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. The next reason is to establish a competitive advantage over your competition and quickly acquire a substantial market share. Both of which are expensive and time-consuming.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

VC Cafe

SEPTEMBER 26, 2022

Before product-market fit… just care about speed of iteration according to your customer feedback. But valuations, especially those in the private market, are not necessarily a predictor of growth/ success. A good way to think about valuation in seed/pre-seed is to reverse engineer the next round. Team, product, market.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Lightspeed Venture Partners

OCTOBER 7, 2012

This isn’t a company yet, it’s an idea, and the founder could do a lot more on his own to validate product-market fit before raising capital. They won a design award at a trade show, but have no revenue and no orders. They were right to do so. He has not done so, and that is not a good sign.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Steve Blank

APRIL 26, 2022

For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value. (A A cram down is different than a down round. Why do VCs Do This?

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Both Sides of the Table

SEPTEMBER 27, 2010

We need venture debt, factoring companies and public markets. There is no way for people to keep prices down – it’s a competitive market. The only solution as an investor is to sit the market out as Chris Sacca said he’s inclined to do. In public investing you can get in and out even in a bull market.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

VC Cafe

JANUARY 2, 2023

As growth investments (and valuations) go down, unicorns might struggle to survive, according to Globes. Israeli public tech companies saw market cap decline of 65% in 2022. The recent valuations analysis by Carta shows the valuation benchmarks across industry (note that the valuations are for the US market, so discretion is advised).

Valuation 158

Valuation Down Round Israel Venture Capital 158

YoungUpstarts

JUNE 26, 2020

To do that you have to show how your market is big enough (a multi-billion dollar market) to support that kind of valuation. Like Mark Zuckerberg, who built a site only for college students, we are looking for a small, protected market that you as an entrepreneur, can dominate. Why does it need to be a small market?

Finance 205

Finance Silicon Valley Valuation Startup 205

Both Sides of the Table

FEBRUARY 14, 2016

I recently survey more than 150 VC friends from all stages and geographies what they thought about the market by asking “Which of the following statements best describes your mood heading into 2016?” I’ll spare you the math and point out that this means we funded 0.104% of the market. In short – no.

Valuation 150

Valuation Down Round Startup Later Stage 150

Both Sides of the Table

MARCH 30, 2016

It is an heroic accomplishment in a brutal fund-raising market in which only market leaders can bring in that sort of money. Every VC who’s been the business for a long time realized first hand that the VC markets were changing rapidly as early as Q3 of 2015. But of course public markets had begun gyrating. $30 million.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

VC Cafe

SEPTEMBER 6, 2024

and team Somite Therapeutics on your $10M seed round to leverage AI and big data to develop cell replacement therapies! Mazel tov Amit Monheit and team Odeeo on your $5M funding round to expand your global audio advertising for games to the US market! billion compared to $6.7 billion in Q1-Q2-Q3/2023. AI and all the rest.

Israel 97

Israel Down Round Silicon Valley Stealth 97

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

This is going to be BIG.

SEPTEMBER 7, 2012

The one thing that does effect them all is the cyclicality of funding and exit markets, but if you go back over the last 20 years, there's really only been a very short timeframe where you literally could not get a company funded. If you're doing seed deals, how often does a down round in a seed deal even happen? Down from what?

Later Stage 99

Later Stage Down Round Pre-Money Valuation Early Stage 99

NZ Entrepreneur

SEPTEMBER 16, 2020

This means that even though founders invest many years of their life studying markets and building their companies, and even though experienced investors pour billions of dollars into startups every year, 90% of the bets are wrong. It isn’t good enough to just say ‘what does halving my revenue do to the business?’ Quantify the impact.

Startup 94

Startup Sales Cycle Down Round Revenue 94

ithacaVC

NOVEMBER 14, 2014

You evaluate the team, product, market and other variables – then, make a general guess. Funding lets you invest in growing your company faster than revenue growth would normally allow. Market size. A big market determines the upside potential. Revenue is how traditional businesses get valued. Active users.

Valuation 69

Valuation Startup Down Round Early Stage 69

VC Cafe

NOVEMBER 30, 2022

Atomico’s founder Nicklas Zennstrom recently called the end of the high valuations era and urged founders and VCs to remove the stigma from down rounds. To justify the valuation, some will require 10x revenue ramp and more efficient margins. But how will the current market affect future unicorn creation?

