I get this question a lot: How long does it take to close a VC fund? We all know the anecdotes of marquee firms closing their funds within weeks. But don't forget that it often took 20 years to become a marquee firm and to build a robust platform and track record. So they closed … Continue reading VC Funds: A Median of 17 Months in Market to Final Close.
Minimum valuations and their required revenue at fixed value-creation-multiple of cash consumption. In the last blog post I wrote about Fred Wilson's excellent insight into value creation relative to cash burn. I got a lot of questions about it so here is an Excel spreadsheet for you to download and play with -- let me … Continue reading Fred Wilson’s “Return on Burn” (Excel Worksheet Attached)
Sounds obvious. So I am puzzled when I get pitches where the basic parameters of investment returns are not met. There are many different types of venture capital investors. You should know which type of investor you are talking to. So here's one real example from last month: We're selling an edge appliance for IoT … Continue reading Pitch Clinic: VC Investments Need Hyper-Growth (D’oh!) — Excel Worksheet Attached.
I know you have a great product. I wouldn't be talking to you otherwise. But I am not a customer. I am a potential investor. As the CEO, you have been juggling all sorts of crisis situations over the past year, and you have been at the forefront of selling, probably meeting with customers and … Continue reading Pitch Clinic: Sell Stock, not Product
Reactions to my last blog post, Cap Table Changes over Time and Founder Dilution (Excel Worksheet Included), were interesting: There were some founders and entrepreneurs who said that this was a great example how venture capital investors squeeze out founders and CEOs who actually have the idea and are actually executing (versus VCs who just … Continue reading Venture Capital Financing and Investor Dilution (Excel Worksheet Included).
I recently got some questions from first-time founders on dilution, what is a typical A round, what does a typical cap table look like (not the format, but the progression over time). My answer is always the same: It depends. Here's an Excel worksheet that lets you play around with different round sizes and investors: … Continue reading Cap Table Changes over Time and Founder Dilution (Excel Worksheet Included)
If you believe you have a great startup, then I hope you have a great product. And, naturally, you will have competition. Gartner is not going to create a magic quadrant for a new huge market with only a single company in it. Your product should be awesome. You should strive to find product-market-fit fast. … Continue reading Your fiercest Competition is your VCs’ Other Portfolio Companies.
[This post appeared first as a comment on Blue Dot Partners' blog, Perspectives. Philippe Bouissou wrote a post that resonated with me about The Two Types of Businesses. There are two very different types of businesses. The motivations that drive entrepreneurs behind them are quite orthogonal. Both types of businesses are critical to creating a … Continue reading The Flipside of Venture Capital.
I saw two fund-raising pitches in the last two weeks with pseudo portfolios -- there must have been a recent book or blog post about it. Both had pseudo portfolios of seed rounds they've "seen" and "would have invested in if they had the money". The two pitches were very different. The first one was … Continue reading (Im)prove Yourself when Fundraising.
Please see my Disclaimer. As previously mentioned, venture-backed companies are getting much older before their exit. But the percentage of $100M+ exits grew by 18.7% when comparing the last 365 days with 2013. The increasing share of larger exits is good news for VCs -- if they can get liquidity! Because the percentage of venture-backed … Continue reading “I’ll get liquidity in the secondary market.”