Steve Blank

MARCH 4, 2014

A consequence of using these corporate finance metrics like RONA and IRR is that it ‘s a lot easier to get these numbers to look great by 1) outsourcing everything, 2) getting assets off the balance sheet and 3) only investing in things that pay off fast.

IRR 335

IRR Startup Business Model Agile 335

David Teten

JANUARY 19, 2021

John Berger, Director Operations & Impact Solutions, Toniic , observed that this has clear investor benefits: “ The grace period became a feature because it benefits investors in regions like the US where there can be tax differences between short and long term gains. 20-30% is a common target IRR for investors.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Steve Blank

JUNE 23, 2016

As a consequence, corporations used metrics like return on net assets (RONA), return on capital deployed, and internal rate of return (IRR) to measure efficiency. In contrast, startups operate with speed and urgency, making decisions with incomplete information. Startups are unencumbered by the status quo.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

View from Seed

JULY 15, 2020

Companies that are largely in R&D phase can operate business as usual, assuming there is capital to fund the company for 18-24 more months. This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. Reshuffling the deck. I think every investor has some of these.

Portfolio 215

Portfolio IRR Dilution Distribution 215

David Teten

NOVEMBER 17, 2011

Projections were based on dozens of operational assumptions related to pricing, production, marketing spend, etc. For my start-up, I built a very robust operational and financial model with a detailed revenue build up and a validated cost structure. In banking, a lot of my time was spent on modeling cash flows. Participa.me

Employee 155

Employee IRR Startup Mexico 155

Both Sides of the Table

MAY 25, 2013

The better way to think about VC returns is, do the firms consistently beat alternative asset clases on an IRR basis to adjust for the increased risk and lack of liquidity? I’ll admit that I do know one VC firm who’s strategy is not to call their entrepreneurs and not to be involved in operations.

LP 374

LP Later Stage IRR Term Sheet 374

David Teten

APRIL 8, 2013

My coauthors and I just published in the Journal of Private Equity the first-ever research study on best practices of venture capitalists in creating portfolio company value through operational support, exploring exactly these questions. Analytics and Data Contributed Articles Portfolio Operations Private Equity Venture Capital'

Private Equity 114

Private Equity Hungary IRR Venture Capital 114

Steve Blank

AUGUST 5, 2014

I was on the way to my lifetime IRR of 90%. We brought in all operating guys—all had done startups, all had technical backgrounds. Two companies I helped start in 1992, DCTM and Grand Junction Networks both became Stanford business school cases and very valuable, successful companies. I loved the business, and I was good at it.

Venture Capital 335

Venture Capital Silicon Valley Chicago Cofounder 335

Hunter Walker

JULY 18, 2021

I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’ A couple of times I encountered very likable first-time founders who were operating in an interesting problem space but lacked strong product instincts or experience. Here’s 2 (and a half) mistakes I made that you should avoid.

Cap Table 154

Cap Table IRR Angel Investor IPO 154

Startup Professionals Musings

FEBRUARY 5, 2018

Brands can fund operating losses in order to scale faster and acquire market share. Investors measure their success by looking at the internal rate of return (IRR). Today, time is your scarcest resource in a new venture. I can almost guarantee that if you’ve observed a market need, others have noticed it as well.

IRR 143

IRR Marketing Startup Angel Investor 143

Growthink Blog

JUNE 3, 2014

Over the last three weeks, we have discussed the various factors that drive the 25% IRR return potential of the startup and emerging company investing class. Unfortunately, all of these approaches rely on something in exceedingly short supply in today’s financial marketplace. As in, Trust Us and we will take care of it for you.

Omaha 91

Omaha Accredited Investor IRR Silicon Valley 91

The Next Web

DECEMBER 16, 2012

It calculates value on the bases of revenue that the buyer can expect to earn from the site, taking into account the risks that are involved in operating it. Strategic buyers will evaluate each opportunity to buy a site within the context of their existing portfolio of properties or specialist resources.

Valuation 128

Valuation NPV Net Present Value IRR 128

Hunter Walker

FEBRUARY 25, 2018

So the fact that a larger fund gives us more capital to spend on Homebrew operations upfront (which might include an increase to our salaries) is fine but it’s also essentially a loan we’re paying ourselves since we pay this money back to our LPs prior to sharing in the upside of the fund. Of course we think this’ll be to our advantage but….

Product 92

Product IRR LP Seed Stage 92

Growthink Blog

MAY 21, 2014

One reader reference Gust Founder David Rose’s new book - “ Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups ” and to Rose’s main contention that to access the 25% IRR potential of the asset class one must hold positions in not less than 20 companies. He asked, “ Is this practical advice?

San Diego 72

San Diego Warrant IRR Investment Bankers 72

Berkonomics

JANUARY 6, 2022

In a cutout, some percentage, usually fifteen or twenty percent of the total sale, is allocated to management to continue operations through the closing period and help in closing the sale. That further reduces the amount available to founders if not still in the ranks of management. Don’t be greedy even if you can.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

abovethecrowd.com

APRIL 20, 2016

As discussed above, these terms can cleverly fool the inexperienced operator, because they are able to “meet the ask” with respect to cover valuation, and the accepting founder does not realize the carnage that will come down the road. Do you feel the need to raise more capital quickly before the prices erode further and bring down your IRR?

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

David Teten

JULY 10, 2017

Angel investing is an exceptionally high-return asset class; I have collected twelve studies on angel returns in the US and UK, which show median internal rate of return (IRR) between 18 and 38 percent. My proposed model looks a bit like the way many VC funds operate internally, except with far more Partners than normal.

Employee 60

Employee Balance Sheet Syndication Syndicate 60

K9 Ventures

NOVEMBER 30, 2008

The General Partners (GPs) are the operating guys. In return for the operational role the GPs play, their firm receives a Management Fee. For what I’ve seen/heard the tops VC funds typically have an IRR of over 20%. Background. Venture Firms are typically structured as partnerships. of the size of the fund.

IRR 48

IRR Venture Capital LP Early Stage 48

Andrew Payne

MARCH 25, 2009

For too long, venture’s been over-funded and over-staffed with homogeneity: the same kinds of partners, operating with the same fund model, looking at the same investments, in the same markets. The venture capital business is in the middle of a shakeout.

Venture Capital 40

Venture Capital IRR Capital Call Distribution 40

Berkonomics

OCTOBER 1, 2015

In a cutout, some percentage, usually fifteen or twenty percent of the total sale, is allocated to management in order to continue operations through the closing period and help in closing the sale. That further reduces the amount available to founders if not still in the ranks of management. So this advice is directed to the investors.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

David Teten

AUGUST 21, 2019

The RBI investor is motivated to help the company grow because that speeds up the pace of revenue payback, and therefore IRR. Since payback is calculated as a percent of revenue, the company doesn’t have the risk of a cash crunch that can occur when paying back loans in large chunks. . Aligned incentives. Works for non-tech companies.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Ben's Blog

AUGUST 17, 2020

This growth could be a function of product differentiation, go-to-market operations, sheer market size, new geographies, and expansion into adjacent categories. An example of such a business is Salesforce, which defined a new category for SaaS and continues to be a benchmark for SaaS companies to follow. Not too shabby!

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

David Teten

NOVEMBER 23, 2020

In its first full year of operation, VCAP attracted 159 applicants. Traditional KPIs are, in descending order of importance: IRR (and secondarily Multiple). We organized a series of HBS Angels pitch nights, joint with a range of affinity groups for HBS Alumni: HBS African-American, HBS Healthcare, HBS LBGT, and HBS Latino.

Venture Capital 60

Venture Capital Partner Technical Review Cofounder 60