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. It literally drove FOMO. The virtue of going long.

Venture Capital 363

Venture Capital LP Valuation Later Stage 363

This is going to be BIG.

SEPTEMBER 30, 2012

How else can you explain this headline matching a story about a professional social network still trying to explore revenues raising $17mm on an $80mm valuation? venture capitalists are now asking tougher questions about start-ups' revenue and profits.". Perhaps I need to rethink that. What follows in this story is pretty laughable: ".venture

Venture Capital 130

Venture Capital Marketing Term Sheet Software Review 130

thebarefootvc

JANUARY 27, 2014

I think that later stage valuations are frothy (for reasons I explain below) while earlier stage valuations are starting to stabilize from previous highs (with the exception of the superstar serial entrepreneur) - turns out scaling in a sea of competition (both startup and entrenched) is not so easy. The answer is yes and yes.

Technical Review 63

Technical Review Valuation Venture Capital Investment Bankers 63

Both Sides of the Table

JULY 27, 2014

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. Most of those industries are fee-based and are competing on revenue growth. I don’t totally agree with that view.

Valuation 309

Valuation Pre-Money Valuation Non-Compete Later Stage 309

View from Seed

FEBRUARY 27, 2019

Analytics vs. Finance?—?what’s In reality, these two domains require quite different skill sets (more on this later). Finance is about reporting on historical performance and future planning through the lens of financial metrics. This is a bit of an oversimplification as there are many sub-disciplines within finance?—?accounting/controller,

Analytics 149

Analytics Hiring SQL Forecast 149

Both Sides of the Table

JUNE 5, 2011

The earlier you invest the higher the chances the company won’t work out and thus you pay a lower price than later-stage investors. That’s the deal you get when you’re raising in a good market for startup financing. million post-money valuation with no revenue. So how exactly are prices determined?

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

VC Cafe

JANUARY 2, 2023

On a global level, venture financing of private companies dropped 33% year over year, from a record $733B in 2021 to $490B in 2022. As a result, I expect to see slower pace of investing across stages. Lower valuations , especially in later stage. We started to see down rounds taking place especially in growth stage.

Valuation 159

Valuation Down Round Israel Venture Capital 159

Gust

SEPTEMBER 5, 2012

How to finance a new seed-stage startup? ” Ressi in particular seems to be passionate about removing the “debt” component from convertible debt seed financing transactions. .” I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For

Finance 134

Finance Convertible Security Equity Seed Stage 134

David Teten

DECEMBER 3, 2019

Data companies focused on early-stage startups include Aingel , fundsUP , Preseries , PredictLeads , and Sploda. Later stage investors are using for sourcing private company marketplace services focused on more established companies, listed below under “Step 11: Exit”. They read reviews of the products of target investments.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

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

Both Sides of the Table

JUNE 19, 2017

Gross burn is your cost base and net burn is the difference between your revenue and costs. In general you should allow yourself 4–6 months of time to fund raise (longer if you’re later stage and require a much bigger round) so calculating anticipated burn rate is pretty easy. You start from the basics, which is if you raise $2.5

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

Both Sides of the Table

DECEMBER 3, 2013

I’m super proud to announce that DataSift has just completed a $42 million financing round coming at the end of a year where its revenue grew several hundred percent year-over-year. Considering our revenue is SaaS revenue this achievement is even more remarkable. I’m an early-stage investor.

Iran 358

Iran API San Francisco Nigeria 358

VC Adventure

MAY 5, 2022

BUT (and you knew there was a but here given the post title…) it’s a poor way to compare the relative performance of funds early, and even into the mid/later, stages of a fund’s life. Both were valued at greater than 50x revenue (one was, I think, 70x revenue). This is a mistake.

IRR 116

IRR Metrics Valuation LP 116

David Teten

SEPTEMBER 5, 2014

Like many established finance & media companies, GLG knows that the tech startup sector is a growing part of the economy. For example, if you’re an early stage company dealing with complex regulation (think Uber in transportation, Oscar in healthcare, LendingClub in finance), we have people who can help.

