• Before the CPA community declares me a persona non grata let me express that I have the greatest respect for what accountants and bookkeepers do every day. We need them now more than ever as it looks like regulation is only going to get worse before it gets better. That said, if you plan on raising capital and achieving world domination with your startup, you need a strategic CFO on your side, not an accountant. Allow me to briefly explain the two fundamentally different types of finance professionals. On the one hand, you have the before mentioned accountants, tax preparers, bookkeepers and controllers. Let’s call these Type 1 finance professionals. On the other hand, you have the strategic finance professional who is versed in fundraising, M&A, investment banking, etc. Let’s ca

  • I’ve been approached many times by founders with their business plans asking me for introductions to other venture capitalists. In most cases I had to say no because the pitch materials were below standard or incomplete. So what does a complete information package for fundraising look like? Obviously, every company and situation is different. A seed stage company that has no revenues or product yet requires a lot less due diligence than one that is raising a Series B round. However, here are the six things every company should have in some form or fashion before approaching investors: 1. Financial Forecasts Yes, I know, no one can predict the future, but you do need a five year forecast model with at least the first 24 months on a monthly basis. This forecast needs to be bottom-up. It

  • Groundbreaking, earthshaking and yes, disrupting.  The “Yo” app is here.  First mentioned in a Financial Times article last Tuesday (no link, since they make you sign up) it quickly grew and cracked the top 150 free apps in iOS by Wednesday night. “Yo” is simple.  All it lets you do is send a single message to your friends.  Yes, you guessed right, that simple message is “Yo”.  I got hooked Thursday night but signed up exactly when the app got hacked.  A few “Yo”s later I was not able to communicate any more.  Meh! Wait!  Did somebody say “Meh”?  Boy, do we have an app for that! Unlike its larger cousin, “Meh” so far is self-funded.  “Yo” received third party funding to the tune of $1 million, plus $200k put in by its genius Tel Aviv-based founder,

  • In case you haven’t seen the news, Uber just raised a private round of $1.2 billion ($1.4 billion after a secondary round) at a post-money valuation north of $18 billion (can someone explain the difference between pre and post-money to the Huffington Post, please?). That’s insane.  A valuation bubble inside the Silicon Valley bubble.  The Uber Bubble. Don’t get me wrong.  I love Uber, even though the German in me cringes every time I see the spelling (it should really be Über with an Umlaut, people, how much cooler would that be?)  Despite the butchering of the spelling, I use the service whenever I can.  I am tired of dirty cabs, drivers who have no idea where they are going, or who don’t care about providing a pleasant service experience.  And yes, SFO airport authoritie

  • Bottoms-Up!

    No, I am not encouraging you to have a drink right now (but feel free if it’s past Happy Hour in your time zone!) I wanted to briefly point out the difference between a bottom-up and a top-down valuation approach for companies. We run into this topic frequently with company founders who too often rely on the top-down approach. The top-down approach uses a percentage of the overall market size to forecast revenues. For example, if the total market size for your product is $10 billion annually and we forecast to have 2% of that market next year, our revenues would be $200 million. The bottom-up approach is a little more complicated as it translates how we are going to generate revenues into formulas and assumptions. For example, one bottom-up approach is to give every sales pers

  • My name is Andreas Kraemer and I am a founding partner at CENAK Consulting L.P., a boutique investment bank focusing on the needs of early stage growth companies.  I have a successful track record of over 16 years in venture capital investing, deal structuring and M&A. One question we get asked over and over again is how to structure a company initially.  There is the question of the legal structure, which I will discuss in a later posting.  Many founders ask me what the “right” ownership structure is when two or more partners are involved. The answer is simple:  there is no “right” structure. There are many factors to consider in structuring a company’s ownership.  Financing is just one but certainly an important factor.  Other questions to ask are: How much does ea

  • Hey Ladies! What’s the score? A question often raised in the venture capital community is around the lack of women at the forefront of the venture capital headlines.  We all assume that since men are hard-wired (testosterone driven) to be bigger risk takers than women, their leadership will result in bigger returns.  After all bigger appetite for risk equals bigger possible returns right?  Well, it can also result in more strike outs than home runs. A study by Hedge Fund Research found that, from January 2000 through May 31, 2009, hedge funds run by women delivered nearly double the investment performance of those managed by men.  Female managers produced average annual returns of 9%, versus 5.82% for m

  • Underdog

    The news these weeks has been filled with dramatic stories of natural disaster and widespread unrest across the global landscape.  Naturally, we are all focused on thinking of ways to lend support to Japan and how the call for reform and resulting violence in the Middle East will impact us. I’m certainly feeling change at the pump, aren’t you? The broader market is reacting to these events with uncertainty, resulting in volatility in the markets. But, out of crisis and chaos come opportunity.  In moments like this, innovation is required in response to changing market needs and could quite literally “save the day.” Innovation is at the heart of both of these news events.  Cell phones and social media have been lynchpin to communications across the Middle East.  The same tech

  • Let’s face it, if you could predict the future, would you be reading this right now?  Would you be on LinkedIn trying to network or learn something about your business if you could forecast, say, Google’s stock price?  We didn’t think so. Nevertheless, there are compelling reasons why you as a business owner seeking funding from a VC or other sophisticated investor need to prepare a financial model.  Here are some of them. A financial model ultimately helps you develop and refine your business plan.  It forces you to break down your value drivers into milestones and benchmarks.  Thus, it helps you identify those value drivers, set goals and analyze your company’s underlying business proposition. A well structured, bottoms-up financial model let’s you analyze what-if scena

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