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. Corporate KPI’s, Policy and Procedures: Innovation Killers.

IRR 335

IRR Startup Business Model Agile 335

Steve Blank

MARCH 31, 2014

Companies horde cash and squeeze the most revenue and margin from the money they use. Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption.

Private Equity 330

Private Equity Metrics China Intellectual Property 330

Steve Blank

JUNE 11, 2013

The test is: If you add one more sales person or spend more marketing dollars, does your sales revenue go up by more than your expenses? What are revenue strategy and pricing tactics? In a perfect world, you would never need investors and would fund the company from customer revenue. What is an IRR?

Venture Capital 335

Venture Capital IRR Liquidity Event Business Model 335

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. 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

Both Sides of the Table

OCTOBER 17, 2019

Invoca is now doing 10s of millions in recurring revenue and is growing > 75% year-over-year but it took the first 3 years to really build out the technology and acquire our initial enterprise clients. I mentioned that we sold our position in Kyriba for > $1 billion but when we invested it had virtually no revenue.

IP 223

IP Intellectual Property IRR Cofounder 223

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

Up and Running

AUGUST 19, 2014

Entrepreneurs impress me when they demonstrate a proven revenue stream before asking for capital. Forget the stupid IRR (that’s internal rate of return) that they taught you in business school. I am after all, a layman with respect to their business—and my time is valuable.” ” - Gena H., Angel from Eugene, OR.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

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

Steve Blank

JUNE 11, 2013

The test is: If you add one more sales person or spend more marketing dollars, does your sales revenue go up by more than your expenses? What are revenue strategy and pricing tactics? In a perfect world, you would never need investors and would fund the company from customer revenue. What is an IRR?

Venture Capital 227

Venture Capital IRR Liquidity Event Business Model 227

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. Intel under their last two CEOs delivered more revenue and profit than any ever before. They knew how to execute the current business model.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

SoCal CTO

MAY 19, 2010

For example, TCA’s evaluation criteria first bullet is: A market opportunity sufficiently large to create a business that can grow to at least $50 million in annual revenues. Remember my day job, I'm past Chairman of the Tech Coast Angels and I see a lot of pitches with revenue forecasts. These are so detached from reality.

Hockey Stick 205

Hockey Stick NPV IRR Valuation 205

Tim Keane

JANUARY 12, 2010

If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR.   Internal Rates of Return naturally compound, so a 50% IRR is 7.59   (If you plug in an IRR of 58.5%   Internal Rates of Return naturally compound, so a 50% IRR is 7.59 times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

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

NOVEMBER 17, 2011

For my start-up, I built a very robust operational and financial model with a detailed revenue build up and a validated cost structure. Despite having confidence in my financial projections, I am realistic enough to admit that at this stage (pre-revenues) and with no real comps, it may be hard for potential investors to believe them. (I’m

Employee 155

Employee IRR Startup Mexico 155

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. These collective sets of documents form the basis of what somebody looking at investing would call “financial due diligence.”

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Hunter Walker

FEBRUARY 25, 2018

Especially with founders who are in markets where they start earning revenue very early in a startup’s lifecycle, they sometimes choose to “fund” their business using this revenue and then go out when ready for a Series A. Our J Curve and early IRR may look worse than other funds.

Product 83

Product IRR LP Seed Stage 83

The Next Web

DECEMBER 16, 2012

This approach is based on the belief that revenue matters most. 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. Primary drivers include site revenue and site usage. The income approach. What drives value?

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?

San Diego 72

San Diego Warrant IRR Investment Bankers 72

crowdSPRING Blog

AUGUST 7, 2011

In addition, as long as investors can earn higher returns on T-notes, they will expect higher returns from alternative investments in equities and VC’s may follow suit for similar reasons and expect a higher IRR from their invest,ends in new ventures. Uncertainty may abate. Tax increases may be ahead. Photo: Kevin Krejci.

Small Business 86

Small Business IRR Government United States 86

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% This month’s trend continues to be acquisitions of Israeli firms by large US corporates. to JVP and Carmel, the highest performing funds. . FACEBOOK BUYS FACE.COM FOR $100M. Facebook Inc.

Israel 109

Israel Latvia Lithuania Russia 109

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

Feld Thoughts

JULY 31, 2013

Today, Zayo has eclipsed $1.1Bin revenue and $600M in EBITDA, leading to an estimated Enterprise Value in the vicinity of $6B. Our equity IRR has averaged around 50% since inception. I will provide a quick synopsis for those who prefer a two-paragraph summary. We raised $2.7B of debt and $870M in equity in three rounds.

Bandwidth 147

Bandwidth Colorado Startup IRR 147

abovethecrowd.com

APRIL 20, 2016

A high performing, high-growth SAAS company that may have been worth 10 or more times revenue was suddenly worth 4-7 times revenue. Do you feel the need to raise more capital quickly before the prices erode further and bring down your IRR? The same thing happened to many Internet stocks. LIMITED PARTNERS (LPS).

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

David Teten

MARCH 2, 2013

Moreover, VC funds on average earn approximately 2/3 of their revenue from fixed fees. I argue that, just as with hedge funds and mutual funds, the larger the venture capital fund, the more difficult it is to generate strong returns.

LP 114

LP Securities and Exchange Commission Silicon Valley Venture Capital 114

K9 Ventures

NOVEMBER 30, 2008

The expectation is that while venture investments are more risky than other forms of investments (though that is open to speculation in the current financial meltdown), they also typically have a high Internal Rate of Return (IRR). For what I’ve seen/heard the tops VC funds typically have an IRR of over 20%.

IRR 48

IRR Venture Capital LP Early Stage 48

Seeing Both Sides

APRIL 10, 2011

million in revenue the year before. . Matrix had a fund in 1998 that yielded an eye-popping 514+% IRR. In May 1996, Open Market completed a successful IPO and more than doubled on the first day of trading, ending with a $1.2 billion market capitalization. We had recorded $1.8

IPO 48

IPO IRR Brazil Government 48

David Teten

NOVEMBER 23, 2020

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”. Another example of a structural solution is the “ alternative VC ” or “ Revenue-Based Investing ” structure that Versatile VC frequently uses.

Venture Capital 60

Venture Capital Partner Technical Review Cofounder 60