VC Cafe

SEPTEMBER 26, 2022

The past year was a wild ride for startups and founders, giving a whole new meaning to the ”rollercoaster” aspect of being an entrepreneur. A combination of competition for top talent and an effort to bring employees back to the office drove startups in Israel to throw extravagant parties and all-inclusive retreats abroad.

Founder 187

Founder Startup Valuation Pre-Money Valuation 187

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! New investors hate down rounds. For others it feels like a two-speed economy, where rules apply to hot tech startups that don’t apply elsewhere. I said that at the Founder Showcase, too. and profits! Many good companies will not get funded.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

VC Cafe

JUNE 10, 2022

The market correction has come for series A and seed startups. For the past few week I’ve been sharing here the impact of the current downturn that started in the public markets on startups and venture capital. Until now, early stage startups were relatively unaffected. It’s not just the prices that are coming down.

Valuation 151

Valuation Marketing Israel Venture Capital 151

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? 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. Few startups get it quite right. A lot of startups that end upgoing public didnt seem likely to at first.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Steve Blank

APRIL 26, 2022

Cram downs are back – and I’m keeping a list. At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. A cram down is different than a down round. Cram downs are done by VC bottom feeders.

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Lightspeed Venture Partners

OCTOBER 7, 2012

They won a design award at a trade show, but have no revenue and no orders. As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. Kevin questioned the use case since bowls are ubiquitous. The entrepreneur was clearly desperate.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

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

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. Unfortunately, most startups don’t meet their initial rosy projections.

Finance 205

Finance Silicon Valley Valuation Startup 205

Scalable Startup

JANUARY 27, 2011

An ominous title for a blog post, but “Grow or Die” has been one of the most basic rules in the high-growth startup world for decades. And by growth I mean revenue growth. Flat to negative revenue growth is a real red flag, especially for early stage companies. And protection form death. And gasoline to create more growth.

Revenue 22

Revenue Early Stage Down Round Software Review 22

Both Sides of the Table

FEBRUARY 14, 2016

” “Mark has a vested interest in talking down valuations of startups.” Most prefer not to say this publicly for two reasons: 1) they have an entire portfolio of startups, many of whom are raising capital and 2) they prefer not to be attacked publicly or seem “anti entrepreneur.” goes into a startup.

Valuation 150

Valuation Down Round Startup Later Stage 150

VC Cafe

JANUARY 2, 2023

A report by Greenfield Partners puts the total fundraising of Israeli startups at $15.16 Israeli startups 2022 funding summary. Down rounds, especially for growth stage companies, and bridge rounds galore. We started to see down rounds taking place especially in growth stage. billion to $17.1

Valuation 158

Valuation Down Round Israel Venture Capital 158

Both Sides of the Table

SEPTEMBER 27, 2010

Industry change allows the entry of newer players at earlier stages – It doesn’t take as much money to launch a startup anymore. So in the past we needed VC to really get a startup going. If you invest it in startups you’re a VC professional money manager. We all know that.

Silicon Valley 308

Silicon Valley Liquidity Event Seed Stage Finance 308

abovethecrowd.com

APRIL 20, 2016

In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” Next came Rolfe Winkler’s deep dive “ Highly Valued Startup Zenefits Runs Into Turbulence. ”

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

View from Seed

FEBRUARY 19, 2015

Below, he gives an honest take about what he’d do differently and what he’d do again as a startup CEO. 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. Startups are incredibly hard. and sold to Datto in late 2014.

Founder 120

Founder Startup Cofounder Business Model 120

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

Berkonomics

OCTOBER 31, 2024

You may recognize these five as a slight variation on the “Berkus Method of Valuation” which is often published and used by investors when valuing pre-revenue businesses. Here we expand the definitions a bit to encompass businesses that are still early stage, but perhaps beyond startup. And fifth: Competitive risk.

Valuation 117

Valuation Down Round Early Stage Demand 117

ithacaVC

NOVEMBER 14, 2014

I have written about startup valuations previously. 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]. Here is a post from October 2012.

