Managing a Startup in a Downturn
In running a startup there will be upturns and downturns. Managing a downturn takes a different approach from the upturns. First, seek advice and guidance from others such as investors, mentors, and CEOs. Don't delude yourself into thinking it's better than it is and that it will turn around soon.…
Varying the Terms of the Raise
In a fundraise, one typically uses the same term sheet throughout the raise. From time to time, investors will demand certain rights and conditions. If there are no investor representations, then you may be able to do so. For some investors, you may need to vary the terms of the…
How to Use Comps to Value a Startup: Part 2
In valuing a startup for an investment, it's useful to find valuations by looking at similar startups. This technique is referred to as 'comps' which stands for comparable. This method looks for companies in the same sector and analyzes both exits and investments to determine the current valuation for the…
How to Use Comps to Value a Startup: Part 1
In negotiating the valuation, the investor can use current market comps or comparables to set the initial price. By looking at companies in the same sector and stage, one can find the range of valuations. From there, the investor can raise the valuation based on the values the startup has…
Warning Signs That the Startup Is in Trouble
As an investor, you can often see warning signs of trouble in small ways before they become full-blown in the startup. Here are some of them: - The CFO quits unexpectedly - The paychecks to employees bounce and it's called an "accounting error" - Information from the CEO becomes limited…
Focus on the Must Dos
In running a startup, it's important to focus on the essentials of the business. In your strategy planning, identify the Must-Dos. The Must-Dos have to get done. Beware of the Nice-to-Haves. If you hear yourself saying "wouldn't it be nice if we did this?", it most likely will be taking…
Employee Assessment
Running a startup is hard work. The team must work long hours and often at low pay. This can wear down the team. The CEO should monitor the employees for burnout. Burnout can be caused by several factors: - Work overload -- too much work and too little time to…
The Sales Learning Curve
Startups seek to grow as fast as possible. One of the key barriers to growth is the Sales Learning Curve. This learning curve is a combination of the product, marketing, and sales working together to create customer acquisition and a product-delivery system that achieves scale and can be maintained. In…
Choosing the Right Channel
In launching your startup, you'll need to determine which sales channel is best for your business. The sales channel is how you reach prospects and then turn them into customers. Most first-time startup founders envision a channel and then assume that's the best path. Experienced founders know you must research,…
Choosing a Co-Founder
Choosing a co-founder is an important step in launching your startup. Consider these points before finalizing your decision: - First, understand what are the businesses' needs and what skills must be recruited. - In the early stages of the startup, you need a complete team -- someone building it and…