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

Berkonomics

MARCH 5, 2020

One way to mitigate this is by using early money to create a prototype, to perform market research, to complete the first generation of the product, or to deliver the service to a satisfied customer. Second: Market risk. . Are you ahead or behind the market with your product or service? compete in the marketplace?

Valuation 62

Valuation Down Round Early Stage Demand 62

NZ Entrepreneur

JULY 8, 2019

I made my first investment in the stock market when I was 12 years old. 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

New Zealand 53

New Zealand Entrepreneur Valuation Dilution 53

David Teten

AUGUST 7, 2019

To simplify, there are two classic approaches to public markets investing. The first is Momentum Investing , “a strategy to capitalize on the continuance of an existing market trend”, which usually meaning that the price has been rising in the recent past. LTV / CAC, revenue growth, etc.)

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.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

Scalable Startup

OCTOBER 26, 2011

The first venture round is often based on an idea, past successes, a business plan, or a market hunch. The current phenomenon of Internet multi-millionaires recycling their money back into the startup markets is creating “super” angels like Ron Conway. Where is the market going? Is it positioned correctly?

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22

Berkonomics

OCTOBER 5, 2023

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

Berkonomics

AUGUST 10, 2017

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Berkonomics

MARCH 30, 2010

Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. There is an art to efficient management of a process, whether that is the process of bringing a product to market from R&D to production or developing a new product’s launch program.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

Both Sides of the Table

SEPTEMBER 18, 2014

Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.paulgraham.com

APRIL 28, 2010

There never has to be atime when you have no revenues. As a company gets more established,its valuation gets closer to an actual market value. The disadvantage of taking money from less known firms is thatpeople will assume, correctly or not, that you were turned down bythe more exalted ones. they decide to start talking to VCs.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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. What about the efficient market hypothesis? Aren’t markets rational? Because markets are not logical; markets are emotional. How could this be?

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

Reid Hoffman

JUNE 8, 2021

And all of the other smart and operational decisions that have enabled Airbnb to weather the storm and go on to have one of the most successful public market debuts. It’s a market. And I thought, well, no one’s marketing. But now our hosts are really angry, and they have a huge revenue shortfall. And so I did that.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Scalable Startup

JANUARY 27, 2011

And by growth I mean revenue growth. The first trick is to offer something that the world will need more and more over the next few years (growing market), without that it doesn’t matter much anyway; your product/service/thing must “catch on”. This can be somewhat manipulated by your successful marketing execution (i.e.

Revenue 22

Revenue Early Stage Down Round Software Review 22

Gust

SEPTEMBER 17, 2014

Revenue multiple? Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. A down round? What proof points?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

VC Cafe

MAY 29, 2022

Snap’s stock plunged 40% last week after Evan Spigel announced the company will miss revenue targets, which raises questions about other ‘advertising powered’ social networks. Carta’s State of Private Markets Q1 2022. As a result, they are less susceptible to immediate changes in the market environment.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

View from Seed

FEBRUARY 19, 2015

In 2010, we were recruiting for a Senior Vice President of Sales and Marketing for Backupify, and it was clear that many of the people I was interviewing wanted the CEO role. I called the recruiter running the search and told him I was going to step down and hire a CEO. Disclosure: NextView was not an investor in Backupify.).

Founder 120

Founder Startup Cofounder Business Model 120

The Equity Kicker

JANUARY 22, 2014

To meet growth and revenue targets, you hire and spend like never before. You rush a few key hires, overbuild the team, ramp marketing spend. A few quarters in, you realize that product/market fit is not quite there, or you’re not as far up the sales learning curve as you thought, or your LTV/CAC is suddenly in the toilet.

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

Reid Hoffman

JUNE 8, 2021

And all of the other smart and operational decisions that have enabled Airbnb to weather the storm and go on to have one of the most successful public market debuts. It’s a market. And I thought, well, no one’s marketing. But now our hosts are really angry, and they have a huge revenue shortfall. And so I did that.

Silicon Valley 36

Silicon Valley Hosting Rhode Island Design 36

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. What about the efficient market hypothesis? Aren’t markets rational? Because markets are not logical; markets are emotional. How could this be?

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Business Plan Blog

OCTOBER 8, 2013

In order to launch a successful business and raise the capital needed to do so, a startup needs to consider several aspects of the business including the management team , the size of the opportunity, the product/service/technology, the market/sales/distribution channels, the competitive environment and several other factors.

Business Plan 67

Business Plan NDA Exit Strategy Valuation 67