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How Startup Valuation Works - Illustrated

How Startup Valuation Works - Illustrated
How would you measure the value of a company? Especially, a company that you started a month ago – how do you determine startup valuation? That is the question you will be asking yourself when you look for money for your company. Create an infographic timeline like this on Adioma Let’s lay down the basics. Valuation is simply the value of a company. Why does startup valuation matter? Valuation matters to entrepreneurs because it determines the share of the company they have to give away to an investor in exchange for money. How do you calculate your valuation at the early stages? Figure out how much money you need to grow to a point where you will show significant growth and raise the next round of investment. How to Determine Valuation? Seed Stage Early-stage valuation is commonly described as “an art rather than a science,” which is not helpful. Traction. Reputation. Revenues. For consumer startups having a revenue might lower the valuation, even if temporarily. Hotness of industry.

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Revenue Multiples And Growth When you say “the stock is trading at 20x revenues” people rightly shake their head and say “that is nuts.” I got a lot of tweets like that in reaction to my comments about the Uber valuation in the LeWeb breakfast chat. However, what people fail to realize is these things happen in a moment in time and that stocks won’t trade at 20x revenues forever. How Funding Works - Splitting The Equity With Investors - Infographic A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later. If all goes well. See how funding works in this infographic: First, let’s figure out why we are talking about funding as something you need to do. This is not a given.

Effective Habits of Power Users: A Look At Recent MOOC Research Recently published research on student behavior in the first edX MOOC reveals some interesting insights about the persistence of certificate earners and about the time they put into the various course activities. “Learning in the Worldwide Classroom: Research Into edX’s First MOOC” was produced by a group of MIT and Harvard researchers, led by Lori Breslow, director of MIT’s Teaching and Learning Laboratory, and published in the summer 2013 issue of RPA Journal from Research & Practice in Assessment. The analysis looked at Circuits and Electronics (6.002x), taught in early 2012 by edX President Anant Agarwal to nearly 155,000 students, and they particularly focused on the 7,100 students who earned a certificate for passing the course. The researchers chose to focus on the behavior of these successful students in order to identify common traits or behaviors. Even before the study, the forum use surprised faculty. “The biggest surprise in my mind was the power of the discussions.

Red Rocket Ventures Blog (Startup Advisor & Growth Consulting) Having a great, defensible business idea in a scalable market is only half of the puzzle to attracting venture capital. The other half is having a backable management team. Today we are going to define exactly what that means, in the eyes of a venture capitalist. The first thing a VC is looking for is domain expertise in the industry you are targeting. How many years of experience do you have in that industry? In what roles did you operate that were relevant to your new business?

I have a job offer at a startup, am I getting a good deal? Part 1: The offer We’ve been answering this question a lot lately: “I have a job offer at a startup, am I getting a good deal?” This isn’t a comprehensive answer—just some questions we would ask if we had an offer. If you don’t understand your offer, get a lawyer. TC Teardown: 13 Ways To Get To $10 Million In Revenues (Part I) After last month’s TechCrunch Disrupt, and to provide a business companion to the popular “Lean Startup” customer development methodology, this TC Teardown focuses not on how one specific company makes money but rather seeks to provide a breakdown of the main general ways consumer Internet startups try to make money. Consider it a guide to Internet business models. If you are currently thinking about or are in the process of developing your own consumer startup idea, these key business models will help give you a working knowledge of what it takes to get to $10 million in revenues (assuming you have a good product that the market wants). (Before you post in the comments about how unique your startup is, this list is not meant to capture every consumer business permutation.

Assessing a Business Model Attractiveness In our previous posts, we learnt how to visually represent the business models of different companies using the Business Model Canvas. Our first post, Understanding Business Model Fundamentals, answered why we should study Business Models and how Business Model Canvas helps with the visual representation of a Business Model. Then, we attempted to represent the business models of Google, VISA, and Twitter over the Canvas.

Frrole Discloses Everything From Founders Equity to Revenue. Brings Transparency To The Startup Ecosystem - The Startup Journal - Indian Startup Stories, Startup News, Startup Resources, Interviews Amarpreet Kalkat If you are following the startup ecosystem closely then you might know that there have been long discussions about the founder’s salary, equity division, and revenue in startups. No individual or startup has ever disclosed these to the public. But Frrole, a Bangalore based startup which helps brands to discover and analyze their social media presence have gone beyond this trend and has publicly disclosed everything that none ever done. The details were posted by Amarpreet Kalkat, the founder of Frrole. Founders Equity

Understanding VC Financings - Liquidation Preferences CONTRIBUTED BYAnthony This installment of our series Understanding VC Financing examines liquidation preferences. Along with dividend rights, conversion rights, and anti‑dilution provisions, liquidation preferences are an essential economic term of the preferred stock typically sold in a VC financing. Negotiating Your Startup Job Offer - Robby Grossman Over the last three years I’ve been on both ends of job offers at startups. One thing that’s struck me is how little most applicants know about what to expect in a job offer, and in many cases, what the written offer they’ve received actually means. I was extremely fortunate that the first startup job offer I received was written by a pair of founders who had the utmost integrity and explained things very clearly. Since then I’ve learned that not every employee is so lucky. This post doesn’t aim to teach you negotiation itself, but rather to acclimate you to the standards and vernacular of startup negotiations. It assumes you’re a startup newcomer.

Liquidation preference and deemed liquidation The liquidation preference is a right which can be required by venture capital investors in recognition of the risk they bear on their capital contribution. While there are many variations, the liquidation preference typically provides that, in the event the company is liquidated or subject to a deemed liquidation (see below), the preferred shareholders will receive a certain amount of the proceeds before any other shareholders. This preference amount may be equal to the amount of the preferred shareholders’ investment, or a multiple of it. The remaining proceeds are often then shared amongst the preferred and ordinary shareholders.

How I negotiated my startup compensation - Michelle Wetzler of Keen IO Hi, I’m Michelle. I recently left my job as a technical consulting manager and joined my best friends and my fiancé, Kyle, at (I wrote about that here). This is the story of how I negotiated my compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. 90 Things I've Learned From Founding 4 Technology Companies On October 27, 2010 I wrote a blog post about the “57 Things I Learned Founding 3 Tech Companies.” It has been awesome, flattering, and humbling to see that post went viral and has been seen by so many thousands of people — mainly aspiring entrepreneurs — and has been translated into many languages. This past week while I was in Tokyo for meetings with potential partners for Fab, I was invited to participate in a panel discussion on startups.