The document discusses the importance of innovation and growth in startup valuation, emphasizing that growth requires careful capital management and understanding of market dynamics. It highlights critical considerations across different stages of a startup, urging founders to focus on sustainable value creation and performance-driven valuation rather than hype. A case study of RightNow Technologies exemplifies bootstrapping and prudent financing strategies leading to significant acquisition success.

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The Fed Awakens –
Use the Force
DECEMBER 2015
Including A Case Study For
Bootstrapping To $1.5bn

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IT’S ONLY .25%

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Where do we go from here?
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SHOULD YOU EVEN
CARE?
• Innovation drives
growth
• Growth drives
valuation*
• Valuation drives returns
(*hint: this is one thing that might change!)

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Basic questions…
 How much capital does your growth require?
 What will be your cost of capital over the lifetime of your venture?
 Can you afford to grow at all costs?
 When will growth not be the basis for valuation?
 What if factors beyond your control impact your growth?

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Early to late stage considerations
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Stage Impact
Just
starting
Your startup needs a vision for impact over the long run that's more important than any
rate hike or economic cycle.
Funded Plan your spend to ensure you meet your milestones ahead of any expectation of your
next fund raise.
Look for repeatability to show why more investment would yield results.
Growing Check that your assumptions for growth aren't based on free money. Look to
understand how your business model will ultimately generate value, free cash flow and
at least identify a path to profitability at scale.
Raising
capital
Pay attention to only one value, that which your customers pay you for. Let your
valuation be driven by performance not hype. Earn it don't yearn for it.

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Early to late stage considerations
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Stage Impact
Late stage Many late stage valuations are a mirage. Revalue yourself before the market does and
in particular, take time to value your most important capital: human capital. Price your
options to reward your team when the mirage is gone. Be prepared to raise capital
from traditional sources. Hedge and mutual funds will be the first to fade over the
horizon.
EVERY
STAGE
Remember: the only money that's not a mirage is the profit you receive in cash on the
value you deliver to customers so pace your funding to meet market opportunity, and
always try to beat the expectations you set.
Regardless, keep your stakeholders in sync with where you really are along the way.

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DISRUPTION IS THE
FORCE OF INNOVATION
Just as necessity is the mother of invention
great entrepreneurs use it!

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THE MOST COMMON SOURCES OF
STARTUP FINANCING
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How much money should you raise?
- Zero?
- No more than you need?
- As much as you can get?
Does it even matter ? read more here
http://mjskok.com/resource/how-
much-money-should-you-raise

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CASE STUDY: RightNow
 Founded by Greg Gianforte in 1997, RightNow Technologies is a
software company that was acquired by Oracle for $1.5 billion in 2012.
Though he eventually raised venture capital financing, Greg began with
as little as $5,000 of his own money and continued to rely on personal
savings and friends and family …
 Read on here http://mjskok.com/news/bootstrapping-much-financing-
strategy-it-cultural-ploy
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