Both Sides of the Table

MARCH 11, 2011

I thing I’ve learned over the years is that technology purists hate advertising even when it is that revenue stream that truthfully drives much of our industry. Too many entrepreneurs focus on dilution. But over-optimizing for dilution is a bad attribute relative to focusing on creating a big & winning company.

Product 350

Product Tuvalu Dilution Incubator 350

Both Sides of the Table

DECEMBER 18, 2009

The first came from the CEO of iScraper telling me that they would not be able to complete the deal – their investor, Apax Partners, had decided not to proceed despite verbal assurances that they would. I then flew from London to Los Angeles to meet with the partners of GRP. And then I got a few disturbing calls. But we did $2.1

Germany 298

Germany Entrepreneur Merger Los Angeles 298

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

Both Sides of the Table

FEBRUARY 25, 2010

We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. You need your key negotiating partner and both sets of lawyers. Yes, this was stupid.

Technical Review 301

Technical Review Term Sheet Due Diligence Venture Capital 301

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

Both Sides of the Table

JANUARY 4, 2014

She started it with a partner, 50-50. It either needed to get more aggressive in pricing, pivot to a new business or business model or raise more capital (and take the dilution) in order to have more time to figure things out. He felt the CEO was willing to “sell his soul” for revenue and wanted things to be more pure.

Founder 340

Founder Cofounder Sacramento Technical Review 340

VC Cafe

FEBRUARY 27, 2024

especially if the startup already has a product and revenue? To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples).

Valuation 186

Valuation Software Review Generative AI Technical Review 186

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

David Teten

JANUARY 21, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. 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? IV: Should your new VC fund use Revenue-Based Investing?

Equity 78

Equity Revenue Cofounder Colorado 78

YoungUpstarts

SEPTEMBER 16, 2015

by John Vrionis, partner at Lightspeed Venture Partners. Raise too much capital at any given stage and suffer more dilution than is necessary – obviously not ideal. John Vrionis is a partner at Lightspeed Venture Partners who focuses primarily on early stage enterprise and consumer technology investments.

Valuation 100

Valuation Dilution Chicago Technical Review 100

David Teten

JANUARY 19, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. His work on VC and small communities can be found at greatercolorado.vc/blog. Of the Inc. 5000 companies, only 6.5%

Cofounder 78

Cofounder Technical Review Equity Dividend 78

View from Seed

APRIL 30, 2015

Use good judgment, talk to your co-founders/investors/lawyers, and partner with a bank that values transparency and relationships such as SVB.]. And it’s that important because all companies will go through good times and tough times, and we’ll want to make sure we’ve got the right partner on the other side. Traction and revenue?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

The Next Web

SEPTEMBER 13, 2013

In India, the leading firms are slightly more concentrated with Sequoia India , Accel Partners , and Nexus Venture Partners being a cut above the rest. Finding the right partner is a much bigger win than the extra cash or minimizing dilution. Focusing on the people you’re partnering with is crucial.

Asia 132

Asia Silicon Valley India Term Sheet 132

Life Beyond Code

SEPTEMBER 27, 2011

One Million by One Million is a global initiative that aims to nurture a million entrepreneurs reach a million dollars each in annual revenue and beyond by 2020, thereby creating a trillion dollars in global GDP and ten million jobs. 1M/1M Program has a bold mission. This is where numerous ventures fail.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

Up and Running

JULY 1, 2020

Our mission, as defined by the community partners that formed us, was to provide medical, dental, and mental health services. The investment expenses precede the revenues they will ultimately produce and may lead to cash or profitability constraints. Will marketing for the expansion dilute marketing of your brand or other products?

Business Plan 152

Business Plan Forecast Operations Dilution 152

YoungUpstarts

OCTOBER 16, 2016

We witness so many of the subtle gains of our labor – ideas made real, people turned passionate partners and the prospects of inching ever-closer to a long-term future rather than the great likelihood of total business failure. Re-set the vendor and partner paradigm. And it’s no different at my company – or, in fact, any company.

Cofounder 100

Cofounder Balance Sheet Small Business Administration Technical Review 100

Both Sides of the Table

MARCH 21, 2010

Plus, we’re all allured by the false sense that our contract with BigCo is going to “make us&# because once they start using us it will spread like wildfire and the revenue will flow in. They negotiate a “master agreement&# to work with your company with some maybe minimum guarantees in terms of revenue.

Warrant 298

Warrant Dilution Startup Stock Options 298

betashop.com

OCTOBER 8, 2012

This past week while I was in Tokyo for meetings with potential partners for Fab, I was invited to participate in a panel discussion on startups. million registered users, 7500 supplier partners, 600 team members, and a run-rate of more than $150M in sales in just 15 months. The discussion quickly turned to those 57 things.

