A Smart Bear: Startups and Marketing for Geeks

MARCH 21, 2017

Revenue multiples, profit multiples, premium over the previous financing — these are metrics used by sellers to help determine a minimum acceptable price. Even for startups, it takes years for a new product to become good enough to demand many millions of dollars in revenue.). Yet mobile advertising revenues were paltry.

Balance Sheet 242

Balance Sheet Vertical Acquisition Revenue 242

Steve Blank

APRIL 1, 2020

But other businesses like law firms, contracting firms, real estate firms, will take hits, too. Your revenue plans are no longer valid. What’s your monthly cash burn at your new low revenue level? Others are cutting their valuations. Days 3 and 4: Prepare new business model and operating plan.

South Korea 334

South Korea Salary Business Model China 334

VC Cafe

OCTOBER 23, 2022

The CEO shared the revenue target for the year at X, and the revenue target for next year at 3X. One of the board members asked a simple question: “Why is revenue our North Star KPI? One of the board members asked a simple question: “Why is revenue our North Star KPI?”

Metrics 179

Metrics Revenue B2C Portfolio 179

Steve Blank

OCTOBER 24, 2017

— Unremarked and unheralded, the balance of power between startup CEOs and their investors has radically changed: IPOs/M&A without a profit (or at times revenue) have become the norm. Typically, this caliber of bankers wouldn’t talk to you unless your company had five profitable quarters of increasing revenue. Board Control.

Founder 278

Founder Technical Review CTO Hire IPO 278

ReadWriteStart

JUNE 1, 2020

Funding might be a need in some cases — but it’s not an absolute necessity. ? The business should be self-sustainable. The primary source of your funds should be your paying customers, i.e., your business should generate enough revenues and profits to fund the growth and expansion. Incubators and Accelerators.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

SoCal CTO

FEBRUARY 2, 2011

Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. Think about how you can prove your business model with an MVP. Bill Payne is an expert on how early-stage investors should look at valuation. What are they really looking for? is a requirement. Not sure why.

Valuation 198

Valuation Revenue Pre-Money Valuation Early Stage 198

Steve Blank

MARCH 17, 2020

But next the question is, ‘What happens to my business?”. The questions every startup or small business CEO needs to ask now are: What’s my Burn Rate and Runway? What does your new business model look like? Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month.

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

Startup Professionals Musings

NOVEMBER 21, 2016

They know it’s especially hard to provide a financial return with a free business model. Declare a $10 million valuation with no revenue or customers. The average valuation for Angel investments is about $2.5 Annual revenue projections exceed $100 million before fifth year.

Intellectual Property 120

Intellectual Property Valuation Technical Review Equity 120

Startup Professionals Musings

AUGUST 10, 2014

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked.Google reached $1 billion in revenue within five years of incorporation, and now has a market capitalization of over $400 billion. A business only achieved critical mass by becoming cash-flow positive.

Revenue 246

Revenue Entrepreneur Valuation Viral 246

Startup Professionals Musings

APRIL 17, 2023

For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. At this point, most Angel investors and a few early-stage VCs will be happy to talk, assuming you have the business model validated, and a large opportunity.

Angel Investor 313

Angel Investor Intellectual Property Investment Bankers Private Equity 313

A Smart Bear: Startups and Marketing for Geeks

AUGUST 18, 2015

They have everything: money, brand, momentum, existing customers, press, product teams, distribution channels, expertise, market insight, analysts, sales offices, product features, and, by definition, a working business model. The insight is: The profitable revenue stream is a prison. Not anymore. That’s a young company’s game.

Technical Review 120

Technical Review Valuation Flash Revenue 120

Startup Professionals Musings

DECEMBER 1, 2017

Every business needs to develop a revenue model even before a product. The alternatives range from giving the product away for free (revenue from ads), to pricing based on costs, to charging what the market will bear (premium pricing). Freemium model – people pay for upgrade.

Revenue 166

Revenue Affiliate Advertising Retention 166

Startup Professionals Musings

SEPTEMBER 30, 2013

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 281

Intellectual Property Entrepreneur Sweat Equity Fractional CTO 281

Startup Professionals Musings

JANUARY 7, 2013

The market and venture capitalists are looking for business, but with a continuing focus on proven business models. Your friends and family are really the only answer until you have a significant revenue stream. Follow with a killer executive summary, investor presentation, and financial model.

Venture Capital 252

Venture Capital IPO Elevator Pitch Initial Public Offering 252

Startup Professionals Musings

JUNE 26, 2016

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $400B. A business only achieved critical mass by becoming cash-flow positive. Both have worked.

Revenue 145

Revenue Valuation Startup Viral 145

Agile VC

JANUARY 13, 2016

Was this simply a shift in sentiment among the tech & business media? A realignment of valuations by late stage investors? It used to take 5-10 years for a great startup to go from $0 to $75-100M+ in annual revenue. Revenue is revenue, right? What happened? The beginning of a tech downturn?

