The start-up financial control loop Start-ups need to keep tweaking their activities on the basis of new information they get, altering their business model as they go. A start-up still needs to have a formal process for this exploratory way of operating that will help it in: planning and structuring its activities; acting on desired pursuits; moni

The question will be: are you creating as much value as you set out to?

The break-even point is the point in the operations of an enterprise when its revenues and expired costs are exactly equal. If an enterprise keeps running at this level of operations, it will make neither a profit nor a loss. We can use break-even analysis as a useful tool for visualizing future performance scenarios for a business, and this can fe

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

Sometimes, angel investors agree to a valuation cap as a way to reward them for the risk they have taken. In our example, a cap was set at €1,000,000. With the pre-money valuation of €1,800,000 calculated above, the angel would get the shares at a price of: €1,000,000 / €1,800,000 = 0.56 × €4.00 = €2.22 That’s quite a discount! And from the money l

Again, what’s essential is that your accounting intelligence must help you manoeuvre your start-up in a very specific way, through close tracking and monitoring of your experimental activities.

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.

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.