Startup Professionals Musings

AUGUST 2, 2014

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 266

Angel Investor Entrepreneur Venture Capital IRR 266

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

Steve Blank

JUNE 11, 2013

Sigh… What I should have been hearing is the search for the business model, specifically the progress on product/market fit, but I hear the fund raising story first at least 90% of the time. Does our product or service solve a customer problem (product-market fit)? What is an IRR? Focus on product – market fit.

Venture Capital 227

Venture Capital IRR Liquidity Event Business Model 227

SoCal CTO

MAY 19, 2010

Bob is heavily focused on ROI (and team/product). But it seems like Bob would be a candidate.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

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. Second, the leaders of these companies tended to be those who excelled at finance, supply chain or production. They knew how to execute the current business model.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Both Sides of the Table

MAY 24, 2021

It’s a virtue of the laws of large numbers ($100 million in ARR ) plus strong growth compounding off of large numbers plus large customers relying on our products for 7+ years or longer. as measured by MOIC, TVPI and IRR and by sources that don’t reveal the underlying data and who themselves have to rely on incomplete datasets.

Venture Capital 363

Venture Capital LP Valuation Later Stage 363

Startup Professionals Musings

MAY 9, 2011

Luckily for me (and regardless of what anyone else says, there is a lot of luck involved in angel investing), I have since had significant positive exits to companies like Kodak, CBS and Facebook, and the current value of my portfolio is approaching the 30% IRR that rational angels target. That’s a three order of magnitude difference!

New York 221

New York Accredited Investor Advisory Board IRR 221

David Teten

NOVEMBER 17, 2011

Projections were based on dozens of operational assumptions related to pricing, production, marketing spend, etc. By definition, IRR is calculated using amount invested, amount received at some point in the future, and time passed between the two cash flows. In banking, a lot of my time was spent on modeling cash flows.

Employee 155

Employee IRR Startup Mexico 155

Hunter Walker

JULY 18, 2021

I wasn’t necessarily trying to do anything impressive, just taking some risk capital and putting it towards people and products that struck me as compelling. I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’ Should have passed and wished them luck, but instead an internal dialogue started.

Cap Table 154

Cap Table IRR Angel Investor IPO 154

Both Sides of the Table

OCTOBER 17, 2019

I had just left Salesforce.com where I was VP, Products, after they had acquired my second startup. As I was trying to figure out the role I wanted to play in the VC world I decided I wanted to focus on businesses that were building deeply technical products to solve problems for business users.

IP 223

IP Intellectual Property IRR Cofounder 223

Hunter Walker

FEBRUARY 25, 2018

For Homebrew , we’ve optimized for a product offering that will appeal to our target customers (founders) and maximize spending our time being hands-on supporting startups. So if you look at each of our funds as a version of a product release, what’s new or different abo ut Version, errr Fund, 3.0? Actually not much.

Product 96

Product IRR LP Seed Stage 96

K9 Ventures

DECEMBER 14, 2008

Lets assume that Shylock Ventures is capable of producing a 20% IRR on a $100M fund. If Shylock Ventures were now to raise a $500M fund or a $1B fund, it probably will not be able to maintain its IRR. Their products — successful companies — are most valuable when the firms remain small and have their own unique style.

IRR 99

IRR Bandwidth Venture Capital Early Stage 99

Startup Professionals Musings

FEBRUARY 5, 2018

While brand building used to be dominated by larger well-capitalized companies, today startups can afford to get their products in front of qualified leads around the globe at a fraction of the cost and in much less time. Investors measure their success by looking at the internal rate of return (IRR).

IRR 143

IRR Marketing Startup Angel Investor 143

Professor VC

MARCH 10, 2009

In other parts of the country, this is business as usual: Identify a customer need Build a product Sell the product In the valley, the knee jerk reaction is to start with the powerpoint deck and look for the venture capital drug. Jon Fisher purposely avoided raising venture capital in his ventures.

Bootstrapping 28

Bootstrapping San Jose Silicon Valley Angel Investor 28

Up and Running

JUNE 17, 2013

We looked at the product, the market, and the management team, with some attention to defensibility and scalability, and we made our own intuitive comparisons of possible ROI. And Internal Rate of Return (IRR)? Finance angel investment IRR ROI venture capital' I trust my judgment on that. It’s a complete waste of time.

