You asked, Troy answered! When you are starting to think about how much money you should raise, you probably start to develop a range in your head. In episode five of MATH 101, Troy digs into the strategy behind which side of that range you should push for to create momentum and excitement around your company. Additionally, he offers advice on how to best communicate to funds on how you will use their capital.
It sounds obvious when you say it out loud: if you show an investor a big pot of gold and a low-risk path to getting that pot of gold, he/she is going to invest. In episode four of MATH 101, Troy explains how to best illustrate this in your VC pitch. If you follow this advice, your audience will be listening!
In episode three of MATH 101, Troy highlights the risk of raising too much capital. Remember, you want to fuel growth, but you don't want to completely diminish the value to you and your shareholders!
In this example, Troy assumes a $50mm exit -- the 2017 average for N. American and European exit activity -- across three different scenarios: bootstrapping, raising too much, and raising the proper amount.
In episode two of MATH 101, Troy digs into when the best time to raise capital for your young business is. In entrepreneurship, timing is everything, and it's more of an art than a science. This video should start to demystify where in the process you should think of raising money, enabling you to play chess while your competition is playing checkers.
At MATH, we want help build a robust entrepreneurial ecosystem. With years of experience in operating, fundraising and advising CEOs, we have a lot of advice to give. So, we are introducing a new video series -- MATH 101 -- with the intention of democratizing the learnings we've gathered over the past few decades. Enjoy our first post on how to fundraise ahead of the infamous "valley of despair."
Over twenty years ago, a mentor of mine gave me some advice that I have never forgotten; I call it the “New York Times Test.” He declared his expectation that anything he said, wrote or did could end up in the New York Times one day, and he used that as a guide and to only say, write and do things that he would be proud of when they appeared on the front page.
We’re not even talking about the right causes of the diversity problem in tech yet.
For the second year now, VC firm First Round Capital has released a fantastic “State of Startups” annual report. First Round surveyed over 700 founders and CEOs of technology startups to get their impressions on the current landscape of the startup world. The survey covers things like whether or not we’re in a bubble, how the IPO market is looking, and--yes--diversity in the tech world.
If you haven’t had a chance yet, you should definitely check out the report. It’s a relatively quick read and will give you a good fix for how folks are feeling about the environment we’re in today. But I want to dig into one particular topic that is near and dear to my heart: the fact that only 3% of venture funding goes to women and a measly 1% goes to people of color.
In the first three articles in this series, we looked at the big-picture motivation for startup financial modeling, why it’s important to start with your assumptions, and how to practically build your income statement and custom detail tabs. Today, we’ll finish off the series by examining how to construct the final components necessary to complete your model, including a quick discussion of unit economics and how to best keep your model updated. Feel free to ping us on Twitter (@wclittle, @troyhenikoff) with any questions.