article thumbnail

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

If you have a very low gross margin (10-30%) it can be very hard to build a large, scalable business because you need to make a lot of sales to cover your operating costs. In startup world low GM almost always equals death which is why many Internet retailers have failed or are failing (many operated at 35% gross margins).

Burn Rate 383
article thumbnail

Master of Customer Acquisition, Matt Coffin, On Startups …

Both Sides of the Table

He tells the story of how he was out of cash, stressed out, nobody in LA or Silicon Valley would give him money, he had finally found an investor in Minneapolis but his venture bank was going to shut him down for breaking a “covenant&# in their agreement by not having enough cash in the bank. The answer?

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Trending Sources

article thumbnail

Flexible VC, a New Model for Companies Targeting Profitability

David Teten

John Berger, Director Operations & Impact Solutions, Toniic , observed that this has clear investor benefits: “ The grace period became a feature because it benefits investors in regions like the US where there can be tax differences between short and long term gains. Typically promissory note or non-voting common stock, with covenants.

article thumbnail

The need for a board grows with complexity

Berkonomics

The operations of the corporation become more complex. Bank loans with restrictive covenants are taken on. Then along comes either money or contracts from strategic or financial investors or partners. Ownership is spread among several classes of investors. The number of employees grows.

article thumbnail

Who are the Major Revenue-Based Investing VCs?

David Teten

The average monthly operating expenses is $70,335. 30% have been operated by females, 70% have been operated by males. 40% have been operated by “visible minorities”, 60% have been operated by “non-visible minorities”. The average cash balance is $191,164. Growth support.

Revenue 60
article thumbnail

How should I finance my new venture? - Startups and angels: Along.

Tim Keane

Example one: Sustainable net operating income with some growth in a stable market.    Appropriate covenants. Example one: Sustainable net operating income with some growth in a stable market.    Appropriate covenants. What are the reasons to choose one financing structure over another?

Finance 83
article thumbnail

Your need for a board grows with complexity.

Berkonomics

The operations of the corporation become more complex. Bank loans with restrictive covenants are taken on. Then along comes either money or contracts from strategic or financial investors or partners. Ownership is spread among several classes of investors. The number of employees grows.