An Exit Value Premium With VC Investors

There’s a refrain I’ve heard several times from venture-backed entrepreneurs: successful startups will command an even greater premium at time of sale if the company is venture-backed, everything else being equal. Some might argue that it’s self-serving for the venture community to promulgate the idea but it makes sense considering an entrepreneur might do one…

Physical Atlanta Startup Village Idea

Atlanta has an amazing resource in Tech Square, on the outer edge of Georgia Tech’s campus in Midtown. Tech Square has all the amenities wanted in a startup hub: highly ranked engineering school, great walkability for serendipitous interactions, easy proximity to public transportation including a subway station, many restaurants, tons of creative-class jobs, Starbucks, Barnes and…

Entrepreneurs That Ride Major Trends

Recently I was talking with a successful serial entrepreneur and he commented that he looks for major trends when deciding on his next business. He described it as finding a big sand box that he likes and digging around in it until he finds a great opportunity — I agree completely. I like to think…

SaaS Cost of Goods Sold for Startups

Cost of goods sold for Software-as-a-Service (SaaS) startups seems like it should be a straightforward topic but there are a number of different conflicting reports online. According to Wikipedia, cost of goods sold “refers to the inventory costs of the goods a business has sold during a particular period.” Of course, due to the nature…

Angel Investor Economics on a $30 Million Exit

Recently a strong Atlanta technology company had a great exit with only angel investment and no venture investment. Not knowing any particulars of the deal, I think this is an instructive example to theorize on the economics of an outstanding angel investment. To make it simple, let’s assume a $30 million exit on $3.5 million of…

SaaS Valuations and NTM Multiples

Software-as-a-Service (SaaS) valuations continue to do well in the public markets even after other technology companies like Facebook and Zynga struggle. One valuation metric for SaaS startups that isn’t talked about as frequently as it should is a multiple of the next twelve months (NTM) revenue. One of the reasons a forward looking revenue multiple…

Death to the $700k Seed Round

The $700k seed round, as it’s currently known today, needs to die. Here’s a common scenario: entrepreneurs scrape together $50k from friends and family, build a prototype, sign three customers or LOIs that are from warm intros, use the modest progress to raise a $700k seed round, spend all the money in 12 months, still…