Business Plan Blog

OCTOBER 4, 2013

While some investors will be willing to help you build your team, they will not be willing to invest in your startup if you are not willing to distribute responsibility and bring on diversified expertise. Having too many co-founders will only lead to your eventual dilution. Never confuse the number of years worked with experience.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

Hunter Walker

JANUARY 2, 2017

Next Level: Buying Customers/Revenue/Distribution. It could lower earnings because of continued investment and share dilution. See Mint and Periscope as examples. There are so many reasons for a current Fortune 500 CEO to *not* bet the farm and make a big tech acquisition. It could go wrong and they’ll look stupid.

Technical Review 131

Technical Review Cap Table Acquisition Startup 131

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

MARCH 14, 2020

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 308

Both Sides of the Table

JUNE 17, 2017

70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue. Revenue When I look at an income statement I start by focusing on the revenue line. You need to understand the “quality” of the revenue.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Startup Professionals Musings

DECEMBER 11, 2022

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

This is going to be BIG.

JANUARY 18, 2024

On the other hand, they could be the opposite—much more focused on near-term cash distributions than long-term equity appreciation. They might not understand how a pre-revenue startup could be worth anything, let alone be valued at $5mm.

.Net 88

.Net Cap Table Startup Technical Review 88

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. .   And if they are built from the top down, they’re pretty much useless. [3] This is why a bottom up approach is more credible.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ConversionXL

NOVEMBER 6, 2017

What works for first-time customers might have less of an effect on (and be diluted by) people who are returning to buy again. Your experimental controls, Stewart says, need to be equal: sample size, performance range, and distribution of outlier behavior. User segmentation can be vital to gaining insights and maximizing revenue.

Chad 112

Chad Mobile Technical Review Aggregator 112

Lightspeed Venture Partners

SEPTEMBER 21, 2013

Despite having over 500k downloads and making $450k in revenue over the last 21 months, he had only $185k left in the bank, which meant that he would be out of business in 90 days if he didn’t raise more money. pre money valuation seems big, the actual implication is only between 5% and 10% dilution since the round size is small.

Pre-Money Valuation 167

Pre-Money Valuation Valuation Dilution Distribution 167

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 other offer saw money coming off the top as a percentage of revenue. Despite all of this, Cuban made an offer to invest $200k for 33% of the company.

Silicon Valley 167

Silicon Valley Salary Dilution Indiana 167

The Equity Kicker

MAY 14, 2012

achieving first revenues. breaking through revenue thresholds – e.g. run-rates of £1m, £5m, £20m and so on. signing distribution deals. demonstrating that signed distribution deals are working. achieving first revenues. breaking through revenue thresholds – e.g. run-rates of £1m, £5m, £20m and so on.

Finance 118

Finance Valuation Venture Capital Dilution 118

Startup Professionals Musings

AUGUST 1, 2016

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

The Startup Magazine

JULY 1, 2022

Production or service is the business’s core activity, which generates revenue. If you are providing a service, you will need to determine how to distribute your service and whether to offer it for free or charge for it. The three main components of a company are production or service, marketing and sales, and finance.

Technology 148

Technology Venture Capital Startup Finance 148

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

View from Seed

JUNE 30, 2015

Over a third of our investments happen pre-product (so by definition, before PMF), and two-thirds are pre-revenue. For a marketplace or ecommerce business, you need to be doing well north of $5M in annual revenue or GMV to get an A round done. FWIW, at NextView, we invest from inception to strong PMF. We’re not at normal yet.

Seed Stage 120

Seed Stage Syndicate Syndication Dilution 120

ReadWriteStart

APRIL 4, 2023

Founders should consider other fundraising possibilities, such as traditional venture capital or angel investment, as well as non-dilutive funding sources such as grants or loans. It can serve as a centralized hub for distributing all of your most important information. Forgoing one is like throwing away money.

Startup 141

Startup Campaign Cofounder Venture Capital 141

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

Up and Running

MAY 21, 2015

What this means, is that he gets paid not as a portion of the profit, but as a portion of the overall revenue, regardless of the profit. They generally also get additional rights that common shareholders don’t get, such as anti-dilution protection, and liquidation preference (discussed further below). Anti-dilution protection.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Duct Tape Marketing

MAY 23, 2024

Through his insights and experience, Gleason reveals the transformative potential of re-commerce for retail businesses, turning what was once considered a loss into a significant revenue stream, while effectively preventing waste. And most distribution centers are really designed for egress. It is one of the most painful parts.