New York 114

New York Technical Review Networking Advisory Board 114

This is going to be BIG.

MAY 9, 2022

5) Is the post-money on your last round north of $30mm and you’ve yet to show meaningful and repeatable revenue traction that comes with positive contribution margins? It was super hard to get any kind of financing before, and it will remain so. 3) Do you need to raise a large amount of growth capital in 2022? But, you know what?

Stock 97

Stock Marketing Valuation Later Stage 97

Reid Hoffman

MARCH 9, 2021

But I knew that there was a ton of work to be done to scale the business into multiple business lines, and that we would be better off with a CEO who was a grand master of organizational growth and had the product vision to serve as a later-stage co-founder. But for some companies the secret sauce might be engineering or finance.

Leadership 45

Leadership Technical Review Cofounder Later Stage 45

K9 Ventures

OCTOBER 10, 2017

This post is intended to be a dynamic document, and I will attempt to update it from time to time with new questions that may arise or as financing trends evolve. Q: What amount of financing is considered Pre-Seed? It’s a legitimate stage of financing in the venture eco-system as of this writing (October 2017).

Seed Stage 82

Seed Stage Finance Later Stage Equity 82

Reid Hoffman

JUNE 11, 2020

When a company no longer has active co-founders, the professional managers running it will focus on business metrics — EBITDA, revenue, CAC, LTV — business-oriented MBA stuff. This is so important that I wrote an essay on how to hire a CEO as a later-stage co-founder. Ryan was and is an amazing product leader for LinkedIn.

Cofounder 36

Cofounder Leadership Metrics Later Stage 36

A Smart Bear: Startups and Marketing for Geeks

SEPTEMBER 10, 2013

When you add up all our costs in Sales and Marketing (SaaS metric: CAC), the result is very small compared to the total revenue we’ll earn from than customer over the next few years (SaaS metric: LTV). That should be OK since we’ll be profitable in the long run. Some day 1 is fine if it’s improving.

Metrics 238

Metrics Revenue Flash Later Stage 238

Steve Blank

JUNE 15, 2010

Certain VC’s like the new class of Super-Angels and small VC funds specialize in the early stage of a startup where you are searching for a business model. And some larger funds that specialize in later stage deals may have a partner or two who likes to invest at this stage. Is it for your technology?

Founder 232

Founder Vesting Later Stage Early Stage 232

Genuine VC

FEBRUARY 3, 2011

Much of the VC blogosphere commentary about startups covers venture and angel financing with advice focused on company founders. The first decision, and the most critical decision, of what type of startup to join is based on the current stage of the company. And that derisking is only for 12 +/- 6 months.

Startup 241

Startup Later Stage Angel Financing Seed Stage 241

Growthink Blog

MAY 10, 2012

Early Stage Investment (Series A & B) 4. Later Stage Investment (Series C, D, and so on) 5. Mezzanine Financing Most companies that raise equity capital and are eventually acquired or go public receive multiple rounds of financing first. Series B is the round that follows series A in early stage financing.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

View from Seed

JANUARY 26, 2016

There are a number of factors that have contributed to the rise of pre-seed rounds, but the strongest have been the frothy late-stage financing market, coupled with both the scaling-up of some of the early winners in the institutional seed ecosystem and the scaling-down of some larger funds that retrenched after the financial crisis.

Seed Stage 120

Seed Stage Early Stage Cofounder Finance 120

View from Seed

JUNE 16, 2015

In my opinion, VCs shy away from directly answering the questions pertaining to “at what point a company is fundable” or give a generic answer regarding revenue. For ecommerce: >$500K revenue/month. And third, that it’s already starting to happen (or happening to a higher, more scalable degree, for later stages).

