Both Sides of the Table

MARCH 30, 2016

If you want to see what was on my mind – I started foreshadowing change publicly in October 2015 with a forecast of what I expected in 2016 VC funding markets at a presentation I gave at the annual Cendana VC/LP conference hosted by Michael Kim. CMRR (contracted monthly recurring revenue) grow 100% y/y. FOMO was NOMO.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Berkonomics

NOVEMBER 7, 2024

If you are a going business with a track record of revenues, then the importance of accurate current financial statements cannot be overstated. (If If there is no record of revenues, see the “The Berkus Method” available with any search query for valuing the business before revenues.) Careful about “hockey stick” forecasts.

Hockey Stick 62

Hockey Stick Liquidity Event Valuation Balance Sheet 62

Up and Running

NOVEMBER 5, 2018

Two essential lists: Startup costs normally include startup expenses and startup assets: Startup expenses: These are expenses that happen before you launch and start bringing in any revenue. And it interferes with the estimates and dilutes their value. Start with revenues, costs, and expenses (including payroll). Add in assets.

Cost 150

Cost Balance Sheet Startup Intellectual Property 150

Berkonomics

MARCH 21, 2019

If you are a going business with a track record of revenues, then the importance of accurate current financial statements cannot be overstated. If there is no record of revenues, see the “The Berkus Method” available with any search query for valuing the business before revenues. Careful about “hockey stick” forecasts.

Hockey Stick 63

Hockey Stick Liquidity Event Valuation Balance Sheet 63

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

Both Sides of the Table

FEBRUARY 14, 2016

Valuing any company can be difficult because it requires a degree of forecasting future growth & competition and ultimately the profits of the organization. forward revenue for SaaS businesses when in the years before it had been less than 5x. Plus, down rounds trigger anti-dilution provisions.

Valuation 150

Valuation Down Round Startup Later Stage 150

epaley.com

MAY 6, 2013

Using revenue metric.s because they are simple, consider the startup that has $3MM in previous year revenue and is hoping to 4X that this coming year to $12MM. Startups forecast based on what’s possible. Large companies forecast based on what’s probable. Instead they do $9MM in sales.

Salary 41

Salary Startup Equity Forecast 41

Ben's Blog

AUGUST 17, 2020

OH in South Park, San Francisco (or on Zoom from Big Sky, Montana): “OMG, crazy – that firm just paid 100x revenue to invest in [insert hot startup here] – what could they be thinking?” cash flows beyond that forecast period). It starts with the complexity involved in valuing companies in general.

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

www.paulgraham.com

OCTOBER 23, 2010

5 ] But the advantage of these medium-sized rounds is not just thatthey cause less dilution. The short term forecast is more competition between investors, whichis good news for you. Meaning that when the noteconverts into stock (in a later round, or upon acquisition), theinvestors in that round will get.6 You also lose less control.

Valuation 92

Valuation Stock Partner Founder 92

Up and Running

JULY 14, 2015

Bigger than that was we had an operating agreement that had a non dilution clause for him and I don’t want to get into the weeds of that. If anyone wants to hear about some tips on non dilution clauses just like writers at Bcast, love to hear some more about that, but that’s great girl. Peter: That’s great.

Incubator 60

Incubator Email Startup Oregon 60

ReadWriteStart

JULY 18, 2011

Every company has a forecast for how it will get to an arbitrary $100 million in revenue and they all hit it on year five. At this stage, the founders pay for the dilution of the shares and the funders will take 20 to 25% of the company. What's interesting is the assumptions that go into that vision of scaling.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Seeing Both Sides

OCTOBER 24, 2015

Many blogs suggest you simply divide 1 by your monthly churn rate to get to a number of months of duration that you can expect to collect revenues from your customer. Thus, if your average monthly churn rate is "c", the number of months of revenue you will receive over the lifetime of a customer is 1/c. A monthly churn rate of 1%?

Churn Rate 20

Churn Rate Early Stage Revenue Metrics 20

Up and Running

DECEMBER 9, 2014

What I did is I learned the art of a pro forma and the value of a pro forma which basically is a forecast. Two, revenue. If you don’t know what your cash flow forecast is, you don’t really understand your capital needs. You heard a little bit from others about that. What do you do? One, profit and loss statement.

Small Business 95

Small Business Finance Forecast Metrics 95

Ben's Blog

MAY 24, 2021

Small” IPOs — companies with less than $50m in annual revenue at the time of IPO – have declined from more than 50% of all IPOs in the 1980-2000 timeframe to about 25% of IPOs from 2001-2016; Companies are staying private much longer — the median time to IPO from founding hovered around 6.5

SEC 36

SEC Accredited Investor IPO Technical Review 36