Revenue 90

Revenue Distribution Cofounder Email 90

Austin Startup

AUGUST 19, 2018

It’s my policy to avoid exclusivity unless it’s absolutely necessary for the survival of the company or if it has the effect of replacing a dilutive round of venture funding with guaranteed revenue that is non-dilutive. if they don’t generate a certain amount of revenue you can start selling to others. Who does it cover?

Customer 48

Customer Intellectual Property Dilution Revenue 48

ConversionXL

APRIL 14, 2016

If your site receives high volumes of traffic that are globally distributed, third-party solutions can be a tremendous help. Additional elements like that dilute the central CTA. Adding all of their products to the homepage hurt revenue by nearly 48%. For AWS users, a network optimization tool such as Datapath.io seconds to 1.6.

Conversion 48

Conversion Technical Review Audience PPC 48

NZ Entrepreneur

JULY 8, 2019

I waited for the ‘casino-like’ world of startup investing until I was 28 years old, putting $10,000 into a friend’s software distribution company – a tidy sum for me at that age. Soon after that first investment, I started my first business, and am now on my fifth (all $1m+ in revenue, but not all ‘successful’). Valuations.

New Zealand 53

New Zealand Entrepreneur Valuation Dilution 53

Up and Running

APRIL 24, 2018

Health care ethics are the moral principles and values that allow you to make the right choice while promoting, distributing, and operating your product to healthcare organizations or patients directly. 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

ReadWriteStart

JULY 18, 2011

He says that one is too lonely, two is good and three is a great number if they can combine their skills to cover design, development and distribution. He believes that equity need not be distributed equally, as long as everyone involved is happy with their arrangement. How to Hack the Investment World.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Small Business Force

JANUARY 14, 2016

It is also less understood than it should be, with dilution and control issues being major points of concern. The point of it was that with any kind of equity distribution, dilution will always occur. The % of equity you own is far less important than the value of that equity. Your 80% is now worth $5.6 With each comes risk.

Equity 20

Equity Dilution Distribution Valuation 20

A Smart Bear: Startups and Marketing for Geeks

FEBRUARY 26, 2019

Sometimes that’s defensible distribution channels. Instead, watch payback period for acquisition efficiency, watch retention for product/market fit, watch expansion revenue for long-term growth, and watch gross margin for long-term profitability. But many startups top out between $5m-$20m in revenue. Fix that now.

Restful 202

Restful Founder Revenue Acquisition 202

Professor VC

JUNE 20, 2011

The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. But of course, the model had us requiring only $10M equity to breakeven and to achieve $185M in revenues in 2008 (the magic Year 5 in all business plans).

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

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

NOVEMBER 7, 2022

Even with advantages that independent startups can never hope to match, including brand recognition, customers, financial capital, and distribution, I don’t often see the entrepreneurial passion for innovation, agility, and team perseverance exhibited by new startups. Commit a source of internal or external seed funding.

Advisory Board 359

Advisory Board Incubator Dilution Agile 359

ConversionXL

FEBRUARY 21, 2018

A number capable of signaling growth, like absolute count of conversions, conversion rate, total revenue, revenue per visitor, cost per acquired customer, among others. Most tools will not be capable of identifying the same user across different devices or browsers, diluting the value of customers who have multi-device journeys.

Programming 117

Programming Audience Analytics Metrics 117

Austin Startup

MARCH 26, 2019

Discounts too early can also have the adverse effect of diluting a brand when targeting a more affluent customer segment. One thing worth considering is that your gross margins will tell you whether certain distribution channels are viable?—?for Are you prepared for continued investment in customer service? These add up very quickly.

Technical Review 49

Technical Review Software Review China Acquisition 49

Up and Running

DECEMBER 9, 2014

Two, revenue. Many business owners today really think of financials as being about the past, how much revenue have we had, how much cost did we have. Inaudible 00:27:51] leading indicator to help you know where your revenue will be over the coming weeks and months but you can actually apply the same concept on the cost side as well.

Small Business 95

Small Business Finance Forecast Metrics 95

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. It will also minimize future dilution. Cash distributions are what matter at the end of the day, bug big paper gains still make for good fundraising pitches. Now you make your own decisions.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

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 have a proposal written up including full cost and revenue projections. Once you’ve done that – then. 1) Hire A’s.

Technical Review 44

Technical Review Startup Cofounder Software Review 44