Second, if you know you’re creating value, you’ll then also need to work out if you’re where you should be. And knowing where you should be means having some forecasts and predictions that crystallize your aims.

properly. Suppose you launched a business six months ago. Your business now needs €600,000 from a venture capital investor who wants 25 per cent ownership. We will call this scenario Series A. If an amount of €600,000 buys 25 per cent of the business, the post-money valuation is: € 600,000/0.25 = €2,400,000

First, you want to be able to work out if you’re getting more out of your business activities than you’re putting in. In other words, are you creating value?

We will learn: about the start-up financial control loop; how we work out financial contribution and track its impact on the start-up; why it is crucial to know what your variable and fixed costs are; how to achieve break-even points; ways to use financial intelligence to guide operational and strategic action.

This means that there might be pressure to achieve break-even quickly, but this needs to be balanced with the pursuit of market share.

Unlike traditional businesses, tech start-ups operate within continuous feedback loops where control, action and decision become woven together. Ongoing experimentation becomes vital to move a start-up forward. You need mechanisms for reacting to new information to keep the start-up on a positive course. This

business. That means that the convertible note converts into preferred shares when the Series A funding round closes. The conversion discount lets the angel investor convert the loan into shares at a price 20 per cent lower than the amount the Series A investor paid. Convertible notes are useful because, when getting seed money early on, it can be

With many tech firms, the focus has moved to the demand side. They use technological innovations to create and expand networks. The growth of networks becomes self-reinforcing, because users get value out of connections and so connections grow.

The key things to think about when it comes to incremental costs are (a) whether costs differ between the alternative courses of action you have and (b) whether these costs imply future incursions. These are the only costs that are relevant for doing this kind of analysis.