Technical Review 108

Technical Review Technology Software Review Valuation 108

The Startup Magazine

AUGUST 9, 2022

The SoStereo firm that Salo helped build not only streamlines the way Fortune 500 Brands use music on their ads, but also helps indie artists build a musical middle class and earn extra revenues. One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted.

Cofounder 158

Cofounder Founder Miami Marketing 158

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

Hearpreneur

JANUARY 30, 2022

Thanks to Adam Wood, Revenue Geeks ! #7- Many businesses are discovering that the key to successful marketing is interacting two-way with customers, not simply shouting marketing messages at increasingly dilute audiences. . With rising costs due to inflation, more businesses are laser-focused on revenue than ever before.

Entrepreneur 127

Entrepreneur Green Technical Review Social Media 127

Duct Tape Marketing

APRIL 7, 2022

20:05] Why wouldn’t you use a resource plan with your white label partners to some degree? [20:52] So a lot of agencies track revenue, some actually even track profit, but you, if we're gonna optimize, um, profitability, what, what should we be measuring? Sometimes you might be using white label or outsource partners.

Cofounder 93

Cofounder Hosting Networking Software Review 93

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

JANUARY 4, 2020

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection.

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Both Sides of the Table

JANUARY 20, 2011

They have some revenue but not much. He wanted a good partner, a fair valuation, and quite honestly, just some effing money! I say this all the time: the “sweet spot&# of dilution on a normal deal is 25-33%. If you’re struggling a bit on funding you might see 40% dilution.

Dilution 284

Dilution Valuation Seed Money Differentiation 284

Startup Professionals Musings

OCTOBER 7, 2022

Angel investors will perk up if you have a prototype or a few real customers, while venture capitalists will likely choose to wait until you have achieved several million in revenue or customer count. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection.

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Startup Professionals Musings

JUNE 13, 2020

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members.

Angel Investor 314

Angel Investor Entrepreneur IRR Valuation 314

Berkonomics

SEPTEMBER 13, 2010

Then along comes either money or contracts from strategic or financial investors or partners. Second, the audit committee is responsible for hiring an outside auditor as appropriate, reviewing the accounting practices of the corporation and making sure that laws are followed relating to recognition of revenues and expenses.

Covenant 59

Covenant Software Review Stock Options Vesting 59

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. Whatkind of anti-dilution protection do they want? The fund managers, who are called"general partners," get about 2% of the fund annually as a managementfee, plus about 20% of the funds gains. Not all the people who work at VC firms are partners. Hell if they know.In

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Both Sides of the Table

SEPTEMBER 12, 2010

It looks as though you’ve built a very interesting business, and I’d love to spend some time getting a better understanding of your future plans for the company and if there is an opportunity to partner with [My Firm]. In case you aren’t familiar, I’ve attached a brief overview on our firm.

Programming 294

Programming Entrepreneur Private Equity Equity 294

ConversionXL

NOVEMBER 15, 2022

Your customers, followers, shareholders, and partners want to be impressed. This example from a presentation by Brent Dykes shows how unnecessary noise dilutes data and how much more effective its when stripped back: Image Filename: example-from-a-presentation-by-brent-dykes.jpg. Focus on the data that matters.

Marketing 100

Marketing Analytics Audience Design 100

Startup Professionals Musings

AUGUST 2, 2014

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members.

Angel Investor 266

Angel Investor Entrepreneur Venture Capital IRR 266

Both Sides of the Table

APRIL 25, 2011

A great recent example of this was a successful group of entrepreneurs who had created a company that will do $10-12 million in revenue at their system integration business (read: services business) in 2011 after having done $5 million or so in 2010 and $2-3 million in 2009. That is $12 million in profits over 3 years.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

Berkonomics

APRIL 4, 2024

Then along comes either money or contracts from strategic or financial investors or partners. The CEO insisted that between husband and wife, over half the stock always be in their hands, refusing new offerings or any other form of dilution, and controlling the majority of board seats in the process. The number of employees grows.

Covenant 48

Covenant Software Review Stock Options Vesting 48

View from Seed

SEPTEMBER 23, 2019

Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. My partner Rob has previously written some thoughts on how to approach that conversation. develop and launch X product, reach Y number of users, generate $Z amount revenue).

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Startup Professionals Musings

MARCH 12, 2023

Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles. They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members.

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Ben's Blog

APRIL 1, 2011

Raise money in a highly dilutive way. Revenue at Ning is soaring and team morale is high. My partner Scott Weiss relayed that it’s so common that there is an acronym for it: WFIO which stands for We’re F#%ked, It’s Over (it’s pronounced whiff-ee-yo). Radically reduce the size of the company or 2. Sell the company or 3.

Management 78

Management Cap Table Balance Sheet Bankruptcy 78