Up and Running

MAY 1, 2014

Your business plan isn’t complete without a financial forecast. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. Three-year projections are typically adequate, but some investors will request a five-year forecast.

Business Plan 163

Business Plan Forecast Balance Sheet Distribution 163

Agile VC

MAY 26, 2011

Google is still a private company (their IPO was Aug 2004). In another we decended into a debate about our 5 year forecasts (I built the models so fielded most of these questions), and it became clear they probably weren’t the best fit for our Series A round (this group is no longer in the early-stage VC business).

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

crowdSPRING Blog

MARCH 28, 2013

Lessons Learned from Bill Gross’ 35 IPOs/Exits and 40 Failures – [link]. Revenue Traction Doesn’t Mean Product Market Fit – [link]. Forecasting Fox | NYTimes – [link]. Lead Or Follow, But Keep Your Eyes On The Crowd – [link]. 3 Things I Did Wrong with My Last Startup – [link].

Social Media 107

Social Media Small Business Design Media 107

crowdSPRING Blog

JANUARY 18, 2013

A VC: MBA Mondays: Revenue Models – Subscriptions – [link]. Thanks To Facebook, Strongest Year For IPOs Since 2000 With $21.5 Creative Forecast: How Marketing Will Change In 2013 | Co.Create – [link]. The Science of Productivity: How To Get More Done In Less Time – [link].

Social Media 94

Social Media Small Business Design Media 94

The Equity Kicker

MARCH 28, 2013

As you can see from the chart above revenues have now reached a reasonable scale and continue to grow very fast. Moreover, their star is rising, according to Forbes a year ago eMarketer was forecasting Twitter’s 2014 revenues at $540m, 43% less than the $950m they are now forecasting.

Forecast 131

Forecast Revenue IPO Advertising 131

Startup Professionals Musings

MARCH 13, 2020

In that context, I offer the following financial projection strategies, from my own experience: Forecast a business that has plenty of room to grow quickly. Find some credible opportunity statistics that can support your own revenue expectations of between $20 million and $100 million in the fifth year.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

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. Flexible VC: Revenue -based. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Tim Keane

MARCH 9, 2011

How to prepare a sales forecast for a business plan » March 09, 2011. Example two:  Explosive market share growth and revenue in an expanding market with acquisitive players available.   The company is pre-revenue and Sarah’s intention is to sell the company within three years. .  five years.). . 

Finance 83

Finance Bootstrapping Startup Equity 83

Startup Lessons Learned

JUNE 5, 2009

And so the spreadsheet is built with conservative assumptions, including a final revenue target. No matter how low we make the revenue projections for this new product, it’s extremely unlikely that they are achievable. In a startup context, numbers like gross revenue are actually vanity metrics, not actionable metrics.

San Francisco 102

San Francisco Lean Continuous Deployment Startup 102

Startup Professionals Musings

MAY 13, 2011

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Exit strategy.

Business Plan 290

Business Plan Sweat Equity Exit Strategy Intellectual Property 290

Startup Professionals Musings

AUGUST 13, 2012

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Exit strategy.

Business Plan 283

Business Plan Sweat Equity Exit Strategy Intellectual Property 283

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. That’s cool.

Software Review 68

Software Review Startup Post-Money Valuation Technical Review 68

Startup Professionals Musings

NOVEMBER 2, 2018

As an investor myself, I look for a balanced story focused on the major elements that drive profitability, including the following: A 5-year financial forecast achieving a positive cash flow early. At the other extreme, I don’t condone greedy and unethical business practices to unjustly shake down customers and employees alike.

Intellectual Property 48

Intellectual Property Initial Public Offering Merger Acquisition 48

Tim Keane

JANUARY 12, 2010

Next, they carefully consider the range of multiples being used today to value companies being acquired or doing IPOs in the market that the business is in.   In a bottom up approach, the forecast is built from actual user projections.   Pre-bubble Siliicon Valley deals were popularly valued at multiples of revenue.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

abovethecrowd.com

JULY 10, 2014

Consider the following example from 34 years ago that included the exact same type of prediction error: “In 1980, McKinsey & Company was commissioned by AT&T (whose Bell Labs had invented cellular telephony) to forecast cell phone penetration in the U.S. And Uber is still growing quite nicely in that market.

