What is it Like to Negotiate a VC Round?
Over the years I’ve written extensively about the downsides of convertible notes for startups such as here, here and here. The truth is that I’ve been warning about convertible notes since 2010 it was first declared that “convertible notes have won.” Today I want to talk about how a VC thinks about equity pricing on your […]
Is 5x the New 2x in SaaS?
Back in 2012, when the SaaStr audience was about 1/30th of what it is today, I wrote a post that a lot of folks didn’t like: ”Workday is Growing 90% this Year. At $250m in ARR. So Wake Up: You Probably Need to Do A Lot, Lot Better.“ In fact, it was the first post […]
Why You and Your VCs Can’t Really Be Friends
There’s a pattern I’ve observed in a number of my friends who are SaaS CEOs. Some fear their board and VCs. The VCs say “Jump”, they say “How High?” That’s for a different post. That doesn’t work out well for anyone. {This tends to happen when you have an insecure CEO, and VCs who control […]
The 10x Rule: What Raising $1 of Venture Capital Really Means
Recently, a good friend of mine asked me how much he should raise in his round. He was lucky enough to have a range of options. My simple advice was: assume you have to return a liquidity event (sale or IPO) of at least 10x the amount you raise. Valuations change from round to round. […]
Understanding How Dilution Affects You at a Startup
Dilution. Or as industry insiders call it, “taking a haircut.” Everybody knows that when you raise money at a startup your ownership percentage of the company goes down. The goal is to have the value of the startup go up by enough that you own a smaller percentage of a much larger business and therefore […]
The Lesson of Dropbox: Usage = Value
Word on the street is that Dropbox is about to raise a major round of financing at a $5 billion+ valuation. While some will cry “Bubble!”, I think there’s a different lesson we can learn: Usage = Value. Let’s face it–Dropbox isn’t the most complicated business or technology. It’s a relatively simple storage app that […]
Should a Startup Have a COO?
It’s rare I can dust off a 6-year old article, find it still relevant and repost it without any changes. But that’s what happened this morning, I felt provoked by this VentureBeat title: Even start-ups need a COO – wanted to respond, than I had that “I’ve already said this” feeling and realized I would […]
What Should You Do with Your Crappy Little Services Business?
There’s a line of thinking in Silicon Valley that you should build product businesses rather than services businesses. This thinking is largely driven by the venture capital industry (and subsequently Wall Street) who are in search of high margin, highly scalable businesses. It’s nearly impossible to get a services company financed by VCs. You’re small fish.
The Art of Riding the Bubble
People are increasingly asking whether there is a Bubble underway in the tech business. The answer is that by the time you know there is a Bubble it’s probably too late to do anything about it. But if all you’re doing is asking whether there is a Bubble, the Bubble is probably not here, yet. […]
8 Questions to Help Decide if You Should be Raising Money Now
A year ago I blogged about one of my most common mantras that applies to sales, biz dev & fund raising alike: “Time is the Enemy of all Deals.” When times are really good for fund raising many teams delay to maximize their valuation. Sometimes this pays off, other times it doesn’t. So how should […]
Why Did I Invest in Pose?
What a sweet feeling it was last week to see the launch of the photo sharing site Pose, whose application targets shoppers of apparel. If you don’t know it and own an iPhone (soon Android) please check it out. What I’d like to do is tell you the story of how the investment came to […]
An Entrepreneur’s Growth Equity Conundrum: Should I sell stock or sell growth?
Two times in the past year, I’ve been close to making an investment in two separate micro-cap growth equity opportunities only to have the opportunity go sideways deep into the process. The two businesses share a lot in common; they are similar in size, profitability, and growth prospects. Both are capital-intensive; the first being asset […]
Atlassian: Fully Funded. By Customer Revenue. Oh, and the $60M T-shirt
It was 2006, the first Office 2.0 Conference in San Francisco and I just met Jeffrey Walker, President of Atlassian. I had followed the company for a while (OK, I admit, had been a fan), met Mike, but this was the first time with Jeffrey, so we took our box lunch to a cozy little […]
Who Will Twitter Acquire With Their Fresh $100 Million?
Last week the NY Times reported that Twitter has raised about $100 million of new funding, making the company’s value to be $1 billion. Just to put things in perspective, they also provide an example: For context, that is almost double the market capitalization of Domino’s Pizza, which has 10,500 employees and had $1.4 billion […]
