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Want to Know How VC’s Calculate Valuation Differently from Founders?

Want to Know How VC’s Calculate Valuation Differently from Founders?
Back in 1999 when I first raised venture capital I had zero knowledge of what a fair term sheet looked like or how to value my company. Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. It was accept the terms or go into bankruptcy so we took the money. But the truth is that I didn’t really understand just how screwed I was until years later when I finally understood every term in a term sheet and more importantly I understood how each term could actually be used to screw me. Back then VentureHacks didn’t exist. I don’t feel that as a VC sneaking in nefarious terms into a term sheet that the entrepreneur doesn’t understand is a good way to build a long-term relationship nor to build a long-term reputation but this does happen and more frequently than we all would like. This starts with understanding how VCs and entrepreneurs often see valuation differently. I turned them down.

Les critères d’investissement d’un Business Angel engagé Cette semaine, j’ai décidé de vous parler de mon process de sélection de projets, en fait surtout d’équipes, dans lesquelles j’investis. Au début de mon expérience de business angel, comme dans le recrutement de collaborateurs (trices) chez Juste à temps d’ailleurs, je fonctionnais surtout à l’affectif. Et, à force de désillusions, je me suis remis en cause, moi aussi. Schématiquement, j’ai évolué vers : - La priorité accordée à l’équipe (versus les marchés) dans mes choix. - La mise en place d’une grille de sélection avec des critères objectifs : je vous laisse la consulter ci-dessous : Laissez-moi revenir sur quelques critères : – Je peux apporter des compétences : comme j’aime bien mouiller la chemise aux côtés des équipes, il convient que je leur sois complémentaire. - J’ai un patron(ne) en face de moi : une boite sans patron, ça le fait pas. - L’entrepreneur(se) sait se remettre en cause : c’est surement mon critère essentiel. Deux précisions importantes : Cordialement. Patrick

Term Sheet | Feld Thoughts While some people hate the phrase “failing fast”, I find it instructive when it’s used to signify that one isn’t going to pursue a particular path in the context of a larger set of activities. A few weeks ago, I wrote a post about The Proliferation of Standardized Seed Financing Documents. It generated several hundred email responses and a handful of phone calls. A week or so later, my partner Jason Mendelson wrote a post titled Why There Will Never be a Standard Set of Seed Documents. I’ve concluded that Jason is right so rather than torture myself, I’m failing fast with regard to trying to help create a set of standardized seed documents. Since I received so many private responses to the original post, I thought I’d summarize them here by type of respondent. Lawyers: By far the largest numbers of responses were from lawyers offering to help (thanks!) Entrepreneurs: The next largest number of respondents were entrepreneurs. VCs: The VC comments came in a few different flavors.

Working Backwards In the fine grained services approach that we use at Amazon, services do not only represent a software structure but also the organizational structure. The services have a strong ownership model, which combined with the small team size is intended to make it very easy to innovate. In some sense you can see these services as small startups within the walls of a bigger company. The product definition process works backwards in the following way: we start by writing the documents we'll need at launch (the press release and the faq) and then work towards documents that are closer to the implementation. The Working Backwards product definition process is all about is fleshing out the concept and achieving clarity of thought about what we will ultimately go off and build. Start by writing the Press Release. Once we have gone through the process of creating the press release, faq, mockups, and user manuals, it is amazing how much clearer it is what you are planning to build.

4 Start-Up Accounting Tips for the Young Trep Skip Advertisement This ad will close in 15 seconds... Young Entrepreneurs Today's Most Read 9 Proven Ways to Get People to Take You Seriously 4 Intangibles That Drive CEOs What It Takes to Go From Dead Broke to 6 Figures in 6 Months The Mentality of a Successful Career 4 Big Challenges That Startups Face These Siblings Are Cooking Up America's First Meatless Butcher Shop Kim Lachance Shandrow 3 min read News and Articles About Young Entrepreneurs Failure 6 Stories of Super Successes Who Overcame Failure They're perfect examples of why failure should never stop you from following your vision. Jayson DeMers Podcasts Top 25 Business Podcasts for Entrepreneurs Podcasts are as easy to use as old-school radio but as specialized as blogs. Murray Newlands Entrepreneurship Programs Saxbys and Drexel Team Up to Promote Entrepreneurship Saxby's founder Nick Bayer talks about the one-of-a-kind program and why he wishes there was one for himself years ago. Carly Okyle Presented by Young Entrepreneurs Laura Entis Fear

