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Companies valued purely based on revenue streams alone will typically sell for 2x to 5x their yearly revenue. This is a big part of why it's SMART for most con
by solve 11y ago
Companies valued purely based on revenue streams alone will typically sell for 2x to 5x their yearly revenue.
This is a big part of why it's SMART for most consumer startups to avoid earning revenue at all. Doing so will often cap their potential exit price, in practice.
Still, this at least was at the higher end, for purely revenue-based valuations.
- msie 11y agoHeh, Silicon Valley (the show) talks about maintaining a pre-revenue state.
- TheOtherHobbes 11y agoHow many SV VCs would have turned him down because his team and his pitch deck weren't cool enough, and they "weren't looking for investments in that sector"? I'd love to see more examples of successful bootstrapped and/or lifestyle businesses, but - unlike PoF - most of them they don't get the same PR as the mainstream startups, which makes them harder to find/follow.
- solve 11y agoLikewise, a cap on a convertible note may be used by investors in the next round as an anchoring point to restrict the valuation in the next round. Both of these effects are what a layman would think "shouldn't be real". From experience, both are extremely real. Too bad that the TV shows present these as sort of jokes. That disappoints me. No joke, these are dead real.
- jsprogrammer 11y agoJokes are often about reality.