IRR 71

IRR Flash Angel Investor Venture Capital 71

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

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% Photoccino’s advanced image analysis and selection technologies will be integrated into products across the Shutterfly, Tiny Prints, Wedding Paper Divas, and Treat brands. Facebook Inc.

Israel 109

Israel Latvia Lithuania Russia 109

The Next Web

DECEMBER 16, 2012

Income-based valuations consider aspects like CAPM (capital asset pricing model), IRR (internal rate of return), NPV (net present value), WACC (weighted average cost of capital), NCF (net cash flow), and GAAP (generally accepted accounting principles). Asset approach. The quality, reliability and cost of site traffic.

Valuation 128

Valuation NPV Net Present Value IRR 128

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? Labor Arbitrage.

San Diego 72

San Diego Warrant IRR Investment Bankers 72

Growthink Blog

MARCH 29, 2010

Launch that new product. Startup investing has outperformed every major investing class, with IRRs of over 27.3% (click here to learn more). Because 2 out of 3 of all new jobs are created by new and young (less than 5 years old) firms. Click here to learn more. Grow A Business. If you own or manage an existing business, go for it.

IRR 59

IRR Entrepreneur Washington Government 59

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. Such distractions, although potentially lucrative for both parties, are likely to negatively impact internal productivity.

Employee 60

Employee Balance Sheet Syndication Syndicate 60

Steve Blank

MARCH 31, 2014

In spite of this, private equity funds have used the rallying cry of efficiency to hijack corporate strategy and loot the profits that historically would have been reinvested into research and development and new products. Smart companies are always looking to make their current products better – and there are many ways to do this.

Private Equity 330

Private Equity Metrics China Intellectual Property 330

View from Seed

AUGUST 17, 2021

One industry specific example is the strange fascination among some LPs and GPs around term IRR. Even though everyone knows that VC funds take 10+ years to come to fruition, one often can’t help but benchmark themselves based on IRR in the early days.

IRR 205

IRR Dilution Founder Portfolio 205

View from Seed

AUGUST 17, 2021

One industry specific example is the strange fascination among some LPs and GPs around term IRR. Even though everyone knows that VC funds take 10+ years to come to fruition, one often can’t help but benchmark themselves based on IRR in the early days.

IRR 156

IRR Dilution Founder Portfolio 156

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. Borchers notes, “There are tons of good, short-term working capital products in the market already (factoring solutions, MRR loans, AR financing, etc.), Aligned incentives.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

View from Seed

AUGUST 17, 2021

One industry specific example is the strange fascination among some LPs and GPs around term IRR. Even though everyone knows that VC funds take 10+ years to come to fruition, one often can’t help but benchmark themselves based on IRR in the early days.

IRR 136

IRR Dilution Founder Portfolio 136

Steve Blank

MARCH 4, 2014

These groups are adapting or adopting the practices of startups and accelerators – disruption and innovation rather than direct competition, customer development versus more product features, agility and speed versus lowest cost. A business model guides an organization to create and deliver products/service and make money from it.

IRR 335

IRR Startup Business Model Agile 335

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? And I’ll know in 18 months whether we have product / market fit. VCs often don’t use the products of the companies in which they invest.

LP 374

LP Later Stage IRR Term Sheet 374

abovethecrowd.com

APRIL 20, 2016

And unfortunately, you may assume that the product of your Unicorn valuation and your percentage ownership is what you are worth. Do you feel the need to raise more capital quickly before the prices erode further and bring down your IRR? You know you work for a Unicorn, and you know you have some common shares. LIMITED PARTNERS (LPS).

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

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

Concentration in consumer/branded products startups. BCG reports that “Many male investors have little familiarity with the products and services that women-founded businesses market to other women”—especially in categories such as childcare or beauty. . What should VC leaders do to eliminate such biases? Firm revenues.

Venture Capital 60

Venture Capital Partner Technical Review Cofounder 60

Hippoland

NOVEMBER 6, 2016

And all of the companies I pick are at roughly the same stage — all seed companies who have launched a product and have some semblance of traction, though this ranges quite a bit. My thesis in how I pick companies remains the same across both portfolios.

Portfolio 48

Portfolio IRR Later Stage Bootstrapping 48