I got a late-stage secondary opportunity today, shopped around by a bank. A major bank. They attached a list of comps and calculated the "risk": Enterprise Value to Revenue to Revenue growth (aka "EVRG"). It's almost worse than a Price-to-Earnings-to-Growth (aka "PEG") ratio. I think the idea here was that there is a high EV-to-Revenue … Continue reading Bullshit Metrics: PEG and EV/R/G
Grab your CEO and have lunch. Chances are, she has once started just like you. And everybody has to eat at some point. Here are some questions that are great for getting some insights on strategy, challenges, and culture -- even if you only have five minutes: What the biggest frustration in your job? What's … Continue reading Lunch with Your CEO: 7 Great Questions to Ask.
We hear about the "Startup A-team" both from our portfolio companies and in pitches. So what's the bar for a Startup A-team? And how do you rank people within an A-team of a Startup? Regardless of industry, I always recommend looking at the "USMC Fitness Report (1610)" as a starting point. Yes, it is from … Continue reading Jocko on Startups: What’s an A-Team?
Dave Kellogg is an outstanding leader and thinker -- go and follow his blog posts if you're not already doing so. He has a lot of good advice on planning and spending after getting funding ("post-funding"). Two of my portfolio companies went through the pleasure of raising a new round of financing last month. There … Continue reading Post-Funding: Trigger Spend on Milestones, not Timeline.
Selling is a service. You are solving a real problem. You are addressing a valuable need -- doing nothing or doing the wrong thing could have catastrophic consequences for your customers . But if you are just selling to make your quota you are neither helping yourself nor are you helping your startup and executive … Continue reading Sales: “I’m so glad I could help.”
[Earlier I wrote about the different vehicles] You're sitting on a board and the CEO presents some proposed grants. Motion to approve - second - all in favor - ay. Here's what you should have asked before the board meeting. A. Economics What's the vesting schedule? What are these options worth right now? What do … Continue reading Board Questions to ask about Stock Options, NSOs, ISOs, Restricted Stock, Restricted Stock Units (RSUs).
SEG: 1Q19 SaaS M&A Update, via http://softwareequity.com/research/ SaaS multiples of venture-backed SaaS Startups are driven down by volume and choice. Tom Tunguz has written a lot about SaaS multiples, specifically about Where are SaaS Companies Priced After the 2018 Correction. We are getting a lot of inquiries from VCs, entrepreneurs, and LPs alike about pricing. … Continue reading Volume and Choice drive down Startup SaaS M&A Multiples.
There are enough primers on the Internet. This is not a primer. But take it as a discussion guideline with your board, your lawyers, your executives. Types of Equity Awards Options An option is a contract between a startup and an "optionee" (mostly employees, but could be contractors or board members) that provide a right … Continue reading Five Areas of Startup Equity Awards Boards Should Discuss.
[Disclaimer 1: This is not a primer on Brexit -- google it.] [Disclaimer 2: I'm not a lawyer, consult your own!] GDPR and Brexit The GDPR came into force on May 25th, 2018, and is applicable in the UK. It is implemented through the UK Data Protection Act 2018 (short: "DPA") and will remain applicable … Continue reading EU / UK / U.S. Data Transfers after Brexit.
Benchmarks are great to tell you where you are compared to others. In venture capital, there are three common problems with benchmarks: History, math, and ego. 1. Benchmarks are History Benchmarks are backward looking. Past performance is no guarantee of future results. Maybe market mechanics changed. Maybe the supply and demand of startup funding in … Continue reading The Pitfalls of Benchmarks.