View from Seed

APRIL 30, 2015

Traction and revenue? Business model? Typically, the gross margins aren’t there compared to software, so revenue isn’t quite as important in the early stages of getting to market. NVV: Is there any dilution? The fact that the process can be much smoother and quicker can actually be a benefit.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Flexible VC: Revenue -based. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

ReadWriteStart

JANUARY 27, 2011

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. Persistent is breaking out of the mold of labor arbitrage, and looking at new and exciting business models. million in revenue.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

Startup Professionals Musings

JANUARY 4, 2020

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Be prepared to explain your business model. How much do you really need for the next 12 to 18 months?

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Startup Professionals Musings

MARCH 14, 2020

That approach may work for an entrepreneur who just sold a successful business for a huge profit, but it doesn’t work for the rest of us who are not proven successes yet, or don’t even have a business yet. Undefined business model or very low gross margins. Naïve expectations on funding terms and process.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 308

Startup Professionals Musings

OCTOBER 7, 2022

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Be prepared to explain your business model. How much do you really need for the next 12 to 18 months?

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Occam's Razor

MAY 2, 2017

The very best analysts distill, rather than dilute. Outcomes: Revenue | Ideas Funded Behavior: Path Length | Cart Abandonment Rate Acquisition: Assisted Conversions | Share of Search. Every ecommerce site has to obsess about Revenue. With advertising revenue in a tailspin, it is more important than ever.

Metrics 143

Metrics Acquisition eCommerce Analytics 143

Startup Professionals Musings

DECEMBER 11, 2022

That approach may work for an entrepreneur who just sold a successful business for a huge profit, but it doesn’t work for the rest of us who are not proven successes yet, or don’t even have a business yet. Undefined business model or very low gross margins. Naïve expectations on funding terms and process.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Duct Tape Marketing

APRIL 7, 2022

So a lot of agencies track revenue, some actually even track profit, but you, if we're gonna optimize, um, profitability, what, what should we be measuring? So there is, is a way to adapt your business model and do this without time sheets. So I'm also maybe a little French too, that might have helped. No, you did a great job.

Cofounder 94

Cofounder Hosting Networking Software Review 94

Tim Keane

JANUARY 12, 2010

3]   However, if they are built bottom up, they demonstrate and make explicit a range of business model assumptions the entrepreneur is using to think about his business and its revenue model.   Pre-bubble Siliicon Valley deals were popularly valued at multiples of revenue.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

betashop.com

OCTOBER 8, 2012

But, you can iterate and iterate on features, but you cannot iterate your way to a business model. I’ve seen too many businesses get stuck or fail because of their endless pursuit for the magic new feature that is going to help them gain traction. Don’t skimp on fundraising because of dilution fears.?. This is tricky.

Technical Review 108

Technical Review Technology Software Review Valuation 108

www.paulgraham.com

OCTOBER 23, 2010

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. They get the same kind of stock and get diluted the same amount in futurerounds. A rich companyis one with large revenues.

Startup 105

Startup Cofounder Software Stock 105

Both Sides of the Table

SEPTEMBER 12, 2010

The actual investment professionals (partners) are too busy to call companies that they’re interested in so they basically outsource it. But how can you really outsource judgment to young, smart people who have often never worked in businesses? I will never have anybody do outbound prospect dialing for me.

Programming 294

Programming Entrepreneur Private Equity Equity 294

Austin Startup

FEBRUARY 13, 2019

Not necessarily the entire business, but at some point, something will fail and you’ll either learn from it and grow or it will be the beginning of the end. Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

The Startup Magazine

JULY 1, 2022

Production or service is the business’s core activity, which generates revenue. All three of these components are essential to the success of a business. How To Create A Business Model And Identify Your Target Market. Creating a business model is an essential step in starting a business.

Technology 148

Technology Venture Capital Startup Finance 148

Startup Professionals Musings

MAY 27, 2017

For investors, show the depth of your business potential by prioritizing a strategic plan for multiple later phases that capitalize on additional problems you plan to address. Pick a business model that you can best support. Consider a subscription model for a repeatable revenue stream, or full-purchase model, but not both.

Entrepreneur 159

Entrepreneur Channel Angel Investor Dilution 159

Austin Startup

NOVEMBER 12, 2017

Let’s talk first about an angel round to individual investors, all of whom may be duly accredited but many of whom may have no background that enables them to understand fully your idea and your business model. Is third-year revenue of $10M good or bad? A price of $2 per share means nothing in itself.

Term Sheet 48

Term Sheet Technical Review Due Diligence Merger 48

Lightspeed Venture Partners

SEPTEMBER 16, 2012

The founder wanted to take the offer, but he called his advisor (his business school professor) who told him it was too much dilution for this stage, so he turned it down. The investor doesn’t bear risk on ongoing expenses without the prospect for future revenue. This was the right decision. ” BUGGY BEDS.