Comprendre le fonctionnement des startups pour améliorer leur réussite Par Hubert Guillaud le 19/04/12 | 6 commentaires | 2,735 lectures | Impression Voilà un an qu’a été lancé un projet de R&D collaboratif original Startup Compass, se désignant comme “le génome des startups”, rapporte Rip Empson pour TechCrunch. Ce projet, créé par Bjoern Herrmann (@bjoernlasse, Max Marmer (@maxmarmer) et Ertan Dogrultan (@ertand, ce dernier a depuis lancé Blackbox, qui se veut à la fois un programme éducatif pour entrepreneurs et un accélérateur de startups) a pour ambition de comprendre ce qui fait la réussite des startups. L’idée est de proposer une analyse comparative des startups, comme l’expliquent les auteurs du site, en permettant aux entrepreneurs de renseigner eux-mêmes l’évolution de leur entreprise afin d’avoir accès à des données comparatives. “Notre mission est d’augmenter le taux de réussite des startups et d’accélérer le rythme de l’innovation au niveau mondial. Image : la cartographie de l’innovation mondiale par le Startup Genome Project.

The Secret of Raising Money Introduction to Growth Hacking for startups : SGE Pintrest, Facebook, Zynga, Dropbox, AirBnb… What do they all have in common? They’ve all used growth hacking techniques to grow their user base from zero to millions (and sometimes hundreds of millions). Growth Hacking isn’t viral marketing (although viral marketing is part of it). The term “Growth Hacking”, invented by Sean Ellis, and made popular by Andrew Chen, a Silicon valley marketer and entrepreneur, is a combination of two disciplines – marketing and coding: Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of “How do I get customers for my product?” In a recent post, TechCrunch defined the three characteristics of a Growth Hacker as follows: Growth hackers have a common attitude, internal investigation process, and mentality unique among technologists and marketers. First Steps in Growth Hacking for Startups Acquisition - Get people to hear about your product from press, blogs and social channels. Growth Hacking Resources: Eze Vidra

Anthropology of Mid-Sized Startups Guest post by Kevin Simler, who works at Palantir, observes the startup scene, and writes at Melting Asphalt, about… well, go see for yourself. In their natural habitats, social species organize into characteristic groups. Gazelles form herds, wolves form packs, and ants form colonies. Humans, in the same way, form tribes. Of course, we’re pretty far removed from our natural habitat these days. Humans also form kingdoms, nations, states, and civilizations, but those units of organizations aren’t as fundamental to our psychology. So let’s see what happens when we treat startups as tribes. To do that, we’ll need to use the methods of anthropology rather than business analysis. Startups as tribes is a useful shift in perspective, I think, because we typically think about startups with a more technical mindset. I’m writing about the world of startups because that’s where I’ve been doing amateur ethnography for the past 7 years. Startups in culture space Startups have low power-distances.

Blogging Innovation » 10 B2B Sales & Marketing Metrics Worth Tracking The fine folks at Focus.com let me do a Webinar on this topic several months ago, but I wanted to summarize what I consider to be ten fundamental B2B sales & marketing metrics here as well. You can get an on-demand recording of the full Webinar here, but below (with some qualifying thoughts & questions) are the ten metrics. Quick Disclaimer: Just because you can track it, doesn’t mean you should. Just because you can track it, doesn’t mean it’s important. Choosing the right metrics that will give you clarity and drive action in your business is most important. So without further adieu… 1. You absolutely must track leads through to close and beyond. 2. What are you willing to spend to acquire a new customer? 3. First off, how are you defining a lead that’s in a “nurture” category – someone who’s somehow qualified but not yet ready to buy? Bonus points if you can use this insight to predict future revenue from your nurture database over time. 4. 5. 6. 7. Are some deals not worth pursuing?

chris dixon's blog / Notes on raising seed financing Last night I taught a class via Skillshare (disclosure: Founder Collective is an investor) about how to raise a seed round. After a long day I wasn’t particularly looking forward to it, but it turned out to be a lot of fun and I stayed well past the scheduled end time. I think it worked well because the audience was full of people actually starting companies, and they came well prepared (they were all avid readers of tech blogs and had seemed to have done a lot of research). I sketched some notes for the class which I’m posting below. 1. 2. 3. 4. By far the biggest influence on investors’ opinions of a startup is the opinion of other investors. 5. Make sure you have good Google results (this is your first impression in tech). 6. Read TechCrunch, Business Insider, GigaOm, Techmeme, HackerNews, Fred Wilson’s blog, Mark Suster’s blog, etc (and go back and read the archives). 6. 7. 8. 9. Have a short slide deck, not a business plan. 10. 11. 12.

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