Both Sides of the Table

NOVEMBER 14, 2017

This financial leader could well have come through the finance org at another startup or at a larger company but they often also can come from strategy consulting (Bain, BCG or McKinsey) or through investment banking (Goldman Sachs, Morgan Stanley, etc.).

Operations 286

Operations New York City Technical Review Startup 286

View from Seed

OCTOBER 24, 2019

The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. No good investor would want the founder/CEO of a company to have insufficient ownership by the series A, and every founder I know is sensitive to taking too much dilution.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Growth can dilute a business’s culture and customer value proposition and put the business in a different competitive space.

Dilution 209

Dilution Virginia Management Washington 209

VC Cafe

FEBRUARY 27, 2024

especially if the startup already has a product and revenue? While the answers are somewhat semantic, the pre-seed funding round is making a comeback in 2024 startup financing. A founder asked me what makes a $2M round “pre-seed”? Pre-seed tends to be about developing an MVP and generating early traction.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

Both Sides of the Table

DECEMBER 18, 2009

We got their commitment and our existing investors bridged us until the new financing round could close. And for all of this we had no dilution and paid no money. million in recurring revenue of which $600k came from Germany. We committed to cost focus, customer adoption and delivering our numbers. We signed deals worth $1.2

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Both Sides of the Table

JUNE 5, 2011

But the reality is that you’re faced with two problems: 1) the earlier the stage the riskier and thus more write-offs so you need to have enough ownership percentage in your winners to make up for the losers and 2) the earlier stage your check the more likely the company will need many more funding rounds behind you and thus you face dilution.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

David Teten

AUGUST 19, 2019

So you’re interested in raising capital from a Revenue-Based Investor VC. A new wave of Revenue-Based Investors (“RBI”) are emerging. For background, see Revenue-Based Investing: A New Option for Founders who Care About Control. Rational burn profile, up to 50% of revenue at close, scaling down. Bigfoot Capital.

Revenue 60

Revenue Technical Review Software Review Equity 60

Both Sides of the Table

SEPTEMBER 29, 2009

Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations. As a personal story, I sat on the board of one company with a very unhealthy burn rate relative to revenue or expected growth. They also make M&A activity more difficult and with lower outcomes.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

ReadWriteStart

SEPTEMBER 10, 2010

They already have several customers including some telcos, and are at about $350,000 in revenues. I call it drip-financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn't always come along, though). Kir Devries.

Cloud 115

Cloud Silicon Valley Incubator Bootstrapping 115

Both Sides of the Table

FEBRUARY 8, 2016

If you raised money in the past 2 years and have grown it is possible that your next round valuation might be flat (or lower) even though you have a higher revenue because investors may value your multiple differently. Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

YoungUpstarts

JUNE 13, 2011

years, and had reached an average revenue level of $60 million with the range being from $5 million to $350 million. They end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service. The problem is that too many entrepreneurs never learn to say ‘NO!’ Growth is messy.

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

David Teten

JANUARY 21, 2021

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?

Equity 78

Equity Revenue Cofounder Colorado 78

Business Plan Blog

OCTOBER 4, 2013

Rather, give titles such as VP of Engineering, Product/Technology, Sales, Marketing, Finance, etc. Having too many co-founders will only lead to your eventual dilution. With little to no revenue, many early stage entrepreneurs turn to the Co-Founder model to build credibility for their startup when raising seed capital.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

ReadWriteStart

JUNE 1, 2020

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. These usually play a role in the very early stage of your business, primarily pre-revenue. Reasons for funding. ? Incubators and Accelerators. Government programs.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Berkonomics

MARCH 20, 2025

If fixed expenses, especially payroll, are paid out before cash is received from services or shipments, the company is financing its growth with ever-increasing working capital needs. Many great businesses in their growth periods find themselves stretched for cash.

Dilution 114

Dilution Acquisition Early Stage Book Value 114

ReadWriteStart

JANUARY 27, 2011

For a more elaborate explanation of the deal, please read my blog post 1M/1M: Alternative Financing For Startups Using A Sales Channel Partner. I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

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. Of the Inc. 5000 companies, only 6.5% raised from angels.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

www.avc.com

SEPTEMBER 22, 2011

This "best value" can be the valuation on the last round of financing. Whatever approach you use, it should be the value of your company that you would sell or finance your business at right now. The other important data point is the number of fully diluted shares. Or it can be a public market comp analysis.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Hunter Walker

JANUARY 2, 2017

This keeps them aligned with their investors since a $250m exit with modest venture financing raised can be wonderful for all parties, but the same transaction can look awful if your last round was $60m on $300m pre! Next Level: Buying Customers/Revenue/Distribution. See Mint and Periscope as examples.