San Francisco 111

San Francisco San Jose Marketing Technical Review 111

Both Sides of the Table

FEBRUARY 23, 2010

I’ve seen way too many startups spend all their energy getting channel deals done only to find out that they don’t produce ANY revenue. The price points are not as high as your beautiful Excel spreadsheet had forecasted when you raised your seed capital. Full Stop for you Brits.) You need to market your product.

Channel 293

Channel Startup Sales Partner 293

Startup Professionals Musings

APRIL 22, 2010

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it requires at least 100M users and $50M investment. Exit strategy.

Business Plan 186

Business Plan Exit Strategy Sweat Equity Intellectual Property 186

BeyondVC

NOVEMBER 17, 2006

I am not sure if you saw the news , but Salary.com recently filed for an IPO to raise up to $50 million. From April 2001 through June 30, 2006, we achieved 21 consecutive quarters of revenue growth. In fact, during the last 3 fiscal years for the company, it did $6.4mm, $10mm, and then $15mm in revenue. million, $0.9

IPO 78

IPO Investment Bankers Demand Revenue 78

Gust

AUGUST 5, 2012

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Exit strategy.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

The Equity Kicker

APRIL 11, 2012

The question on everyone’s lips is, of course, ‘how come a two year old startup with no revenues is worth $1bn?’. I think the answer is pretty clear – it’s all about Facebook’s IPO price. In this case Facebook’s pending IPO make it particularly easy to understand the logic.

IPO 110

IPO Valuation Forecast Acquisition 110

The Next Web

FEBRUARY 19, 2014

It was the biggest IPO the Australian market had seen all year , and sparked a flurry of subsequent listings – but ‘going public’ was not the only option we considered, and until we had progressed our exit strategy to near completion, it also seemed the most unlikely. An IPO requires special preparation of its own, some of it complex.

Prospectus 121

Prospectus IPO Exit Strategy Private Equity 121

The Equity Kicker

AUGUST 19, 2013

As you can see from the chart below the latest projections for 2013 revenues are 2x what they promised in their 2011 IPO, and EBITDA is forecast at over 2x. On the back of outstripping expectations LinkedIn has had an easy ride from Wall Street and the media and the share price has risen from $93 at the IPO to $227 today.

IPO 94

IPO Forecast Revenue Media 94

The Equity Kicker

OCTOBER 10, 2012

HR software business Workday has just upped the proposed share price in its coming IPO to $24-26, taking its valuation over $4bn. That’s 30x this years forecast revenues of $134m. the revenue run-rate from the last quarter. the revenue run rate. the revenue run rate. Like Workday, Salesforce is loss making.

Valuation 108

Valuation Acquisition Forecast IPO 108

BeyondVC

NOVEMBER 17, 2006

I am not sure if you saw the news , but Salary.com recently filed for an IPO to raise up to $50 million. From April 2001 through June 30, 2006, we achieved 21 consecutive quarters of revenue growth. In fact, during the last 3 fiscal years for the company, it did $6.4mm, $10mm, and then $15mm in revenue. million, $0.9

IPO 60

IPO Investment Bankers Demand Revenue 60

Startup Professionals Musings

FEBRUARY 13, 2016

What are your forecasts for revenue, expenses and cash flow? Forecasts are evaluated as a level of commitment and a measure of your business savvy. Technically, this is your exit strategy, usually a merger and acquisition (M&A) or initial public stock offering (IPO).

Sweat Equity 120

Sweat Equity Advisory Board Liquidity Event Startup 120

Steve Blank

AUGUST 27, 2009

Yet we used the product development model not only to manage product development, but as a road map for finding customers and to time our marketing launch and sales revenue plan. If it’s a new division inside a larger company, forecasts talk about return on investment. We had no clue what our market was when we first started.

Silicon Valley 271

Silicon Valley Product Startup RSS 271

The Equity Kicker

DECEMBER 18, 2012

After the Admob and Quattro deals we had the near $1bn Milennial IPO earlier this year. Google was most of the story, taking their mobile search and mobile display revenues from $750m to $2.2bn. The other big player was Facebook who went from $0 in mobile ad revenue last year to a forecast $339m this year.

