Is LTV/CAC the Holy Grail of Startup Metrics?
Summary: LTV/CAC, or Lifetime Value to Customer Acquisition Cost, is a prominent but potentially misleading metric for startups founders that is often oversimplified as a measure of ROI. The three primary issues of LTV/CAC is sensitivity to retention rates, tendency to deteriorate at scale and poor reflection of capital efficiency, especially in the short term. […]
How to read a P&L
Summary: A Profit & Loss (P&L) statement is crucial for startups, providing insights into growth, spending, profitability, and cash flow. Analyzing revenue growth is essential, ensuring it aligns with the narrative presented in the pitch deck. Understanding the relationship between growth and spending, especially in sales and marketing, is vital for evaluating efficiency. Gross margin […]
Choosing your business structure: C-Corp vs. LLC
Summary: C-Corps are best for founders seeking to raise outside capital from VCs Why Consider a C-Corp? C-Corps (or corporations) are the best choice for attracting venture capital and angel investors. Due to the flexibility corporations offer by issuing different classes of stock, this entity structure makes it easier to raise funds and incentivize key […]
New Tax Credits Available for Small Businesses Offering 401(k) Benefits
In an effort to bolster retirement planning for American workers, the Series 2.0 Tax Act incentivizes small business owners to provide retirement plans to their employees. Under this act, startups that offer 401(k) benefits or similar retirement plans stand to gain substantial tax credits – potentially reaching up to $5,000 per year! Let’s dive into […]
409A Valuations for Startups
Summary What is a 409A? A 409A valuation is used by startups and other private companies to determine the price of stock options for their employees. It generally does not impact the valuation investors will assign to your business in a financing round. A lower 409A valuation means employees pay less to exercise their options […]
5 Hacks to Raise Money From VCs
Introduction Raising venture capital (VC) funding is often a crucial step for founders looking to scale their startups. While securing investment from VCs can be challenging, implementing effective strategies can significantly enhance your chances of success. In this article, we will explore five simple tactics that founders can employ to raise funds from venture capital […]
Series A Fundraising Guidelines
Securing Series A funding for your startup can be a daunting task, especially in a challenging fundraising market. As a founder, it’s crucial to start well in advance to optimize your odds of success. Here are some essential guidelines to consider when embarking on your Series A fundraising journey. Give yourself ample time to prepare […]
How to Find and Meet VCs
Fundraising is a challenge for many startups, and is especially difficult for founders who do not have close personal ties to VCs. In this article, we address the first step in raising a venture capital round: meeting investors. Many of the entrepreneurs we work with at OpStart are first-time founders based outside the Bay Area […]
Practical tips in the wake of the SVB & Signature collapses
On Sunday night, founders and investors across the country exhaled upon learning they wouldn’t lose all their money in the SVB/Signature collapses. This news, coupled with JP Morgan stepping up to bankroll First Republic and SVB’s successor entity somehow being “open for business” already, put many of our minds at ease – at least temporarily. […]
Comparing Credit Cards for Startups Brex, Ramp & Others vs. Traditional Providers
Credit cards can be a great tool for startups looking to earn rewards and defer cash payments by 30+ days for each purchase. When used correctly, a business credit card can be a great asset. When evaluating which provider to use, you can assess institutions that have been built with startups in mind or providers […]