Uber angel investor JF (you call him Jeff) Clavier raised some eyebrows last year when he was quoted as telling startups that their income is “noise”, even if said income is approximating $300,000 in monthly revenues. A $300K monthly revenue implies an annual run-rate of $3.6M.
Maybe he’s right: Ning just raised $60M on a $500M pre-money valuation despite making $1.7M in revenues. That’s also the valuation Slide got, and it too probably commands an eye-popping revenue multiple. Any way you dice it, Clavier’s $300K per month revenue would be for a company with twice as much revenue as Ning. In a linear world, that would be a $1B company (if Ning is indeed wirth $500M at $1.7M in revenue). Obviously, we’re playing with numbers, because a company with $1.7M in revenues should not be worth half a billion… but who cares, obviously investors don’t, argues Macromedia founder Marc Canter, who sold his firm to Adobe for a cool $3.4B a few years ago. continue reading...
How much is too much money? If you’re running a business in SF, NY, London, you need a lot of money. It’s not just fixed costs that are killer, naturally labor costs are also much higher than they would in a smaller market.
Yesterday Marc Andreessen announced that his latest company Ning raised a massive $44M for a post money valuation of over $200M. That’s a lot of money for a company in a space that has yet to prove it can generate substantial revenues. In other words, the only successful companies yield exits that come in the shape of an M&A, and these are scarce despite the big headlines. continue reading...
