Elizabeth Holmes aimed to revolutionize the blood test industry and was once regarded as a wunderkind that would become the Steve Jobs of the biotech industry. The company she founded, Theranos, was seen as one of the “unicorn” startups in Silicon Valley, a term given to startups that are privately-held and valued at $1 billion or more.1 Unfortunately,…
Tag: Venture Capital
Regulation Crowdfunding: The Results Are In and the Future Looks Bright
Crowdfunding has become a common way for entrepreneurs to secure financing. In 2015, total global crowdfunding raised an estimated $34 billion in financing, compared to $2.7 billion in 2012. 1 With such a large impact on the economy, it was only a matter of time before industry regulation was enacted. On May 16, 2016, Regulation Crowdfunding…
The Unicorn’s Dilemma
For startups seeking to join the ranks of “unicorns”- private companies with billion-dollar valuations- the venture capital climate has never been more favorable. The number of private companies receiving billion-dollar valuations has ballooned in recent years1 and as of 2015, a record 41 companies have received exactly such a valuation.2. However, these sought-after valuations are…
Too Big To Succeed: How Liquidation Preference May Be Driving Unsustainable Valuations
When startups begin to negotiate for venture financing, most are primarily focused on maximizing their valuations. While founders are wise to focus on the valuation term given its importance to the company’s public perception and financial position, that focus may ultimately be leading founders to undermine their own interests. When venture capitalists (VCs) invest in…
Is Yik Yak Next?
Yik Yak, the anonymous messaging app sweeping college campuses nationwide, recently announced that it has closed a $62 million round of financing led by Sequoia Capital. Mike Isaac,1 This was the messaging company’s third round of venture funding in the past seven months, bringing its total funding raised to approximately $73 million.2 While to outsiders…
Lyft Versus Uber: The Competition Revs Up
The fierce competition between rival ride-sharing services Lyft and Uber is revving up for a battle in the courtroom. In a complaint filed with the San Francisco Superior Court on November 4, 2014, Lyft alleges that former Chief Operating Officer Travis VanderZanden breached his confidentiality agreement and fiduciary duties when he joined Uber after leaving…
Alternate Methods of Paying for College Tuition and Dealing with Our Nation’s Debt
The college graduation class of 2014 graduated with the highest average debt of any college class in the history of our country.1 College student’s student loan debt now amounts to $1.2 trillion dollars, and economists and business leaders are beginning to worry that student loan debt, which amounts to 6% of the total national debt,…
Unsustainable Burn Rates
“No one’s fearful, everyone’s greedy, and it will eventually end.”1 Startup companies are burning through cash at unsustainable levels. Almost all failed startups cease to exist because cash runs out, and nearly all startups get close to running out of cash at some point, regardless of outcome.2 Every startup company is fueled by cash investments.3…
(Jump)start Our Business Startups: The JOBS Act 500+ Days Later (Part 2)
Two years, one month, and three days have passed since President Obama signed the Jumpstart Our Business Startups (JOBS) Act into law. A product of rare bipartisanship, the JOBS Act was praised on both sides of the aisle as improving access to capital for US small business, which would in turn drive economic growth.1 While…
Demand Dividends: An Emerging Alternative to Equity Financing
Definition of Demand Dividends Demand dividends are an investment vehicle where the investee makes periodic payments to the investor based on a percentage of free cash flow, up to an agreed upon multiple of the investment.1 Demand dividends factor the fact that an enterprise can grow revenue without generating cash. Payments are made after a…