About 10% of startups will fail in their first year. Between years two and five, approximately 70% of businesses will finish.
But those numbers don’t matter when you’re making a presentation: Investors expect to see a business plan that describes how you plan to reach profitability in 3-5 years.
Legal Counsel/Anthony Mellen writes, “As unfamiliar as it may sound, there are a few key things to keep in mind that will ensure that your financial model is a powerful tool for you and investor-ready as well.”
Full TechCrunch+ articles are only available to members
Use the discount code TCPLUSROUNDUP To save 20% on a one- or two-year subscription
In this detailed primer, he shares a framework for creating a 60-month bottom-up financial plan that accounts for early fixed expenses such as R&D and marketing, which lead to high burn rates within the first 12-18 months of operation.
“Remember, the goal here is to show a thorough understanding of your market and how your business scales, which is then reflected through the various assumptions you use to build the model,” Mellen writes.
Thanks a lot for reading,
Walter Thompson
Managing Editor, TechCrunch+
@employee
If you raise investment capital, you have to pay yourself
Image credits: Leah Galimzyanova (opens in a new window) / Getty Images
What is the appropriate salary for the founder of an early stage startup? Should they get paid at all?
Some investors are urging entrepreneurs to forgo their paychecks, says Hajjan Camps, but “not being able to afford a mortgage, rent (or) car payment” will have a material impact on a company’s chances of success.
“As an investor in these startups, it is your duty to help the startup reach this point in the shortest possible time,” he wrote.
“Telling the founders not to get paid backfires wonderfully on so many levels.”
Vote for TechCrunch at the Webby Awards!
Image credits: Michael Loccisano (opens in a new window) / Getty Images (photo modified)
Two TechCrunch podcasts, Chain Reaction and Found, have been nominated for Webby Awards in the Best Technology Podcast category.
Cast your vote before Thursday, April 20th!
In the VC’s new normal, builders will win
Image credits: Lyrics (opens in a new window) / Getty Images
Large venture capital firms secure deals by using a complex mix of strategy, research, and relationship building, but “looking deeply into each founder’s vision and initiative is the only way forward,” says Will Robbins, general partner at Contrary Capital.
With so much capital so readily available, “we will never go back to the days when VCs can win being the only term paper on the table,” writes Robbins, who shares his view on aggregating deal flow, building a technology stack, and the productiveization of “limited entrepreneurs who think about the next decade”.
With valuations of crypto startups back on the ground, big investors are looking for bargains
Image credits: Bryce Durbin/TechCrunch
Several large crypto funds launched in the past two years are still actively deploying capital and looking for additional opportunities, Jacqueline Melnik reports.
To get a sense of what they’re looking for and the trends they predict in 2023, I spoke to:
- Lydia Chiu, Vice President of Business Development, Ava Labs
- Tushar Jain, Managing Partner, Multicoin Capital
- Peter Knies, President of the Venom Foundation
- Ariana Simpson, General Partner, Andreessen Horowitz
RevOps Unleashed: 4 tips that help teams filter out noise and focus on the big picture
Image credits: Mirage J (opens in a new window) / Getty Images
There isn’t a single person who can manage a B2B SaaS sales operation today, which is probably why Head of Revenue Operations is #1 on LinkedIn in Rise’s 2023 Job List.
To take time back from mundane tasks so RevOps teams can handle “larger, more intensive projects,” COO Rattle Apoorva Verma shares recommended tactics for training salespeople, finding places for automation, and ideas for writing down “every critical business process.”
When your startup fails
Image credits: Bohdan Skrypnik/Getty Images
When a fighter doesn’t have a reasonable chance of winning the match, throwing in the towel is the smart move.
The same is true for startups that fail to thrive: after a certain point, an entrepreneur can do himself more harm than good by relentlessly pursuing his goal.
To learn more about what happens when an organization closes its own company, Ron Miller interviewed Lillian Cartwright, co-founder of ShelfLife, a B2B marketplace for wholesale ingredients.
Cartwright raised a $3 million seed round in 2021, but after approaching 90 VCs in the summer of 2022, “we haven’t been able to raise anything,” she says.
“So in the first week of February, I notified investors in my regular regular update that I was closing the company and returning capital.”