You Can Take Your IRR and Shove It

by Tim Berry

In pitches and presentations everywhere, bright young entrepreneur tells cynical skeptical investors, usually with great pride and flourish, about their fabulous IRR for their great new startup. I get a gag reflex. IRR stands for internal rate of return. You can check wikipedia or investopedia for what that’s supposed to mean and how it’s calculated.... Read More »

Long-Term Successes Don’t Leave Out Investors

by Tim Berry

For an investor in a startup, return on investment is as simple as writing a check now and depositing some related money later.  And since startups are risky, you’d expect to hit big when you win because you’re so much more likely to lose. Does that make sense? So when the angel investor writes a... Read More »

Mark Suster: Be a Line, Not a Dot

by Tim Berry

This morning I added Mark Suster’s Both Sides of the Table to my blogroll here because his post Invest in Lines, not Dots reminded me that I’ve been meaning to include his blog for a long time. His idea here is something everybody should understand. His single line chart here,combined with his title, makes the... Read More »

How Much Money Do I Need for My Startup?

by Tim Berry

It’s an obvious question. And if you’re looking for startup investors you’d better be able to answer it well, and quickly too. No wandering eyes. No doubt. If you’re doing a pitch, have a slide for it. And be specific. I liked this from Ben Yoskovitz’s Instigator Blog on Use of Funds: …most descriptions of... Read More »

Angels vs. VCs on Business Pitches

by Tim Berry

Over the weekend I caught Business Insider’s Five VCs Explain What They REALLY Think About Your Pitches. It’s a great post, gathering points together from discussions with several high-end VCs. If you’re looking at venture capital, read it. Part of what they said reminded me that angel investors and VCs have a lot in common.... Read More »

True Story: Why We Bought Out Our VC Investors

by Tim Berry

It started in 1999. We had already grown Palo Alto Software from zero to more than $5 million in annual sales in five years, without investment. But valuations had gone crazy, and our bplans.com site was already getting millions of visits every month. So we decided to look for venture capital to grow the company... Read More »

Are You Planning to Sell Boxes or Hours?

by Tim Berry

All of these are just “in general” points. There will always be exceptions. But still, it’s good to understand the huge difference between service businesses and product business. Selling hours has advantages, but selling boxes does too. And there are huge differences, things I think you need to understand. My wife and I spent several... Read More »

Not the Customer’s Job to Know What They Want

by Tim Berry

There was a nice short video on TechCrunch the other day, quoting Mark Zuckerberg, John Doerr, and two other industry leaders on how much the iPad has changed “everything.” I picked it up because of what John Doerr says near the end. The video snippet I’ve embedded here skips directly to my favorite part, at... Read More »

Why Market Numbers Are Like Patents: Good, But Not To Be Believed

by Tim Berry

I was enjoying Chris Dixon’s Size markets using narratives, not numbers when I realized his point is a lot like a point I like to make about patents: good to have, but not to believe in On sizing new markets, with startups looking for investors, Chris says: The only way to understand and predict large... Read More »

Pot of Gold

True Story: Dollars vs. Eyeballs in Business Valuation

by Tim Berry

It was a warm late-spring day in 1999. I sat in my office with a venture capitalist, my lawyer, and my son. The sun beamed in the patio outside my office. We talked about Palo Alto Software and its web subsidiary bplans.com. At one point the VC said: You wouldn’t be an attractive investment for... Read More »