Entrepreneur Dysfunctions in Cartoons: Concept vs. Business Funding

By now, I think I have got through to you: Investors fund businesses, not concepts.

So how do you actually build a business without funding?
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Entrepreneur Dysfunctions in Cartoons: Who Makes More Money?

Jim and Sarah’s conversation above is a very common conversation among entrepreneurs.

Next time, you encounter an entrepreneur who brags about how much money he has raised, ask a follow-on question: How much ownership do you have left in the company?
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Ownership Matters: How To Maximize Valuation

In an earlier Unicorn series article, I profiled Tableau Software, and how the company raised its Series A financing at a pre-money valuation of $20 million. In this piece, we look at RightNow. Series A valuation? $130 million. This piece is an excerpt from my book:Entrepreneur Journeys: Bootstrapping: Weapon Of Mass Reconstruction.

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May 20th Event – Inside the Mind of a Venture Capitalist

The Silicon Valley AMA is hosting an event, “Inside the Mind of a Venture Capitalist,” on Tuesday, May 20, from 6:00 to 8:30 p.m., at Dell, 5450 Great America Parkway, Santa Clara, California, 95054. Come hear from a panel of leading venture capitalists as they share their insights on what’s resonating now, trends to watch and what they look for from a marketing perspective:

• Jim Lussier, Managing Director, Dell Ventures
• Sramana Mitra, Author, Serial Entrepreneur, Founder 1M/1M
• Benjamin Tseng, Vice President, DCM
• Moderator: Preethy Padmanabhan, Sr. Mgr, Solutions Management, Marketing, Dell

REGISTER HERE!

Starting Unicorn Companies: Tableau Software

Last November, Aileen Lee with Cowboy Ventures wrote a post on Techcrunch titled Welcome To The Unicorn Club: Learning From Billion-Dollar Startups. In it, she offered a list of companies that have had billion dollar exits, and analyzed some of the common threads.

In this series, I would like to look at some of the ‘unicorn’ companies that she identified, as well as some others that I know well, and one by one, explore their early stage entrepreneurial journey. The case studies we explore are all from the 1M/1M Entrepreneur Journeys series of interviews.

We begin with Tableau Software, currently trading in the public market under the symbol DATA with a ~$3.5 billion market cap.

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YCombinator’s Further Evolution Into A Seed Fund

YCombinator has just announced that it will replace its $17k for 7% pre-seed equity investment with a $120k for 7% seed investment deal. From the WSJ:

Previously Y Combinator’s standard deal was about $17,000 for 7% of the company, plus an $80,000 note from a group of venture investors and firms eventually known as YCVC, which most recently included Andreessen Horowitz, General Catalyst, Maverick Capital and Khosla Ventures.

So, startups will now get $120,000 from Y Combinator, instead of $97,000 from a combination of Y Combinator and select venture firms. That means the implicit valuation for YC startups rises to about $1.7 million from the previous $1.4 million (YC might deviate from the standard deal “in exceptional cases,” presumably for an ultra-hot startup that merited a higher valuation).

The $120,000 will come directly from YC and a fund it manages that has limited partners, though the accelerator itself has no limited partners, Altman said.

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The Funding of Avaz: Some Reflections

Harvard Business Review Series on the Seed Capital Gap