Mobile 100

Mobile Acquisition Forecast IPO 100

Both Sides of the Table

MARCH 30, 2016

Many had started IPO’ing and we started to think about our future. If you want to see what was on my mind – I started foreshadowing change publicly in October 2015 with a forecast of what I expected in 2016 VC funding markets at a presentation I gave at the annual Cendana VC/LP conference hosted by Michael Kim.

Balance Sheet 150

Balance Sheet Burn Rate Valuation Forecast 150

Startup Lessons Learned

OCTOBER 30, 2008

Get 18 months or more of cash (runway) in the business against a conservative forecast. Not just about expenses, about increasing revenue. Make sure for planned revenues you have "leading indicators" to know if you will hit it. This can take the form of a traditional sales pipeline or a registration-activation-revenue chart.

Lean 121

Lean San Francisco Continuous Deployment DC 121

Startup Lessons Learned

JUNE 9, 2020

This was supposed to be Airbnb's biggest year by many measures, including its IPO, which was one of the most anticipated since the 2008 financial crisis. A complete collapse of revenue that simultaneously affects your employees and your customers, your partners, your investors, everyone all at once and all the news is bad.

Silicon Valley 60

Silicon Valley Hosting Cofounder Employee 60

Cracking the Code

OCTOBER 13, 2020

The average revenue multiple is now 17x+, close to 10 times higher than during the 2008 crisis! On the IPO front, the one word that comes to mind is “supersize”. Overall, COVID prompted people to revise their growth forecast slightly downward and be more conservative on their cash burn, but so far, the impact hasn’t been dramatic.

Europe 71

Europe Cloud Silicon Valley Israel 71

Startup Lessons Learned

JULY 9, 2009

We were focused on revenue, but we didnt understand that revenue is not important for its own sake in an early stage company. Almost all of them got scooped up by pre-IPO Google this time. That year, right before the IPO, those months mattered a great deal in terms of financial outcomes. About spot trends. all about luck.

San Francisco 94

San Francisco Lean Continuous Deployment DC 94

Up and Running

APRIL 28, 2015

Slide 5: Revenue model. Investors will expect to see your sales forecast, profit and loss statement, and cash flow forecast for at least three years. Having an IPO and going public is a viable option for some high-growth startups, while other businesses are more likely to be bought by larger players in your market.

Forecast 60

Forecast Hockey Stick Exit Strategy Intellectual Property 60

Seeing Both Sides

AUGUST 3, 2012

With over $1 billion in revenue, 2000 employees and a market capitalization of over $6 billion, Akamai has become a role model for scalable start-ups. In 2012, analysts forecast the company will achieve nearly $1.5 billion in revenue, over $1 billion in gross profit and $500 million in EBITDA. Gross Profit. $(60). Market Cap.

Distribution 49

Distribution Lean Massachusetts Cofounder 49

Ben's Blog

AUGUST 17, 2020

OH in South Park, San Francisco (or on Zoom from Big Sky, Montana): “OMG, crazy – that firm just paid 100x revenue to invest in [insert hot startup here] – what could they be thinking?” cash flows beyond that forecast period). It starts with the complexity involved in valuing companies in general.

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

abovethecrowd.com

JULY 7, 2015

If you are post-revenue, it should unquestionably include a financial statement and forward forecast. It may simply be an expense analysis, or a detailed pricing model, or a TAM (total available market) analysis. If you are post launch, it might involve a viral coefficient discussion or a cohort analysis.

Warrant 40

Warrant Later Stage Forecast IPO 40

Cracking the Code

SEPTEMBER 2, 2008

The Deutsche Bank report has a very interesting chart on the topic presenting the Free Cash Flow margins vs. the revenue growth four years post IPO for select software leaders: As you can see, with 20% Free Cash Flow margin and a 50% growth rate, Salesforce is well positioned in the pack! Tuesday, September 02, 2008. for Lawson?

Software Review 48

Software Review Software Technical Review Cloud 48