Valuation 69

Valuation Startup Down Round Early Stage 69

Both Sides of the Table

MARCH 30, 2016

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. Invoca was raising at the tail end of this market phenomenon at this time doing tens of millions in SaaS recurring revenue and growing at a nice clip. FOMO was NOMO.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

VC Cafe

SEPTEMBER 6, 2024

We must #BRINGTHEMALLHOME August was a slow month in venture investment as globally startups raised $18 billion in August worldwide, a 37% decline MoM and 24% decline year over year. This was also felt in Israeli startups, who reportedly raised only $201M in 7 deals, bringing the total to $938 million in 61 deals in Q3 2024 so far.

Israel 97

Israel Down Round Silicon Valley Stealth 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

The Equity Kicker

JANUARY 22, 2014

To meet growth and revenue targets, you hire and spend like never before. You fall into the spiral of death: head of sales gets replaced (at least once), CEO gets replaced (at least once), a down-round financing happens (if lucky). Startup general interest Venture Capital'

Venture Capital 102

Venture Capital Down Round Valuation Lean 102

NZ Entrepreneur

SEPTEMBER 16, 2020

No one can predict the future and it’s especially true in the startup world. 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. Sensitivity Analysis: “What if my assumptions are wrong?”.

Startup 70

Startup Sales Cycle Down Round Revenue 70

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. 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.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

Reid Hoffman

JUNE 8, 2021

As I’m sure most would agree, Airbnb is one of the most iconic startups to have been formed in the world. But I generally am not a fan of committees and things that get in the way of moving quickly in a startup. But now our hosts are really angry, and they have a huge revenue shortfall. Not that we should have more committees.

Silicon Valley 69

Silicon Valley Hosting Rhode Island Design 69

Tim Keane

AUGUST 20, 2009

Startups and angels: Along the way to success. "  The problem has been that too-high valuations and too generous terms have spawned painful down rounds that squash the entrepreneur and his early investors.  up to $10MM in revenue.  up to $10MM in revenue.  up to $10MM in revenue. 

Milwaukee 60

Milwaukee Bootstrapping Cram Down Deal Structure 60

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

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

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Berkonomics

MARCH 5, 2020

You may recognize these five as a slight variation on the “Berkus Method” which is often published and used by investors when valuing pre-revenue businesses. Here we expand the definitions a bit to encompass businesses that are still early stage, but perhaps beyond startup. And fifth: Competitive risk. .

Valuation 62

Valuation Down Round Early Stage Demand 62

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

Reid Hoffman

JUNE 8, 2021

As I’m sure most would agree, Airbnb is one of the most iconic startups to have been formed in the world. But I generally am not a fan of committees and things that get in the way of moving quickly in a startup. But now our hosts are really angry, and they have a huge revenue shortfall. Not that we should have more committees.

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Hippoland

NOVEMBER 13, 2016

It takes a long time to see the results of a startup that does well. 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.

IRR 48

IRR Valuation Portfolio Due Diligence 48

NZ Entrepreneur

JULY 8, 2019

I waited for the ‘casino-like’ world of startup investing until I was 28 years old, putting $10,000 into a friend’s software distribution company – a tidy sum for me at that age. Soon after that first investment, I started my first business, and am now on my fifth (all $1m+ in revenue, but not all ‘successful’).

New Zealand 43

New Zealand Entrepreneur Valuation Dilution 43

Ben's Blog

JULY 16, 2013

If you run a startup and are currently raising money, you probably planned for a somewhat different fundraising environment than the one you find yourself in today. 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.

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

Altgate

MARCH 8, 2009

I say ecosystem as opposed to industry because it is not just the VC funds themselves that are imploding, instead the collapse includes entrepreneurs and startups that were funded by VCs, angel investors, service providers like lawyers, bankers and accountants as well as limited partner investors in VC funds.

Later Stage 34

Later Stage Early Stage Venture Capital Portfolio 34

Scalable Startup

OCTOBER 26, 2011

The Second Round, or “B Round”, or “Follow On” round can be the achilles heel of a startup. No doubt the first round of external funding for a startup is usually critical to a startup as it can be the difference between continuing your startup or shutting it down.

Mezzanine 22

Mezzanine Due Diligence IPO Angel Investor 22