treat their startup’s burn rate like it’s etched in stone. The latter group also tends to spend every waking moment in the pursuit of lining up new financing.

Burn Rate 107

Burn Rate Management Startup Early Stage 107

Berkonomics

MARCH 30, 2010

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Although young companies rarely measure profitability this repeatedly, more mature companies usually can bring from five to ten percent of revenues to the bottom line in the form of net profit.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

Both Sides of the Table

MARCH 30, 2016

Invoca was raising at the tail end of this market phenomenon at this time doing tens of millions in SaaS recurring revenue and growing at a nice clip. Here are some stats to give you a sense: • Year over year revenue grew 51% in 2015 and we’re forecasting the same again for 2016. forward revenue for public comps (comparable stocks).

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Startup Professionals Musings

DECEMBER 15, 2014

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Bootstrapping 276

Bootstrapping Entrepreneur Startup Burn Rate 276

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. By the first quarter of 2016, the late-stage financing market had changed materially.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

View from Seed

OCTOBER 15, 2014

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard. Finance is mission critical, for instance – it just appears on a recurring basis. The seed stage is all about traction.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

Steve Blank

FEBRUARY 22, 2010

I had been confused for years why I had to update an income statement each board meeting that said zero for 18 months before we had any revenue. How do we finance the company, etc. Regardless of your type of business model you should be tracking cash burn rate, months of cash left, time to cash flow breakeven. Financials.

Balance Sheet 307

Balance Sheet Startup Burn Rate Metrics 307

This is going to be BIG.

MARCH 1, 2010

It’s often some combination of the idea not being big enough to sustain a venture exit or the company just not being appropriate for venture financing. My company was not well executed enough to achieve venture capital financing—and that wasn’t the city’s fault, it was mine. I was there, too. They’re not “dumb Wall Street money”.

New York City 120

New York City New York Startup Burn Rate 120

Startup Professionals Musings

JUNE 28, 2013

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Startup 264

Startup Burn Rate Bootstrapping Valuation 264

Both Sides of the Table

JULY 13, 2013

I got a job at a bank, and I worked in their corporate finance group. We had a finance group for all of the bank branches based in San Diego, and I wrote programs to download stuff from the mainframe so we could do analysis three days faster than they could send us the data. Comp sci in the 80s was terrible.

Cofounder 337

Cofounder Technical Cofounder San Diego Startup 337

Up and Running

JUNE 18, 2013

LivePlan’s cloud-based Scoreboard feature enables you to track your finances on the go. Keep an eye on both your monthly burn rate and any major payables to make sure you’re financially viable in the immediate future. Finance accounting entrepreneurship metrics projections startup' You can take LivePlan for a spin here.).

Metrics 79

Metrics Burn Rate .Net Finance 79

Gust

DECEMBER 7, 2014

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

Bootstrapping 191

Bootstrapping Entrepreneur Startup Burn Rate 191

BeyondVC

DECEMBER 10, 2009

Secondly, what is most important for me to understand is the expenses and what milestones will be achieved with this first round of funding and whether or not it would be suitable enough to raise the next round of financing. The remainder would go into deferred revenue. Another area that is quite important is churn rate.

Churn Rate 112

Churn Rate Burn Rate Startup Metrics 112

Professor VC

JULY 31, 2008

I actually enjoy the process of pulling together a selection of materials to create a complete course on Entrepreneurial Finance. The artists received very little of album sales, but kept concert and merchandise revenue. The artists received very little of album sales, but kept concert and merchandise revenue. NCH Australia.

San Jose 28

San Jose Software Review Angel Investor Silicon Valley 28

Both Sides of the Table

FEBRUARY 14, 2016

Huge funding increases lead to massive wage inflation, rent inflation and thus higher burn rates. forward revenue for SaaS businesses when in the years before it had been less than 5x. Why Financing in Falling Markets is So Damn Difficult. You’ll see here that in 2007 people were willing to pay 7.7x And so it goes.

Valuation 150

Valuation Down Round Startup Later Stage 150

Professor VC

JUNE 20, 2011

Financing, that is.I One truth of start-up financing is that it generally takes twice as long and twice as much money to accomplish your milestones. But of course, the model had us requiring only $10M equity to breakeven and to achieve $185M in revenues in 2008 (the magic Year 5 in all business plans). ProfessorVC.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

Professor VC

AUGUST 26, 2011

To that last one, there is certainly some truth as the standard time vs. revenue chart in most business plans looks like this: Im not teaching Entrepreneurial Finance this semester for the first time since Fall 2007. Does a complicated sales build model make sense for a pre-revenue SaaS company? Steve Bennet. at 3:15 PM.

Silicon Valley 35

Silicon Valley San Jose Hockey Stick Venture Capital 35

BeyondVC

JUNE 11, 2007

In the last six months, we have augmented some of our existing venture financing with venture debt as the market has become quite competitive which means pricing and terms are getting more attractive for all of us. The trick for entrepreneurs is to look at bringing on debt concurrent or soon after your close of equity financing.

Intellectual Property 60

Intellectual Property Covenant Warrant Equity 60

Professor VC

JULY 2, 2010

I take CFO roles in early stage companies and participate on the management team during the early financings and business model development phases. I also teach Entrepreneurial Finance at San Jose State. Can Entrepreneurship Be Taught? ► October. (1). Watch Out for the Red W(h)ine. ► September. (1). ► July. (1).

San Jose 28

San Jose Silicon Valley Venture Capital Angel Investor 28

dondodge.typepad.com

JANUARY 15, 2011

It isnt always possible to have a competitive bidding situation at each financing round so here are some guidelines for funding sources and percentages. Friends & Family can usually raise between $30K and $300K and usually take an interest bearing note that is convertible into stock at the next financing. 5% Managers -.25%

Equity 40

Equity Employee Dilution Valuation 40

www.chubbybrain.com

SEPTEMBER 28, 2011

spent $20 million to get back to the same revenue that I had when I was CEO. created a vastly higher cost structure; I had 80 people mostly on base salaries under $100,000 and was bringing in revenue at the rate of $20 million annually. .”). Finances were just one part of the story. During this year they.

Software Review 79

Software Review Startup Technical Review Vesting 79

Both Sides of the Table

AUGUST 9, 2011

Companies with less than $2 million in revenue were asking for $50-60 million valuations and getting them. Finance where needed. Companies raised too much money in 2005-08 and had high burn rates. When I first got into the industry it was 2007. Valuations were enormous relative to progress in companies. Cut where needed.

Stock 305

Stock Technical Review Marketing Greece 305