Fresh Insights

Analyses, Musings & Observations

Raise more money than you need

Venture is in a bubble, and inevitably, that bubble will pop. As a founder, what should you do? Well, you could do what Peter Thiel did while he was at Paypal: he raised more money than he needed. Recall Thiel was one of the founders of PayPal in 1998. PayPal went on to list on…
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Consumer tech valuations are rising

We follow 58 publicly traded internet companies in different industries including social media, marketplaces, content distribution, gaming, ecommerce, payments, and new hardware. The one thing these companies all have in common is that consumers are a customer/critical constituent in the business model. Given the diversity of industries, the multiples vary. Below is the data along…
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SaaS valuations are getting crazier

Valuations for SaaS are higher than they’ve ever been since we started keeping track of the data in Q4 2014: of the 77 SaaS companies we follow, the average public SaaS business is trading at 10.07x revenue while the median is 9.32x. The data is below. Negative EBITDA, positive cash flow. The median SaaS business had…
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When you hate your VC

This happens. Occasionally you and your investors/VC won’t see eye to eye, or worse yet, you’re sideways with your VC and the relationship is acrimonious or hostile. While I’ve never had a hostile relationship with a founder, certainly there are times where we’ve been in disagreement on major issues or a founder isn’t happy with…
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Founder ownership compounds with cash efficiency

There’s a compelling reason to keep burn down and be cash efficient: it limits founder dilution. The less money you raise, the less dilution founders absorb, but what many founders don’t realize is that the relationship is not linear. In other words, being cash efficient has a compounding effect on limiting founder dilution: in a…
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Layoffs done right at a startup

Many young company goes through it: at some point you may have to lay off a chunk of your team to reduce burn. Group layoffs at a startup are particularly challenging because the team is presumably small (less than 30 people), everyone works in the same office, and since group layoffs are generally not performance…
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How to Create a Market Where None Exists

Recently one of our companies had a sales consultant do an audit of its sales team and methodology. Our portfolio company’s market has some interesting traits: i) the market is greenfield and almost all homegrown; ii) ‘no decision’ is the company’s primary competitor; and iii) the market as it stands is currently small, with large enterprises being the target customers. The…
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You won’t be profitable at exit

Venture backed companies like Uber, WeWork, and Spotify, are unprofitable. Is this the norm or just a trend for the more recent vintage of high flying companies? To answer that question, we took a look at the operating income and free cash flow of 92 tech companies at the time they went public going as…
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Life in an accelerator: part 1

A good friend of mine named Joe Shiraz is taking his company, ServiceBot, through an accelerator based in Memphis called Launch Delta. Launch Delta was created by Start Co in partnership with ServiceMaster, one of the largest home services companies in the nation. Launch Delta is focused on home services startup, Joe’s company ServiceBot is…
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M&A advice from an investment banker

One of our portfolio companies is exploring a sale, so we’re talking to investment bankers. Below are some of the interesting insights from those conversations: You’re not the only one who wants to exit. One banker stated “Google sees upwards of 2,500 companies a year they could potentially acquire.” Another mentioned “Adobe receives dozens of companies…
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