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. Don’t assume that you can “just do a down round” if necessary.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

VC Cafe

JUNE 10, 2022

But recently those round sizes and valuations have tumbled to about $10 million and $50 million, respectively, he said. As a result, founders are accepting increased dilution of the stakes they hold in their own companies. That’s why Bessemer ventures coined a new term, reflecting that revenue is king. Apple Roomplan API.

Valuation 151

Valuation Marketing Israel Venture Capital 151

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

Lightspeed Venture Partners

OCTOBER 7, 2012

The founders were very sympathetic; a man, laid off from his job, and his very pregnant wife, who sold their house and investing $150k into the business and are working hard to make a go of it. The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Both Sides of the Table

SEPTEMBER 27, 2010

And people like Jeff Clavier, Aydin Senkut, Dave McClure, Chris Sacca & Eric Paley (at Founder Collective) are leading the charge. Chris Sacca talked about how a $20 million exit can change a founder’s life and that shouldn’t be scoffed at. That’s awesome. I had two kids and a rental house.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

VC Cafe

JANUARY 2, 2023

As Fred Wilson put in in his post ‘What will happen in 2023’ “I believe that ‘new normal’ is more or less where we were in 2015 where seed rounds were done around $10mm, A rounds were done around $15mm to $25mm, B rounds were done around $25mm to $50mm, and growth rounds had a cap at 10x revenues.”

Valuation 158

Valuation Down Round Israel Venture Capital 158

YoungUpstarts

JUNE 26, 2020

When a VC’s website says they do “early stage” – to a VC that means a product has already been built and generating some revenue, while to an entrepreneur it means “just an idea.”. I always caution entrepreneurs not to take too high a valuation in any round because it sets very high expectations for the next round.

Finance 205

Finance Silicon Valley Valuation Startup 205

VC Cafe

SEPTEMBER 6, 2024

It’s worth mentioning that the actual number is likely much higher, as rounds get reported long after they actually happened and September already started off with a bang. OpenAI co-founder and former CTO, Ilya Sutskever and his new SSI Inc. Revenue estimates of AI products A new wave of humanoid robot is coming to homes soon.

Israel 97

Israel Down Round Silicon Valley Stealth 97

Both Sides of the Table

FEBRUARY 14, 2016

forward revenue for SaaS businesses when in the years before it had been less than 5x. Why Inside Rounds are Difficult? Many founders don’t understand why inside rounds are so difficult. Why Down Rounds are Harder Than You May Think. Down rounds are hard.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

MARCH 30, 2016

Investors sat with the founder & CEO, Jason Spievak, and asked him what he wanted to do about the future. Investors had grown too used to the idea that any deal you funded would get marked up to a higher valuation in the next round and that’s clearly not always true. CMRR (contracted monthly recurring revenue) grow 100% y/y.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

VC Cafe

NOVEMBER 30, 2022

The 2022 Founders Factories report by DealRoom and Accel shines a spotlight on the startup clusters that produced most unicorns across Europe and Israel, and then tracks the alumni of those unicorns to test where the talent goes to found their next companies. London and Tel Aviv are home to the most founder nurturing unicorn startups.

Israel 97

Israel Europe Balance Sheet Valuation 97

Growthink Blog

MAY 23, 2011

This venture capital financing - usually between $3 and $10 million - is the first of a number of rounds of outside investment over a period of three to five years. With this capital, the company propels itself to $50 million+ in revenues, and to either a sale to a strategic acquirer or to an initial public offering.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

NZ Entrepreneur

SEPTEMBER 16, 2020

The statistics show that even though most founders bet their time and resources that their startups will be the best in the world, 90% of those new startups won’t be in operation in 10-15 years. For example, “How will unit cost affect our capital requirements and how will product pricing affect revenue?”

Startup 86

Startup Sales Cycle Down Round Revenue 86

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

ithacaVC

NOVEMBER 14, 2014

If you are advising startup founders, I strongly suggest having them read all 4 of the posts to get the lay of the startup valuation land. A founder is about to raise their first round and asking me how to value their company. [1]. Funding lets you invest in growing your company faster than revenue growth would normally allow.

Valuation 69

Valuation Startup Down Round Early Stage 69

NZ Entrepreneur

JULY 8, 2019

Soon after that first investment, I started my first business, and am now on my fifth (all $1m+ in revenue, but not all ‘successful’). I personally funded my first ventures, then led the two rounds that have seen Ambit take in $2.2m Josh Comrie is founder and CEO of AmbitAI and an active angel investor. Valuations.