Silicon Valley 167

Silicon Valley Salary Dilution Indiana 167

Startup Professionals Musings

AUGUST 1, 2016

That approach may work for an entrepreneur who just sold a successful business for a huge profit, but it doesn’t work for the rest of us who are not proven successes yet, or don’t even have a business yet. Undefined business model or very low gross margins. Naïve expectations on funding terms and process.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Startup Professionals Musings

SEPTEMBER 5, 2016

Don’t quit your day job until the revenue is flowing. Investors expect nothing less than a full-time commitment, even in the early stages when the business model has not yet been proven. Don’t let early funding increase risk and dilute your potential. Spread your equity internally to build the team.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Startup Professionals Musings

MARCH 7, 2015

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Be prepared to explain your business model. How much do you really need for the next 12 to 18 months?

Preferred Stock 120

Preferred Stock Exit Strategy Equity Angel Investor 120

David Teten

AUGUST 21, 2019

Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. Less or no dilution.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Lightspeed Venture Partners

OCTOBER 22, 2012

The company has gotten off to a fast start, $150k in revenue in the first two months, with all the marketing coming from social media. Adding two trucks instead of just one would have increased their revenue far faster, and a $100k investment would have enabled them to do that. In 2010 they did $10k in profits.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Austin Startup

MARCH 23, 2017

Priced equity financings make sense as they provide clarity around valuation and ownership dilution, while creating alignment between the investors and founders. I point back to Fred Wilson’s blog, specifically a guest post by Andy Sack on revenue based financing. However as the above links show, debt is a trickier subject.

Dilution 54

Dilution Equity Warrant Distribution 54

Duct Tape Marketing

MARCH 5, 2013

There are many access points to a business and its offerings. Social media has certainly increased that number and perhaps simultaneously diluted it, but know this; your story must unfold in a total presence online and off. Changing the Social Channel is a post from: Small Business Marketing Blog from Duct Tape Marketing.

Channel 77

Channel Kansas City Kansas Social Media 77

Up and Running

APRIL 24, 2018

If you’ve never written a business plan before, take a look at these sample medical startup business plans. At first, you need to focus on developing your business model and validating it. That’s why having a revenue-minded focus from the early stages helps to secure funding.

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

Both Sides of the Table

FEBRUARY 14, 2016

forward revenue for SaaS businesses when in the years before it had been less than 5x. Plus, down rounds trigger anti-dilution provisions. Just as with the late 90s there is no new “business model” that defies the laws of gravity. You’ll see here that in 2007 people were willing to pay 7.7x

Valuation 150

Valuation Down Round Startup Later Stage 150

Bryce Dot VC

DECEMBER 22, 2016

5%-10% range is much more likely after the initial round of funding and dilutes rather quickly in successive rounds as reserves for pro rata vary wildly by firm). (sidebar- most $50M funds would kill for 20% ownership these days. Through our work on Indie.vc

Founder 40

Founder Cap Table Dilution Valuation 40

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. As the business owners had a longer-term perspective, decisions were made with greater deliberation and with a more conservative recognition of risk.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Ben's Blog

AUGUST 17, 2020

OH in South Park, San Francisco (or on Zoom from Big Sky, Montana): “OMG, crazy – that firm just paid 100x revenue to invest in [insert hot startup here] – what could they be thinking?” Multiples are not only used to value companies today but also to value companies several years down the line.

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

Up and Running

JULY 14, 2015

Our business model was Pinterest. It goes to show you that the business model was good but we just … We’re not the right team. They want to be able to put a badge or something, whatever it is that works for your business model but don’t pay them. Pinterest didn’t exist at the time.

Incubator 60

Incubator Email Startup Oregon 60

Professor VC

JUNE 20, 2011

I took a look back at our original financial model we presented to VCs in 2004. The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. So what does this all mean.

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

Seeing Both Sides

JANUARY 13, 2015

My boss and mentor from Open Market, Gary Eichhorn , made the entire management team read it in the 1990s to hammer home its important lessons as we stumbled through the chasm on our way to scaling from zero to nearly $100 million in revenue in a few years. Business Model: running a lot of experiments - pricing, packaging, value proposition.

Mezzanine 20

Mezzanine IPO Finance Business Model 20

maplebutter.com

JANUARY 8, 2013

I would focus on one product and set a goal to generate $1M in yearly revenue from it. Outsourcing is something a big company, with a known customer / problem (that has revenue & traction) does to save cost. I don’t have any formal business training and I actually think it’s served me well. Once you’ve done that – then.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. They plan to franchise the model (presumably including selling equipment plus a certification program). it also means less dilution, something that entrepreneurs should be very mindful of.

Pre-Money Valuation 164

Pre-Money Valuation Post-Money Valuation Valuation Dilution 164