Berkonomics

JANUARY 7, 2021

Think of startups and early stage businesses whose entrepreneurs you know. One: The entrepreneur. First, there is the entrepreneur , the visionary, and force behind the venture from start to finish. So, co-management is the second group to share in the bounty upon a liquidity event. Two: Co-management.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

Berkonomics

AUGUST 17, 2023

Preparing for the game… If you have been following our recent insights, you’ll be up to speed knowing that professional investors negotiate tough terms, from provisions of control over asset acquisition, eventual sale of the company, future investments, forced co-sale when others attempt to sell their shares and more.

Liquidity Event 118

Liquidity Event Stock Options Stock Audio 118

Startup Professionals Musings

AUGUST 19, 2017

Most entrepreneurs struggle with many startup founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. Marty Zwilling.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

MARCH 13, 2020

For example, every investor I know can tell you about meeting a passionate entrepreneur who is pitching a great technology innovation, but has not done the financial homework on making it a good business. Thus the investor can’t visualize any return on investment (ROI), so the entrepreneur gets no money, and a good opportunity is lost to all.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

Startup Professionals Musings

AUGUST 10, 2019

Most entrepreneurs struggle with many startup founders quandaries in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. Marty Zwilling.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Gust

DECEMBER 1, 2011

When meeting with early stage entrepreneurs for the first time, after reviewing a demo or hearing their pitch, I often ask them to articulate what they’re most focused on building. I don’t fault entrepreneurs for relegating startup legal work to the bottom of their daily triage list; founders are spread incredibly thin.

IP 114

IP Intellectual Property Equity Liquidity Event 114

Steve Blank

JULY 15, 2010

The Golden Age for Entrepreneurs and VC’s. The two decades from 1979 when pension funds fueled the expansion of venture capital to 2000 when the dot-com bubble burst were the Golden Age for entrepreneurs and venture capital firms. Number of Venture Backed Liquidity Events 1991-2000. What Does it Mean to an Entrepreneur?

Venture Capital 307

Venture Capital IPO Liquidity Event Entrepreneur 307

Berkonomics

OCTOBER 24, 2013

Next week, we begin again with new insights from startup through liquidity event, including guest postings by some of the nation’s best known angel investors and entrepreneurs. I followed many of these stated retirees, and very few if any retiring entrepreneurs stay that way for long. Stay tuned! – Dave.

Liquidity Event 70

Liquidity Event Entrepreneur Stock Options Angel Investor 70

Startup Professionals Musings

AUGUST 29, 2018

Yet crowdfunding is no panacea for hungry entrepreneurs and startups. Crowdfunding may look easy, via popular sites like Kickstarter and Indiegogo, but their cost in time, effort, and money by entrepreneurs is daunting. Payoff after a liquidity event is difficult and unpredictable.

Equity 180

Equity Due Diligence Angel Groups Liquidity Event 180

Startup Professionals Musings

JULY 27, 2018

I’m still amazed at how many technical entrepreneurs don’t have a business pitch, and offer me their product pitch or product spec instead. Potential investors love to see gross margins in the fifty percent range or greater, with recurring revenue through subscriptions, follow-on sales, or services. But it’s critical to have one.

Product 145

Product Intellectual Property Liquidity Event Valuation 145

Up and Running

SEPTEMBER 19, 2017

By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable. Background: Adam Carlson is a serial entrepreneur who has successfully raised private capital at three different technology startups. Consequently, he passed. Conclusion.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

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

Steve Blank

JUNE 11, 2013

For many entrepreneurs “raising money” has replaced “building a sustainable business” as their goal. Entrepreneurs need to think about 1) when to raise money, 2) why to raise money and 3) who to take money from, 4) the consequences of raising money. These are great, but they are not repeatable by a sales organization.

Venture Capital 335

Venture Capital IRR Liquidity Event Business Model 335

Berkonomics

FEBRUARY 3, 2022

First, the implied promise: Taking money from professional investors such as angels or VCs usually requires that you agree to seek an exit for those investors in your plan, often targeting five to seven years as the ideal period for growth before a liquidity event. What if you later decide to just keep control? (You

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

Berkonomics

APRIL 20, 2023

We have years of real data to call upon: data that impacts both investors and entrepreneurs. years before a liquidity event (positive or negative.) Entrepreneurs will always start new enterprises. There are two reliable sources of reasonably recent data for us to examine. How about the early-stage investors?

SBA 62

SBA Angel Investor Early Stage Liquidity Event 62

Women Entrepreneurs Can

NOVEMBER 19, 2022

They can also help you develop your product and sales channels. Investors receive a healthy return on investment when the company reaches a liquidity event. This is done by evaluating the product’s potential market, the sales process, and the company’s team. They may also provide a mentorship network.

Venture Capital 52

Venture Capital Early Stage Liquidity Event SEC 52

Startup Professionals Musings

AUGUST 7, 2015

When pitching to investors, entrepreneurs always seem to start with a customer pitch, then add a slide or two about the business. Investors are business experts, while the entrepreneur is more likely the product expert. Specific elements of your marketing and sales plans. Potential investor return calculation and exit strategy.