Boston 120

Boston Syndicate Syndication eCommerce 120

K9 Ventures

JUNE 5, 2015

Together this means that Seed stage companies need to run longer and at a higher expense structure, meaning they need to raise a lot more capital. A re-jiggering of deal stages and sizes had begun in 2013. In the 80s and 90s a company would go public when it hit $20M in revenue.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

www.mint.com

MARCH 9, 2010

If the answer to the question centers around “We will achieve revenue soon so our net will improve and give us more runway,” it means the company is in trouble because no product ever ships on time nor achieves the company’s “conservative forecast.” These days revenue is the best source of capital. Who is on your board of directors?

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

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. By the first quarter of 2016, the late-stage financing market had changed materially.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Small Business Force

FEBRUARY 21, 2014

In early stage companies (and even some later stage or mature ones), there is no one area where most entrepreneurs and small business owners are lacking in just basic fundamentals, than in dealing with their company's finances and financial management. This is more than just revenue or expense. What are yours?

Finance 37

Finance Management Forecast Entrepreneur 37

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

cdixon.org

AUGUST 3, 2012

. - For consumer startups with transactional models, e.g. e-commerce, the number of users required is often far lower because revenue is the more important metric. Hence, many early-stage consumer startups are switching to transactional models. - VCs are increasingly focusing on B2B for early-stage investments.

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

This is going to be BIG.

SEPTEMBER 7, 2012

In the late 90's, it wasn't surprising that companies with no revenue that were funded at 100 million dollar valuations didn't survive. That wasn't a bubble bursting issue--that was a poor financing strategy issue of people getting caught with their pants down, hands in the cookie jar, and all the metaphors you can think of at once.

Later Stage 99

Later Stage Down Round Pre-Money Valuation Early Stage 99

Both Sides of the Table

FEBRUARY 14, 2016

forward revenue for SaaS businesses when in the years before it had been less than 5x. So the multiples paid by publics matter and when they drop, the late-stage markets drop, too. Why Financing in Falling Markets is So Damn Difficult. You’ll see here that in 2007 people were willing to pay 7.7x And so it goes.

Valuation 150

Valuation Down Round Startup Later Stage 150

Growthink Blog

JUNE 9, 2011

In the earlier stages of your business, you have more control on decisions (such as the decision to sell your company) than in later stages (when you have more investors, a Board of Directors, etc.). The number of startup companies who eventually become massive successes like Facebook or Google is extremely small.

Silicon Valley 107

Silicon Valley Later Stage Early Stage Cloud 107

Genuine VC

FEBRUARY 3, 2011

For later-stage, it’s a high-priced financing round, tipping scales on widespread adoption, rapid hiring, or credible information on successive revenue-growth quarters. On the early side, it's repeat founders coming together again or early runaway traction in an early beta that generates buzz.

Startup 148

Startup Portfolio Later Stage Hiring 148

Rob Go

NOVEMBER 30, 2015

It’s a lot of work to invest in early stage companies, and it’s easier to try to chase anything with traction and pay up for those opportunities. But, looking further downstream, the later stage funding landscape has been incredibly robust. Over the last year, these late stage financing rounds have had more and more teeth.

Later Stage 28

Later Stage Marketing Early Stage Ratchet 28

Feld Thoughts

NOVEMBER 2, 2016

So – for early stage companies (Pre-Seed, Seed, Series A), the terms tend to be clean and simple, and valuation is in a modest range that probably has a median around $5m. For growth companies (usually Series D or later), there are pretty clear market comparables based on growth rate, revenue, gross margin %, and type of company.

Venture Capital 70

Venture Capital Private Equity Early Stage Valuation 70

Both Sides of the Table

MAY 13, 2018

Sometimes engagement at the later stages seems to go dry. Sometimes I encourage teams to create new analysis on cohorts, future revenue projections, competitor reviews, pricing studies, etc. This is the green and yellow portions of my graphic above which I’ve highlighted specifically as a reminder to you. Plan accordingly.

Term Sheet 332

Term Sheet Due Diligence Campaign Sales 332