Steve Blank
MARCH 4, 2014
It describes the product/service, who is it for, what channel sells/deliver it, how demand is created, how does the company make money, etc. A business model guides an organization to create and deliver products/service and make money from it. Somewhere in the dim past of the company, it too was a startup searching for a business model.
David Teten
JANUARY 19, 2021
From RBI, Flexible VCs borrow the ability to reap meaningful returns without demanding founders build for an exit. This causes the cost of capital for Flexible VC, often calculated through IRR (similar to an interest rate), can be higher than that of venture debt or traditional RBI. 20-30% is a common target IRR for investors.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Startup Professionals Musings
JUNE 13, 2020
VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). How large is the financial return you project?
Steve Blank
JUNE 11, 2013
What is an IRR? You invest the dollars to create end-user demand and drive those customers into your sales channel. How do the fund and the partners make money? How long is a fund’s life? How much will they invest in the life of your company? How much do they need to own at a liquidity event? What’s a win for them?
Tim Keane
JANUARY 12, 2010
If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR. Internal Rates of Return naturally compound, so a 50% IRR is 7.59 (If you plug in an IRR of 58.5% Internal Rates of Return naturally compound, so a 50% IRR is 7.59 times at 5 years and 11.39
Startup Professionals Musings
AUGUST 2, 2014
VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). How large is the financial return you project?
Seeing Both Sides
SEPTEMBER 26, 2010
During most periods, there has been a supply and demand imbalance that favors the VCs. A little IRR math shows the price of this elongated time to liquidity – a 5x return in 5 years yields a 38% IRR. If you find yourself in a market transaction and don’t know for sure that you are the wolf, then, sadly, you are the sheep.
Expert insights. Personalized for you.
335 
Let's personalize your content