VC Masterclass Double Feature
Don’t Raise VC Money Before You Understand Unit Economics
From: Itay Sagie, startup advisor and founder of VCforU.com
The standard pitch meeting will see VCs asking a predictable array of questions designed to gauge a startup’s unit economics and general financial health. The metrics are intended to determine whether a company can be valued at 8-10x revenue during an exit.
This is a rather new development, as investors previously looked only at growth and ignored costs more or less completely. The heightened scrutiny before IPOs cost investors dearly, as they discovered that their loss-making portfolio companies would receive substantially lower valuations on public markets compared with private ones. There are three main rules for healthy unit economics:...
Your Responsibility as a Manager is to Hire 7 People
From: Tomasz Tunguz, partner at Redpoint Ventures
Tomasz’s advice applies to any segment of a company, be it engineering, marketing, etc. The basic premise is that a strong managerial core will benefit the hiring party, irrespective of whether talent comes from internal or external hires. He gives three reasons:...