Venture Capital

How Much Money Do I Need for My Startup?

July 29, 2011

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 the full article →

Angels vs. VCs on Business Pitches

June 20, 2011

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 the full article →

True Story: Why We Bought Out Our VC Investors

June 1, 2011

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 the full article →

Are You Planning to Sell Boxes or Hours?

April 29, 2011

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 the full article →

Not the Customer's Job to Know What They Want

April 27, 2011

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 the full article →

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

December 17, 2010

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 the full article →

True Story: Dollars vs. Eyeballs in Business Valuation

December 13, 2010

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 the full article →

Top 10 Business Plan Mistakes #8: Making Financing the Goal

October 22, 2010

(Note: this is the third of a 10-part series listing my revised top 10 business planning mistakes. The list goes from 10, the least important, to 1, the most important.) It’s just too damn bad that so many entrepreneurs assume to start a business you do a plan, get financed, and then you start. As [...]

Read the full article →

Big Mistake: Huge Unbelievable Sales Numbers

April 14, 2010

Jeffrey Moskovitz added an important comment to my big mistake post from last week: I read an blog yesterday, written by someone I respect, who asserted that investors know and even EXPECT that projected sales and profits will be overstated. Aware of this expectation, the entrepreneur plays the game by inflating the numbers, fully aware [...]

Read the full article →

No, You Can't Just Pull Numbers Out of The Air

April 9, 2010

Question: I’m in the process of writing an Internet startup business plan to present to prospective investors. The site isn’t live so I don’t even have a basis for speculation with respect to the financials. I would essentially be pulling numbers out of the air. Being that the Internet business as it pertains to advertising [...]

Read the full article →