New Zealand 49

New Zealand Entrepreneur Valuation Dilution 49

David Teten

AUGUST 7, 2019

Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. LTV / CAC, revenue growth, etc.) were clearly Momentum, but [in hindsight] they were also Value.”

Venture Capital 60

Venture Capital Valuation Stock NDA 60

Altgate

MARCH 8, 2009

Growth stage investors are usually the Series B or C investors who come in when the product is in the market but there is little or no revenue and the team is probably in the 20-something range with the goal to ramp it up to 40-50 employees with the new money, build out a sales team, etc. But some will be saved.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

Scalable Startup

OCTOBER 26, 2011

It’s no longer based on a hunch, unless the company is in trouble and needs money to finish what the first round started. This problem often leads to a lowered valuation or “down round” Not a great scenario.) If the company is doing well, the second round is easier to acquire. Founders Fund.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

Berkonomics

OCTOBER 5, 2023

How about young or pre-revenue companies? Although young companies rarely measure profitability this repeatedly, more mature companies usually can bring from five to ten percent of revenues to the bottom line in the form of net profit. Lots of good jobs were lost and many investors including me were left with the question.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

Berkonomics

AUGUST 10, 2017

Although young companies rarely measure profitability this repeatedly, more mature companies usually can bring from five to ten percent of revenues to the bottom line in the form of net profit. It is not a strong bargaining position for the CEO to ask for money to complete a product promised for completion with the previous round of funding.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Both Sides of the Table

SEPTEMBER 18, 2014

How will you price the next round? Your A round? Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

www.paulgraham.com

APRIL 28, 2010

A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. Few startups get it quite right.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Berkonomics

MARCH 30, 2010

Although young companies rarely measure profitability this repeatedly, more mature companies usually can bring from five to ten percent of revenues to the bottom line in the form of net profit. Hedging against downturns The fight for quality.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

View from Seed

FEBRUARY 19, 2015

This is a guest post from Rob May , a co-founder and CEO of Backupify , which raised $19.5M Rob,” he said, “no offense, but you aren’t going to get a world class, been-there-done-that CEO into a company with less than $1 million in revenue. Hang out with other founders and CEOs. and sold to Datto in late 2014. Keep at it.

Founder 120

Founder Startup Cofounder Business Model 120

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. BC: Yeah, Reid. We couldn’t make them whole.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Gust

SEPTEMBER 17, 2014

How will you price the next round? Your A round? Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. A down round?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Scalable Startup

JANUARY 27, 2011

And by growth I mean revenue growth. Flat to negative revenue growth is a real red flag, especially for early stage companies. If you’re venture funded, things get kind of ugly -unhappy board members, cut off from communications, down- rounds to keep you going, or no more funding. And protection form death.

Revenue 22

Revenue Early Stage Down Round Software Review 22

VC Cafe

MAY 29, 2022

Sequoia’s “Adapting to Endure” Sequoia presented this deck to a group of portfolio founders and it quickly spread online to founders worldwide. Investing at this stage is primarily focused on founders, market tailwinds, and underlying product/strategy (in that order). Source: VentureUnlocked newsletter.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

Ben's Blog

JULY 16, 2013

Perhaps you are caught in the “Series A crunch” or perhaps you are a consumer company and expected that you would be valued on users rather than revenue like the last time. When you go to fundraise, you will need to consider the possibility of a valuation lower than the valuation of your last round, i.e., the dreaded down round.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For those of you who fit that description, nice work. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For you who fit that description, nice work. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Reid Hoffman

JUNE 8, 2021

While many travel industry leaders chose to “go dark,” as Airbnb CEO and co-founder Brian Chesky put it , while they decided how to navigate next steps, Chesky took a different approach: He got candid. Today, we are thrilled to have Airbnb CEO and co-founder Brian Chesky with us. BC: Yeah, Reid. We couldn’t make them whole.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For you who fit that description, nice work. Do not expect grand valuations of your enterprise from these professional angels.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Hippoland

NOVEMBER 13, 2016

But as we’ve seen, these valuations can be hocus-pocus — even at later stage rounds, we’ve seen lots of companies of late fall from grace and become massively devalued overnight when they cannot raise their next round at a higher valuation. If a company raises a good round, it gets marked up to the new value.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Feld Thoughts

SEPTEMBER 9, 2015

Some will demonstrate strategically justifiable metrics and have fantastic ‘up round’ exits; others may see liquidation preferences kick in which will negatively impact founders and employees; others may fulfill the adage “IPO is the new down round” , which has been the case for more than half of the public companies on our list.

Liquidation Preference 70

Liquidation Preference Burn Rate Balance Sheet .Net 70