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Accounting and Finance

155 results found

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Financing an Acquisition
7/12/2007
Summary:

This well-written article gives practical advice on how to think about acquisitions and five no-nonsense tips on how to do them productively for all concerned.

Go To Source (www.entrepreneur.com)
Getting Paid
7/12/2007
Summary:

Inc.com provides an excellent collection of 21 links to resources that can guide your management and collection of receivables.

Go To Source (www.inc.com)
Valuation Worksheet
7/1/2007
File Resource
Summary:

During a round of investment in seed- (start-up) and early stage companies, angel investors typically invest from $25,000 to $100,000 each. The round usually totals between $250,000 and $1 million, and the company valuations run from $1 million to $3 million. Collectively, the angels purchase from 20 to 40 percent of a company’s equity and seek a return of 20-30x over five years.

Since the Internet bubble burst, the pre-money valuations of seed-stage companies by venture capitalists have averaged between $1 million and $3 million. Angel investors tend to participate at earlier investment stages than VCs, so pre-money valuations for angel deals nearly always fall into this admittedly wide range. What factors within this range impact the valuation of a specific company?

The accompanying Valuation Worksheet provides entrepreneurs and investors with an empirical basis for deciding if a start-up company should be valued near the top or bottom of the range. It’s not designed to be used for definitive valuation calculations.

The Valuation Worksheet lists major factors and key issues to consider in judging the value of a seed (start-up) company. Note the following features:

  1. The major factors are listed roughly in order of importance.
  2. Each major factor has been assigned a weighted ranking. For example, the “Strength of the Management Team” is worth 30 percent while “Sales Channels” are worth 10 percent. Investors put greater emphasis on the management team and the size of the opportunity than they do other factors.
  3. Within each major factor, the impact of each issue has been assigned a valuation ranking from +++ (very positive) to - - - (very negative), to assist the investor decide the overall weighted ranking to be assigned to the valuation. Some factors, such as the size of the opportunity (scalability) and coachability of the entrepreneur, can be deal killers.

Entrepreneurs can use the worksheet to gain insights into what investors are looking for in a fundable seed-stage company and to identify factors that justify higher pre-money valuations. The worksheet is also a roadmap on how entrepreneurs can improve the fundability of their enterprises and increase the pre-money valuation.

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The 5-Point Plan to Check Out Potential Investors
8/7/2007
Summary:

Stolen software, too-high brokerage fees, out-and-out scams are just a few of the pitfalls entrepreneurs must avoid as they raise capital. This article explains key signs of trouble and what to do about them.

Go To Source (www.angel-investor-news.com)
The Art of Projections in a Dotcom 2.0 World
8/16/2007
Summary:

Facing facts and forgetting fantasies are vital to accurate forecasting for startups seeking outside investment. This highly practical blog entry provides eleven helpful tips for doing forecasts realistically and presenting them in ways that investors understand and appreciate.

Go To Source (blog.guykawasaki.com)
The Best Funding Source for You
8/16/2007
Summary:

This article provides an excellent framework not only for how to raise money but also for how to think about raising money. Key point: Always stay nine months ahead of your need for cash.

Go To Source (www.entrepreneur.com)
Communicating with Your Board: At-A-Glance Financial Information
10/18/2007
Summary:

For quick reference and review, present your board with a one-page summary of your company's finances at your quarterly meetings. Open-book management companies can use it for employees, too. This technique doesn't exempt you from standard financial reporting, but it does help key stakeholders more quickly see and appreciate the big picture.

Go To Source (www.2-speed.com)
Legal Fees: Start Swearing Now
10/18/2007
Summary:

Pulling legal documents from the internet may be quick, cheap, and easy, but keep in mind you get what you pay for. Sometimes more is less. An experienced, straight-talking start-up veteran provides three best practices about how to avoid mistakes, what you should pay, and how to negotiate fees.

Go To Source (www.burningdoor.com)
Using Scorecards With Your Board
10/11/2007
Summary:

A venture capitalist explains how key performance indicators (KPIs) are best compiled and used. They should be straightforward covering financial items and people, probably no more than 20, tied to specific managers, and coordinated by the CFO. Sales should be handled as a separate category.

Go To Source (www.vcconfidential.com)
Are VCs Simply Valuation Luddites?
11/8/2007
Summary:

The mysteries of how VCs determine company value can be daunting to entrepreneurs. This uncertainty is due, in large part, to the uncertainty of the valuation process itself. From the VC Confidential blog, here is a glimpse of what that process looks like.

Go To Source (www.vcconfidential.com)

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