"It turns out to be really good for a company to have a board -- it focuses the company if everyone knows they have to present the key metrics to outsiders once a month. ... If I could ask VCs for only one thing in this new world, it’d be to keep showing up for board meetings."<p>This is very interesting. If ownership percentages at Series A are trending down, and investor time & emotional investment per company is trending down as a result, but having outside accountability predicts success, then I wonder how the best companies will replicate outside accountability.<p>Put another way: How could you hack a replacement for a board meeting?<p>I'm a funded entrepreneur without a board. I've tried nominating advisors and/or very-helpful angels as our "pseudo-board" and meeting monthly. This didn't help very much: There's something about having a lot of skin in the game that makes board members really prepare, take it seriously, and summon courage to have hard conversations with CEOs when things aren't working.<p>The one thing that worked pretty well was bolting a whiteboard over the desk area with this month's single goal (a revenue number, natch) and value so far. I don't have any board experience to compare it to, but it certainly keeps us focused.<p>Anyone else have ideas that have worked, or might work?
A lot of the "real money" startups generate is from selling services to other startups and tech companies - particularly in the YC ecosystem. It's possible that revenue will slow in a crash and start a nasty cycle.
It's interesting to see a post discussing how free VCs are in their investments as I'm sending out job applications because we couldn't make it past the Series A crunch despite big-name customers and ex-FB/Googlers on the founding team.<p>Make no mistake, VC firms may be increasing the capital they're investing in the markets but by no means does that translate into "everyone gets a free ride".
Is there a decent way to calculate valuation? We're starting to be approached with merger/acquisition talk and we're unsure on how to best determine our value in that scenario.<p>We're a 2.5 yr old company, annual revenue for this year forecasting to $1.1M. (2013 was $360k, 2012 was $60k). We're a team of 5 salaried employees (founders included), bootstrapped, fully employee-owned and steady revenue growth with very low operational costs.
"Resist the urge to raise and spend too much money. The track record of companies that raise $30MM or more in their first round is bad."<p>Q: Is the track record bad, or do they just fail louder than the ocean of companies that raise small amounts of $ and then quietly die? It'd be interesting if someone could prove that a large raise actually hurts your chances, but for a disciplined/veteran founder (who would raise a lot but spend it thoughtfully rather than recklessly), it seems like it shouldn't.<p>Edit: <a href="http://www.alleywatch.com/2014/02/the-10-biggest-series-a-rounds-of-all-time/" rel="nofollow">http://www.alleywatch.com/2014/02/the-10-biggest-series-a-ro...</a> - "All of the companies are still operational in some capacity."
This kinda looks like a vicious / virtuous cycle:<p>* Interest rates are kept low primarily because of the unemployment crisis. (Right?)<p>* But then that encourages capital-holders to invest in, among other things, tech and startups.<p>* And then those companies invent things that make <i>more</i> jobs obsolete, causing unemployment to remain high.<p>Are my assumptions correct? What breaks the cycle? Or will it spiral out of control until we decide it's time to stop worrying about unemployment and just start paying everyone a basic income?
I haven't seen any evidence that suggests starting a company during a boom economy makes it easier to succeed. It does make it easier to get a salary while failing though (which is better than just failing and getting nothing).
What will this all means in terms of "smart" angel money versus "dumb" angel money? If angel investing is becoming more a matter of prestige than thrill/returns, it could become much easier to get an angel round, but at the price of dumb investors who lack the patience or stomach to deal with the ups and downs of startups.<p>I know I'm going to have to look for angel money in the next year. And when I find my angels, I want them to be the first people I turn to when things are hard. I want them to be genuinely helpful and supportive, not angrily demanding to get their money back at every little hiccup.
We decided not to pursue subsequent rounds of funding beyond a seed. I'm also hearing about deals with quite cheap capital (high valuations, favorable terms) flowing to companies near us.<p>For SaaS it seems you can get deals with valuations at 10x revenue and YC Companies in SaaS are getting a premium even on that.<p>Cheap money can help you weather a storm and smooth over mistakes, but it also increases your risks as a business and reduces the "successful" outcomes you can have.<p>At the end of the day if your goal is to build a sustainable business, cheap money can't guarantee that.
I don't know what this article was trying to convey.<p>Valuations are a subjective airy-fairy number and, in reality, based on the strategic need of a buying entity. For example, when I was in the process of selling my last business I had 3 offers. 2 offers were from companies that wanted me obviously but didn't need me strategically, therefore their valuations were low. The 3rd offer was from a company who had a hole in their product-line and my tools fit perfectly in that hole, hence their perception of my company's value was much higher.<p>So find businesses which have a strategic need (or convince them of such need). Also, I would assume but have no evidence that strategic acquisitions have a higher success ratio than purely financial acquisitions.<p>And just like salespeople should 'always be closing', business owners should 'always be exiting'.
I recently took a trip to Asia where capital is hard to come by and startup valuations are much lower. It seems that if VCs are having trouble finding return, they might be well served by investing in global expertise.<p>Are the consumer markets so much better in America that it's worth paying 4x valuation and competing with lots of other VCs for deals? The answer may be "yes", but it doesn't seem obvious to me.
> And a macroeconomic collapse—which may happen—would certainly correct valuations in a hurry<p>I wonder what the collapse will look like and what will cause it.
Missing word<p><pre><code> We’re more and more A rounds happen with less than 20%
ownership going to the investors, and fewer and fewer
requirements about investor control over the company.
</code></pre>
-> We're seeing more and more