Startup Professionals Musings

MARCH 12, 2023

Both angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $20M mark by year five. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return).

Angel Investor 246

Angel Investor IRR Venture Capital Valuation 246

Both Sides of the Table

MAY 19, 2018

A detailed financial model that shows your anticipated revenue, costs and profits (Income Statement) as well as your balance sheet and cashflow statements. So junior analysis of your company is also often where initial due diligence goes to die unless you can be sure that the investment partner is also willing to engage.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Both Sides of the Table

OCTOBER 17, 2019

The first check I wrote was just over 10 years ago into a company called Invoca who just announced a new $56 million in funding led by Scott Hilleboe at HIG Growth Partners. I mentioned that we sold our position in Kyriba for > $1 billion but when we invested it had virtually no revenue. Over the past 2.5 Over the past 2.5

IP 223

IP Intellectual Property IRR Cofounder 223

David Teten

NOVEMBER 17, 2011

While working on my most recent startup, Navon Partners , we were fortunate to have Raul Trevino , a star former Citi investment banker and Columbia MBA, interning with us. When I interned at Navon Partners last summer, I was both surprised and humbled when I realized that I did not know the first thing about valuing start-ups.

Employee 155

Employee IRR Startup Mexico 155

Startup Professionals Musings

JUNE 5, 2016

Both Angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $20M mark by year five. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return).

Angel Investor 120

Angel Investor IRR Valuation Startup 120

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? Aligned incentives.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

VC Cafe

JULY 2, 2012

Lots of returns are being made these days, but the latest CalPers report shows dissapointing returns by Israeli VC firms , with an IRR of 3.5%-3.8% Britain’s Apax Partners in cooperation with Baltimore, Maryland’s JMI Equity has purchased the US-Israeli software company Paradigm for $1 billion. FACEBOOK BUYS FACE.COM FOR $100M.

Israel 109

Israel Latvia Lithuania Russia 109

David Teten

MARCH 2, 2013

See the Techcrunch posts by my Partner John Frankel and Professor Robert Wiltbank , my recent post on the quality of angel returns data , as well as reports from the Silicon Valley Bank and Kauffman Foundation. Moreover, VC funds on average earn approximately 2/3 of their revenue from fixed fees.

LP 114

LP Securities and Exchange Commission Silicon Valley Venture Capital 114

Hippoland

NOVEMBER 13, 2016

But what if a company is growing revenues but hasn’t raised a round in a while? At that time, they had no revenue and now they are doing $500k revenue runrate. Last traction: None have revenue. Current traction: None have revenue Portfolio 2: 3 companies Last valuation for all: $3m cap convertible note Recent raise: none.

IRR 48

IRR Valuation Portfolio Due Diligence 48

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

K9 Ventures

NOVEMBER 30, 2008

The General Partners (GPs) are the operating guys. The money that the GPs and other employees of the firm invest comes from Limited Partners (LPs) — typically the big university endowments, retirement funds, charitable organizations, family offices and high net-worth individuals. This is what makes it more difficult to scale.

IRR 48

IRR Venture Capital LP Early Stage 48

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?” Multiples are not only used to value companies today but also to value companies several years down the line.

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36

David Teten

NOVEMBER 23, 2020

Blue Future Partners, a venture capital fund of funds, recently interviewed me on ESG in venture capital. In an article you wrote for Techcrunch in 2019 about Revenue Based Investing you mentioned that “ traditional equity VC is biased structurally against some women and underrepresented founders”. Firm revenues. Why is that?

Venture Capital 60

Venture Capital Partner Technical Review Cofounder 60