This post is not about the pro’s and con’s of raising venture debt for startups, it is about how to go through the process of deciding whether to take venture debt at all – and how to do it.
Each company is unique and I have seen venture debt extend a company’s runway enabling them to get to cash flow b/e without founders taking any more dilution; and I have seen companies not hit their plans and the ramifications this means when the note is then called. But it is a pretty common instrument and even Facebook took venture debt early on before the cloud existed when they needed to buy servers. And in my experiences with the lenders that we have worked with, they are always much more flexible when covenants are close to being breached or when there is a workout situation than your typical risk averse banker. They also tend to work quickly and will be ready to give you a termsheet in under two weeks after your first meeting. Continue reading →
We’ve all seen this chart in a board meeting or in an email from the CEO or VP Sales.
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Someone shared the latest YouGov Entrepreneurs Poll with me recently and the findings are very interesting.
They interviewed a select group of founders about their experiences working with different VC’s and asked them about what they wanted from their VC and what they were actually getting from them. Here are some of the key findings: Continue reading →
Mikkel Svane is one of my personal heroes. He has quietly built Zendesk into an extraordinary business which IPO’d earlier this year at just under a $1b market cap and which today is valued at nearly $1.8b – and growing fast.
They have over 50,000 customers globally and have grown revenues substantially over the last few years – $38m in 2012, $72m in 2013 and are on track to hit $125m this year! It’s nothing short of amazing and this is why I was so excited to learn that he had written a book to tell the Zendesk story. Continue reading →
Business development is one of the most common titles at a startup for the first non-technical hires. It’s also one of the least understood roles and in many cases results in wasted efforts and wasted burn.
BD can have many different meanings for many different companies. There are business development reps (BDR’s) at saas companies who prospect at the top of the funnel. There are BD execs at internet companies like Spotify who may only close one or two large partnerships a year when they are first getting started. There are BD execs at ecommerce companies who have a mix of growth, product and marketing responsibilities. Continue reading →
I’m obviously a huge fan of Clay Christensen’s disruptive innovation theories and have written about them previously. In the Innovator’s Solution there is a quote,
“…just as (a company) needs to develop products for the circumstance and not the customer, the (company) needs to communicate to the circumstance, and not necessarily to the consumer.”
What he is saying here is that you shouldn’t be targeting customers of your product by segmenting them into demographics/geography. Rather, you should be targeting the job that your product gets done.
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Many successful enterprise software companies have significant channel strategies. What is a channel strategy? To me, it is about how to leverage an external network of partners that can resell another company’s product, refer leads to that company, or enter into formal partnerships to go after deals together (specifically when one company has a killer feature that the other company’s product doesn’t have).
Another way of putting this is: sell with, sell through, sell to.
I have seen numerous startups try and fail to set-up their own channel strategy early on – early typically being less than $1-3m ARR. Should they have explored these opportunities this early on? Continue reading →