Technical Review 157

Technical Review .Net Revenue Software Review 157

Steve Blank

MARCH 12, 2014

We realized that past K-12 Entrepreneurial classes taught students “the lemonade stand” version of how to start a company: 1) come up with an idea, 2) execute the idea, 3) do the accounting (revenue, costs, etc.). We wanted to teach our students how to think like entrepreneurs not accountants.

Lean 335

Lean Customer Development Startup Silicon Valley 335

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. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Startup Professionals Musings

JUNE 26, 2013

It’s higher risk, but higher return, to pick the big winners early, before Angels have set unreasonable valuations and restrictive terms. More sources of funding for early-stage startups may drive up valuations on these deals, which will lower the returns for the Angels and super-Angels willing to do these deals.

Angel Investor 231

Angel Investor Entrepreneur Early Stage Silicon Valley 231

Startup Professionals Musings

JANUARY 7, 2023

Perhaps the most famous bubble for startups was the dot.com craze that crashed 20 years ago, where the highest valuations were given to companies with massive user growth, but minimal revenue or profit. Never take your eye off the ball in business. Falling victim to a magical mania or bubble.

Intellectual Property 314

Intellectual Property Entrepreneur Bankruptcy Viral 314

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

Startup Professionals Musings

AUGUST 31, 2012

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 260

Intellectual Property Sweat Equity Fractional CTO CTO Hire 260

Startup Professionals Musings

JULY 22, 2020

For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. At this point, most Angel investors and a few early-stage VCs will be happy to talk, assuming you have the business model validated, and a large opportunity.

Angel Investor 370

Angel Investor Intellectual Property Investment Bankers Private Equity 370

Startup Professionals Musings

OCTOBER 20, 2017

Due to the efficiencies of digital, it is now commonplace to have companies with billions of dollars of revenue and valuation, with few employees, and without years of building infrastructure. Think about the up-and-comers during the past decade that have either created new business models or stolen share from established players.

Technical Review 136

Technical Review Demand Valuation Business Model 136

Startup Professionals Musings

NOVEMBER 13, 2021

If you are an aspiring entrepreneur, or an existing business, and haven’t yet sized any of these opportunities, you may be already late to the game. Usually these are revenue-generating e-commerce sites, or have the potential to be revenue-generating. There is value in the “idling capacity” of all assets.

Cuba 316

Cuba Venture Capital Community Valuation 316

Steve Blank

MARCH 31, 2014

Companies horde cash and squeeze the most revenue and margin from the money they use. Look at the valuations of companies like Tesla, Illumina, and Twitter. The first will be commodity businesses that are valued for their ability to execute their current business model. Act Like a Startup.

Private Equity 330

Private Equity Metrics China Intellectual Property 330

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

JANUARY 10, 2016

Perhaps the most famous bubble for startups was the dot.com craze that crashed 15 years ago, where the highest valuations were given to companies with massive user growth, but minimal revenue or profit. Never take your eye off the ball in business. Falling victim to a magical mania or bubble.

Business Model 120

Business Model Intellectual Property Startup Bankruptcy 120

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. Most existing investors (those still in business) hoarded their money and stopped doing follow-on rounds until the rubble had cleared. They’re Back. Why do VCs Do This?

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Startup Professionals Musings

JUNE 17, 2011

Don’t expect them to believe your $100M revenue projection, if you are still waiting for the first revenue dollar. A great business often starts with one person, but it doesn’t end there. Get a real customer and real revenue. It doesn’t prove your business model of pricing, distribution, and support.

Intellectual Property 253

Intellectual Property Sweat Equity Fractional CTO CTO Hire 253

VC Cafe

JANUARY 27, 2021

But within two weeks its Israeli founders managed to pivot their product into the virtual events world and have concluded 2020 with 100% growth and tens of millions of dollars in revenue. Next47 and American Insight Partners VC, demonstrates growing trust in its current and future business model.

Vertical 148

Vertical Video Technical Review Europe 148

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

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. Non-credible funding request or unreasonable valuation. Future unproven projections don’t set today’s valuation.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 308

VC Cafe

JANUARY 15, 2024

A billion dollar valuation, the Unicorn status was once the holy grail for many VCs and founders. At zero interest rates with a seemingly never ending flow of capital to fuel growth, Unicorn creation rate hit a peak in 2021, but fast forward 3 years and justifying a billion dollar valuation seems more like a liability.

IPO 88

IPO Valuation Israel Private Equity 88

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

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. And for some that means that despite waiting they may see worse valuations in the future than now.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Startup Professionals Musings

SEPTEMBER 9, 2010

It’s higher risk, but higher return, to pick the big winners early, before angels have set unreasonable valuations and restrictive terms. More sources of funding for early-stage startups may drive up valuations on these deals, which will lower the returns for the angels and super-angels willing to do these deals.

Technical Review 215

Technical Review Early Stage Venture Capital Startup 215