Finance IRR Revenue 
Both Sides of the Table
SEPTEMBER 15, 2022
Should SaaS companies trade at a 24x Enterprise Value (EV) to Next Twelve Month (NTM) Revenue multiple as they did in November 2021? This happens slowly because while public markets trade daily and prices then adjust instantly, private markets don’t get reset until follow-on financing rounds happen which can take 6–24 months.
VC Adventure
MAY 5, 2022
I’m observing that IRR is a metric that is becoming an increasing focus in venture, replacing fund return multiple as the key metric of success. I understand the draw of IRR, and – as a fund draws to a close – there’s no question it’s an important metric. Recycling hurts IRR. This is a mistake.
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David Teten
JANUARY 19, 2021
More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. Of the Inc. 5000 companies, only 6.5% raised from angels.
Steve Blank
MARCH 4, 2014
Staff functions in finance, human resources, legal departments and business units developed Key Performance Indicators, processes, procedures and goals to measure, control and execute. Finance The goals for public companies are driven primarily by financial Key Performance Indicators (KPI’s). This is a big idea. What Does this Mean?
David Teten
AUGUST 21, 2019
Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. But should they?
Both Sides of the Table
MAY 24, 2021
It has historically been the case that VCs would rather fund the promise of 100x in a company with almost no revenue than the reality of a company growing at 50% but doing $20+ million in sales. This “overnight success” was first financed in 2004. This is true in consumer but it’s also true in enterprise software.
Steve Blank
MARCH 31, 2014
Companies horde cash and squeeze the most revenue and margin from the money they use. Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption.
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