Product 120

Product Intellectual Property Liquidity Event Burn Rate 120

Startup Professionals Musings

JULY 19, 2013

Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. Marty Zwilling.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Berkonomics

JUNE 12, 2014

First, there is the entrepreneur , the visionary, and force behind the venture from start to finish. Few entrepreneurs can do it alone, with subordinate hired help and no expert management to share the burdens, skill sets and efforts involved in growing the enterprise. Email readers, continue here.]

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Steve Blank

JUNE 11, 2013

For many entrepreneurs “raising money” has replaced “building a sustainable business” as their goal. Entrepreneurs need to think about 1) when to raise money, 2) why to raise money and 3) who to take money from, 4) the consequences of raising money. These are great, but they are not repeatable by a sales organization.

Venture Capital 227

Venture Capital IRR Liquidity Event Business Model 227

Berkonomics

NOVEMBER 15, 2018

Looking back over an entrepreneur’s journey. As I look back over more than fifty years as an entrepreneur, I can think of the financial focus of my three entrepreneurial businesses as a prime driver in my life during the early stage of each. But, for this short moment…. The rewards of angel investing. The rewards of angel investing.

Liquidity Event 48

Liquidity Event Early Stage Government Leadership 48

Berkonomics

SEPTEMBER 20, 2018

Most entrepreneurs and certainly all investors would like to see “a positive liquidity event” (a good sale of the business) someday. Not only will group focus upon the possibility of a liquidity event, it will begin to focus upon a number of possible buyers. So, that’s the reason for this insight.

Liquidity Event 48

Liquidity Event Intellectual Property Naming Acquisition 48

Berkonomics

OCTOBER 4, 2018

The entrepreneur, whether remaining to the end as CEO or not, is celebrated for his or her prescient timing, great vision and excellent execution of the plan. I cannot recall ever attending a closing dinner for a sale in which we returned only a portion of the investor group’s money. It is an exhilarating ending to a great journey.

Sales 54

Sales Investment Bankers Initial Public Offering Early Stage 54

Startup Professionals Musings

AUGUST 13, 2012

Many entrepreneurs scare away potential investors by claiming that their technology represents “truly disruptive technology.” It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. Marketing, sales, and partners.

Business Plan 283

Business Plan Sweat Equity Exit Strategy Intellectual Property 283

Berkonomics

SEPTEMBER 27, 2018

Offering to reincorporate the game company as a new entity to avoid any more surprises, the entrepreneur and I negotiated 10% for my $100 thousand, with the remaining 90% for the founder. Fast forward a month to a meeting between a senior executive of the buyer, our hero the entrepreneur, our corporate attorney and myself.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Professionals Musings

FEBRUARY 13, 2016

Entrepreneurs who are looking to attract investors need to develop and pitch a plan -- preferably written -- that answers every potential investor question about your startup before it is asked. What are your specific marketing and sales plans? If you don’t plan a liquidity event, you won’t find many investors interested.

Sweat Equity 120

Sweat Equity Advisory Board Liquidity Event Startup 120

Both Sides of the Table

MARCH 3, 2013

We talked about how business school historically hasn’t positioned entrepreneurs well for success. I wrote about that before in a post about “ whether MBAs are necessary for entrepreneurs. His class reading lists could be a primer for any entrepreneur, not just MBAs.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

Startup Professionals Musings

MAY 13, 2011

Many entrepreneurs scare away potential investors by claiming that their technology represents “truly disruptive technology.” It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. Marketing, sales, and partners.

Business Plan 290

Business Plan Sweat Equity Exit Strategy Intellectual Property 290

Berkonomics

SEPTEMBER 12, 2024

And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere. And there are gray areas for former key employees who signed a non-compete with a limited life as part of the sale but remained on with the buyer for some time thereafter.

Non-Compete 62

Non-Compete Bankruptcy Sales Employee 62

Berkonomics

MARCH 9, 2017

We have years of real data to call upon: data that impacts both investors and entrepreneurs. years before a liquidity event (positive or negative.) Entrepreneurs will always start new enterprises. For 2016 alone, there are two reliable sources of recent data for us to examine.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

Berkonomics

NOVEMBER 1, 2018

Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale. I found myself in such a situation upon a sale of my computer software company. And a lack of plans for others.

Stock Options 192

Stock Options Stock Distribution Programming 192

Gust

AUGUST 5, 2012

Many entrepreneurs scare away potential investors by claiming that their technology represents “truly disruptive technology.” It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. Marketing, sales, and partners.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Berkonomics

NOVEMBER 12, 2011

As I look back over more than fifty years as an entrepreneur, I can think of the financial focus of my three entrepreneurial businesses as a prime driver in my life during the early stage of each. And yet, as I recall the greatest thrills, the memorable events, the best of memories, almost none are about the money.

Liquidity Event 86

Liquidity Event Early Stage Government Leadership 86

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. Redpoint was understandably disappointed that it didn’t get the chance to see its MySpace investment through to an IPO or later liquidity event at a higher multiple.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Berkonomics

SEPTEMBER 17, 2011

Fast forward a month to a meeting between a senior executive of the buyer, our hero the entrepreneur, our corporate attorney and myself. Our entrepreneur, engorged with the year’s effortless value increases, turned to the executive without a pause, and said something to the effect of “Hell no! And a month later the bubble burst.

Liquidity Event 59

Liquidity Event Pre-Money Valuation Sales Valuation 59

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