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Jeff Fluhr, founder of StubHub, Spreecast explains what it takes to keep your business on track

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How much to burn while building a product

by Fred Wilson, December 20, 2011 | Comments

Foursquare spent nine months without any pay, but a reasonable burn is about $50k a month

(Fred Wilson is a VC at Union Square Ventures. This piece is about burn rates for start-ups and why $50,000 a month is probably a reasonable starting point, unless founders are willing to put their own sweat equity in without paying themselves, which happens a lot.) In last week's MBA Mondays, I wrote about burn rates at three stages of a ...

Business arcanery: Going concern

by Fred Wilson, November 14, 2011 | Comments

The purpose of this new monthly series is to decode business code words

(Fred Wilson is a venture capitalist at Union Square Ventures, in NY) We got so many ideas for this Business Arcanery series on MBA Mondays that I'm not going to do it as a series. I am going to do one of these every month. There is enough business arcanery out there that I could do a years worth of weekly posts without running ...

Revenue-based financing

by Fred Wilson, October 17, 2011 | Comments

	This structure may align your incentives with angel investors Fred Wilson is a VC at Union Square Ventures, based in NYC. Back when we were doing our MBA Monday series on Financing Options For Startups, I got an email from my friend Andy Sack. Andy was one of the first entrepreneurs we funded by in the mid 90s with our Flatiron Fund. He's done something like a half dozen startups since ...
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Is there a cash crunch? What we're seeing

by Fred Wilson, October 13, 2011 | Comments

	VCs are having a tough time raising money; Angels may be topping out Fred Wilson is a partner at Union Square Ventures in Manhattan. The Wall Street Journal has a story out today that says "Web Startups Hit Cash Crunch." There has been a fair bit of reaction in the tech blogs and I thought I'd toss into the discussion some things we are seeing: 1) There are so many startups out there ...
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Liquidation analysis (Continued)

by Fred Wilson, October 10, 2011 | Comments

'Things like participating preferred shares and dividents and multiples make this even worse'

Fred Wilson is a venture capitalist with NY-based Union Square Ventures. This is a continuation of his article "Liquidation analysis." Last week I pointed out that when your company is sold at price points around or below prices where you have financed your company then your proceeds in a sale transaction will not equal your fully diluted ownership percentage times ...

Lean

by Fred Wilson, September 19, 2011 | Comments

Lean is a state of mind that a founder and his/her team needs to have across all aspects of business

(Fred Wilson is a venture capitalist with Union Square Ventures in NY) I've been reading Eric's book which I am very much enjoying. And on wednesday night I spoke to the NYC Lean Startup Meetup with the help of Giff who interviewed me. Eric and his fellow lean advocate Steve Blank have both written at length about the methodologies associated ...

The fascinating process of fundraising

by Thomas Korte, July 20, 2011 | Comments

Twenty companies went through fundraising at AngelPad; some had commitments within an hour

Most founders fundraise twice in their lifetime. I have seen over twenty companies raise funds since I started AngelPad and the process is fascinating. It is as diverse as the startup world: Some companies have commitments and are “oversubscribed” within hours, others have to work hard to ultimately succeed in raising funds (let’s not forget that fundraising success does not mean business ...

Financing options: Convertible debt

by Fred Wilson, July 11, 2011 | Comments

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As the current financing gold rush fizzles, the use of convertible debt will wane

MBA Mondays are back after a one week hiatus. Today we are going to talk about convertible debt. Convertible debt can also be called convertible loans or convertible notes. For the purposes of this post, these three terms will be interchangeable. Convertible debt is when a company borrows money from an investor or a group of investors and the intention ...

How much money to raise

by Fred Wilson, July 4, 2011 | Comments

First, try to keep dilution below 20%; Second, raise 12 to 18 months cash each time...

I spent some time yesterday talking to an entrepreneur about this topic and I thought I'd share what I told him with everyone. When your company is growing really fast, doubling employees year over year, adding users and customers at a very rapid rate, you don't want to raise too much money. If you raise three or four years of ...

Financing options: Vendor financing

by Fred Wilson, June 27, 2011 | Comments

Equipment financing or development for equity are two reasonably common examples

Last week's financing options post was about getting your customers to finance your business. This week's post is about getting your suppliers to finance your business. Truth be told, this is not very common in the startups I work with. The more capital intensive your startup is, the more you can and should think about this approach. Two reasonably common ...

Slow down to speed up

by Brad Feld, June 26, 2011 | Comments

	If I do this right, I believe I'll be able to cover even more ground It’s Sunday morning. Take a deep breath. It’s summer time. Go for a walk. Or a run. Play with your family. Take a nap this afternoon. Read a book. Go to a movie. Chill. Last week, I had two close friends tell me some version of “I’m too busy.” One insightfully said “I have no time these days. I’m doing ...
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Financing options: Customers

by Fred Wilson, June 20, 2011 | Comments

Customer financing is much more difficult, if not impossible, in consumer-facing services

I wrote in an earlier post in this series that friends and family is the most common form of startup financing. If you are talking explicitly equity investments, then that is probably true. But the most common way that startup businesses get money to get going is they sell something to someone. In this context, someone means customers. Customers are ...

Financing options: Government grants

by Fred Wilson, June 13, 2011 | Comments

	These grants are essentially 'free money' Governments will provide capital for startups and I've seen many entrepreneurs over the years take advantage of this form of financing. The grants are usually "free money" in the sense that they do not need to be paid back and they don't cost any equity. But nothing in life is free. You do pay for this money in ways that ...
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