Technical Review 130

Technical Review Cap Table Acquisition Startup 130

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. Revenue multiple? In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Me: More dilution? There were no metrics. So a convertible note was easier. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. If you really don’t want to raise another round, then prove that to me based on what really matters: Revenue. This situation is not always in the best interest of founders.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

The Startup Magazine

MARCH 30, 2022

This is where growth financing options come into play. So what is it exactly, and to what extent can you finance the growth of your startup using it? A quick overview of growth financing. Tip: carefully review your financing options. The scope of growth financing products. The advantages. Final thoughts.

Finance 166

Finance Dilution Green Revenue 166

ConversionXL

AUGUST 30, 2018

It’s likely to be related to improving revenues, reducing costs, increasing the number of new customers, increasing the sales from existing customers, or increasing shareholder value. The finance team understands that content customers are less likely to churn and destabilize revenue flows. What about user personas ?

Design 111

Design Framework Product Development Technical Review 111

Both Sides of the Table

APRIL 25, 2011

It’s nearly impossible to get a services company financed by VCs. They have created two internal technology “products&# and wanted to figure out how they could turn their services business into a product business that could be financed. You’re a small fish. This team is talented. They wanted advice.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors. . This is why a bottom up approach is more credible.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 14, 2012

What I want to talk about today is one of the insider baseball discussions of our industry this past week: The odd fact of the $500 million financing round completed just before the company sold for a B. You just said, “nobody would take 1-2% dilution.” I will weigh in with some thoughts soon. Was this a good thing?

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

crowdSPRING Blog

DECEMBER 13, 2018

But if you want to accelerate growth and improve your revenues and profits, you need to up your game. It is a key factor in the success and prosperity of all businesses and nonprofits, regardless of their revenues. If your brand tries to be too many things at once, the message becomes scattered and the brand grows diluted.

Marketing 162

Marketing Charlotte Naming Design 162

View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. First, it’s helpful to enumerate the startup’s funding history to date.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Both Sides of the Table

MARCH 11, 2010

Let’s assume that the $2 million buys 25% of your company, which is the norm in an equity financing. Your revenue will take longer to ramp then you think. obviously the starting point is to ask yourself how much money you’ll need until the next milestone. 24 months for most tech startups is usually too much money. -

Venture Capital 319

Venture Capital Startup Silicon Valley Warrant 319

The Equity Kicker

MAY 14, 2012

Twice in the last week I found myself coaching founders on how to build a financing plan around value creation milestones so I thought I would share what I said here. achieving first revenues. breaking through revenue thresholds – e.g. run-rates of £1m, £5m, £20m and so on. achieving first revenues.

Finance 118

Finance Valuation Venture Capital Dilution 118

Austin Startup

MARCH 26, 2019

These strategies can be useful in increasing initial conversions from your ads and website traffic, but offering large discounts too early in the life of the company will lower your gross margins and CAC, both of which will affect your unit economics and future financing conversations.

Technical Review 49

Technical Review Software Review China Acquisition 49

The Next Web

FEBRUARY 27, 2014

This is typically in conjunction with an upcoming financing or pending takeover offer. A competitive commodity business, or a “me too” story , will be less demanded, and hence, will require a lower valuation to close your financing. Freshman are a piece of paper to beta site (bootstrap financed—raise $50K to $500K).

Valuation 167

Valuation Forecast Seed Stage .Net 167

Austin Startup

FEBRUARY 4, 2019

A finalist in the Social and Culture category , which will pitch at 11 am Saturday, March 9, EnrichHER Funding , based in Atlanta, is fueling the growth of women-led businesses by enabling women founders to secure capital in an affordable and non-dilutive way. The second is a loan via our EnrichHER Funding crowd-funding platform.

Startup 50

Startup Cofounder Technical Review Equity 50

Hunter Walker

JANUARY 15, 2016

I wish I could claim I deftly foresaw this, but I was just seeking recurring revenue to to cover OneMatchFire’s office expenses. By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue. InVenture is in a really great place.

Technical Review 48

Technical Review Startup Cofounder SMS 48

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. Same, except at the option of the noteholders (per the term sheet example above).

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

David Teten

NOVEMBER 17, 2011

I’ve often found it helpful to have on hand a simple model showing the impact of each financing stages on all team members, suitable for sharing with everyone in the company. In particular, this model is designed to help all team members understand the impact of dilution on their options.

Employee 155

Employee IRR Startup Mexico 155