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This essay is part of a series on alternative VC: I: Revenue-Based Investing: a new option for founders who care about control. II: Who are the major Revenue-Based Investing VCs? III: Why are Revenue-Based VCs investing in so many women and underrepresented founders? IV: Should your new VC fund use Revenue-Based Investing?
A concrete monetization strategy, or at the very least a revenue model, gives investors detailed insight into how a startup plans to generate profit once an established network is set into place. With over a decade of hands-on experience in venture capital, Emmanuel is also an expert in M&A and dealstructuring.
Helped merge company with Seedling – on track to do $20 million combined revenue in 2015 – will now become Chairman). Kara has worked in finance in Boston, NYC and Silicon Valley. In Kara’s case I got to see her work on dealstructuring first hand having worked closely with her on her board at P.S. XO.
Think of financing an acquisition as an exercise with two parts that work in concert: 1) structuring a desired deal with a suitable target and 2) obtaining the funding. Structuring the Desired Deal. A desired deal meets the needs of the buyer, the seller and the funding sources. Obtaining the Funding.
But every year thousands of entrepreneurs become millionaires by buying and growing businesses without the startup headaches of venture capitalists, zero revenue, and no business processes. The opportunity: Use this as a negotiating point when bargaining for the deal. If you remove the owner, the business struggles and collapses.
Be prepared to cross the desert - SaaS requires R&D and sales expense up front for a multi-year stream of revenue, so it demands enough investment capital to fund 4+ years of runway. Farming is also often overlooked, but can help grow customer accounts and revenues from 30% upwards (if successful). Great list! Philippe Botteri.
This post is intended to be a dynamic document, and I will attempt to update it from time to time with new questions that may arise or as financing trends evolve. Q: What amount of financing is considered Pre-Seed? It’s a legitimate stage of financing in the venture eco-system as of this writing (October 2017).
ME: Of course getting tied up with that might distract you from other growth opportunities, and sometimes buyers don’t like that you’re dependent on another company for revenue. One of the best ways to arm yourself going into negotiations is to know this number and be prepared to blow up the entire deal if it cannot be met.
Professionally, I am a Certified Public Accountant (CPA), may also be called a Chartered Accountant (CA) on your side of the globe, a Finance Charter-holder and a Certified Financial Planner. I understand personal finance. It also helps that I arranged seller financing, which meant I didn’t have to take a loan from the bank.
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