Anyone vaguely familiar with the venture capital industry knows that down rounds are bad news. But what exactly are they, and why do they occur? What alternatives do founders have to avoid a down round? Toptal Finance Expert Natasha Ketabchi draws on her experience in the VC industry to run through the mechanics of a down round, its implications and effects, and concludes by offering some vital advice for founders and investors keen to avoid the dreaded down round.Continue reading →
Over the last few years, crowdfunding has imposed itself as a viable alternative financing route for small and medium-sized businesses globally. In this article, Toptal Finance Expert Bechara Kara runs through the market’s recent milestones, highlighting some of the shortcomings that can potentially threaten crowdfunding as a tool for democratizing finance, concluding with suggestions for a balanced approach in promoting its evolution.Continue reading →
Revenue-based financing allows an entrepreneur to repay an investment over time, to retake ownership of their business, and give a capped return to investors. With founders increasingly rejecting the scale-at-all-costs mentality, this article investigates the math of revenue-based investing and whether in VC it is possible to play averages over home runs.Continue reading →
Startup investors are not benevolent creatures, they’re looking for certain signals that help to persuade them to part with their money. This guide, written from an investor’s perspective, intends to help startups understand the key areas to focus on and emphasize when raising money.Continue reading →
In part I of this two-part series, Toptal Finance Expert Carolyn Deng provided an overview of the world of AI aimed at investors, with a focus on understanding what factors make for a great AI company. In this follow-up post, she outlines five practical steps investors should follow when diligencing a potential AI investment.Continue reading →
Over the last few years, the world has witnessed an explosion of interest surrounding Artificial Intelligence. A concept once confined primarily to the Sci-Fi genre, AI has become part of our everyday lives. Hundreds of millions of dollars have been poured into AI companies, and investors all around the world are keen to put money to work in this space.
Nevertheless, there still exists a significant gap in understanding and knowledge about AI applications, particularly amongst the investor community. This article, the first of a two-part series on the topic, is a collection of thoughts and advice by Toptal Finance Expert Carolyn Deng, based on her experience having founded an AI startup as well as having worked as VC Investor.Continue reading →
Depending on your perspective, type, and motivation, the idea of building a board of directors either excites or intimidates you, complete with all associated imagery of aged oak rooms, brief-case wielding titans, and expensive cigars.
This article, by Toptal Finance Expert Orinola Gbadebo-Smith, sets out to debunk a few myths. It sheds light on boards as a construct, their workings, dealings, and nuances, and explores some battle-tested strategies for recruiting, building, and managing effective boards.Continue reading →
Fundraising is hard to get right, which is why companies of all sorts often turn to fundraising experts for help and advice regarding the fundraising process. There is a multitude of different professional figures that help companies raise capital, but for startups and growth companies, the two figures most often encountered are fundraising consultants and broker-dealers.
Despite many similarities between the two, there are some important differences that startup founders and company managers must understand if they are thinking of turning to one of these for help. In this article, Toptal Finance Expert Aleksey N. Krylov explores various features of both service providers and discusses the pros and cons of working with either one.Continue reading →
Popular rhetoric states that you need a team to found a startup. But what if you don’t have the desire or the right co-founders to start a new venture in a team? Contrary to popular belief, there are many successful solo ventures. This guide presents some tactics for solo entrepreneurs to follow when starting a solo venture.Continue reading →
LTV:CAC analysis is one of the most important exercises startup founders must go through to evaluate their business’ prospects and raise external funding. It is, however, frequently misunderstood and misinterpreted.
In this article, Toptal Finance Expert Ryan Downie runs through a practical tutorial of how to perform LTV:CAC analysis correctly, and how it should be adapted and interpreted depending on the business model or sector in question.Continue reading →
Convertible notes have become an increasingly popular and common method for raising capital by startups, but how well do founders truly understand the implications of going down this route?
In this article, Toptal Finance Expert Jeffrey Briggs outlines the basics of convertible note structures, and runs through the pros and cons of using them to raise money for new entrepreneurial ventures.Continue reading →
In the current low interest rate environment, investors have been increasingly moving towards alternative asset classes, particularly private equity which continues to attract the lion’s share of investor capital. But could a relatively unknown, niche new asset class hold the key for outsized market performance?
In this article, Toptal Finance Expert Toby Clarence-Smith uncovers the world of search fund investing, reviewing some of the key aspects of the asset class from the investor standpoint as well as running through the main benefits of putting money to work in this space.Continue reading →
VC and PE fund structures are traditionally raised in the closed-ended manner, through limited partnerships with end dates. A less common alternative to this is an open-ended/evergreen fund, an ongoing structure that continues indefinitely. In this article we discuss the nuances of open-ended funds with a GP from B37 Ventures, who raised and operates one.Continue reading →
The origins of family office investing date back, colorfully, to at least 15th century Florence, when the Medicis auspiciously gave the likes of Michelangelo and Da Vinci their start. Fast forward to present day, family offices have quietly continued to rival household VC names in the capital structures of the world’s largest tech companies (Uber, Facebook, and WeWork, for example).
Finance Expert Vidur Gupta presents a captivating introductory piece on the secretive but potent world of family office investing.Continue reading →
2017 saw a number of issues arise in the VC industry and it may be approaching a watershed regarding its relevance.
This article looks into the root causes of the industry’s problems and why they have come to light. VCs can go through a pivot of their own to retain a seat at the table, with big data, exotic funds and platforms offering a path forward.Continue reading →
Through its acquisition of Whole Foods, Amazon is not only likely to disrupt the grocery shopping experience but is perhaps embarking on a grander push that could change the entire retail landscape, leaving Walmart on the back foot.Continue reading →
Many newcomers to venture capital fail to appreciate some of the nuances that distinguishes venture investing from traditional forms of financial investing. This article delves into three areas in particular that new venture investors should look to understand.Continue reading →
Four years on from the signing of the JOBS act, equity crowdfunding remains a small, niche market. In this article, we take a look at the current state of equity crowdfunding in the US and assess some of the challenges the market faces if it wants to grow into its potential.Continue reading →
Startups nowadays are hyper focused on growth at all costs, a practice which often undermines the fundamental health of the business. This article takes an in-depth look at the importance of focusing on customer retention from day one and the practical benefits it can provide in the medium to long term.Continue reading →
Open-source software is a catalyst for growth and change in the IT industry, and one can’t overestimate its importance to the sector. In recent years, there has been a surge in venture capital dollars pouring into the sector. In this article, we analyse whether recent valuations make sense, and whether the open-source model lends itself to the returns profile that venture capital investors look for.Continue reading →
Ahead of Snap’s IPO, we take a look at whether the rumoured valuation makes sense, and find that whilst overall market concerns regarding DAU growth are justified, the market is likely under-valuing the company’s ARPU growth prospects. For us, Snap is a Buy.Continue reading →
Despite the large increase in resources aimed at helping founders navigate the fundraising process, many still struggle when it comes to comprehending certain term sheet clauses.
Such clauses can lead to founders losing control of their company or payout structures upon exit down the road. This post breaks down the term sheet’s trickiest clauses and the implications thereof.Continue reading →
Between 2013 and 2015, the number of Unicorns exploded to 140 members, marking an incredible growth spurt in valuations and positive sentiment toward the venture industry.
But after a rocky 2016, in which scandals, funding downrounds, and more cautious investor commentary emerged, many have questioned the validity of the sector’s valuations. With this backdrop, 2017 is shaping up to be a make-or-break year for the Unicorn Club. Is the party over?Continue reading →