The importance of optionality

MatrixBluePillRedPillIt seems like there is no end to the supply of venture capital these days. Funding rounds are getting larger. The time between funding rounds is getting shorter. For the most part this is all good. As a general rule, my advice to founders and CEOs is: raise what you can, when you can. And now is definitely  a time when companies can raise.

But…it’s important to be mindful of the path that you go down by raising more and more capital. In today’s land of plenty it can be tempting to double down before your company is truly ready. That can lead to issues if you don’t live up the expectations that come with all that money.

CBinsights recently reported a huge increase in the number of companies that have raised $3M *before* their Series A. As you can spreseriesa1ee, this trend is not specific to 2014. It’s been steadily rising for the past 3 years.  There’s a similar trend for companies that raise $6M before series A. Read More

Why this budget season was different

The FreshBooks finance team delivered the 2015 annual budget on Friday. As always, this was a big project and a big accomplishment. Most of the time, I’m pretty calm at work. But delivering the annual budget and related board package has historically been a more stressful time for me. But two things were different this time around:

Team

I am blessed with a rockstar finance team at FreshBooks. Without question this is the strongest team I have ever had. I often joke that I don’t “do” anything. They do it all.  Budgeting should be a team sport. The worst budgets are just delivered down from on high by the CEO and CFO. The best involve all departments working together to figure out key projects and deliverables for the coming year. That then gets reflected in a budget.

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Unicorns vs Undercorns: Making sense of the venture climate

Once upon a time, fundraising was a long, arduous task. CEOs and their management teams would diligently prepare for a process that could take 6 months and more from start to finish. In a sure sign of the times, the time it takes to raise capital these days is getting shorter and shorter. In some cases companies are getting funding commitments *before* they even begin a fundraising process.

This mythical scenario is known as the ‘preemptive round’. This is when an investor swoops in and offers to fund you before you decide to run a roadshow. There are many examples of this being played out these days. Payments startup Stripe (full disclosure: They are a FreshBooks partner) raised $80M back in January. 11 months later they announced a $ 70M round at a massive uptick in valuation.

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Build your senior team before you need them

My friends at Passwordbox announced their sale to Intel today. While no terms were disclosed, insiders seemed pretty happy. Startup failures often give us more valuable lessons but it’s always good to look at the winners to see what worked for them that can be applied elsewhere. So, I thought I’d look at this exit to see what we can learn from it.

I’ve said it before and I’ll say it again: traction forgives all  startup sins. In less than two years, Passwordbox generated over 14 million downloads of their software. But telling you to go get traction isn’t all that helpful. So, what other lessons can Passwordbox give us?

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