What’s the best way to understand your company’s financial position?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
MBA Mondays From The Archives: Cash Flow – AVC

Cash flow is really easy to calculate. It’s the difference between your cash balance at the start of whatever period you are measuring and the end of that period. Let’s say you start the year with $1mm in cash and end the year with $2mm in cash. Your cash flow for the year is positive by $1mm. If you start the year with $1mm in cash and end the year with no cash, your cash flow for the year is negative by $1mm.

What’s the best way to understand your company’s financial position?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
MBA Mondays: Accounting From The Archives – AVC

If you have a company, you must have financial records for it. And they must be accurate and up to date. I do not recommend doing this yourself. I recommend hiring a part-time bookkeeper to maintain your financial records at the start. A good one will save you all sorts of headaches. As your company grows, eventually you will need a full time accounting person, then several, and at some point your finance organization could be quite large. There… (read more)

What’s the best way to understand your company’s financial position?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
MBA Mondays From The Archives: The Profit and Loss Statement – AVC

A profit and loss statement is a report of the changes in the income and expense accounts over a set period of time. The most common periods of time are months, quarters, and years, although you can produce a P&L report for any period.

What’s the best way to understand your company’s financial position?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
MBA Mondays From The Archives: The Profit and Loss Statement – AVC

Numbers don’t tell you everything about a business. That is very true. A P&L can only tell you so much about a business. It won’t tell you if the product is good and getting better. It won’t tell you how the morale of the company is. It won’t tell you if the management team is executing well. And it won’t tell you if the company has the right long term strategy. Actually it will tell you all of that but after it is too late to do anything about i… (read more)

What’s the best way to use crowfunding platforms?

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

There are now sites like AngelList, FundersClub, and WeFunder that can introduce you to investors. We recommend startups treat them as auxiliary sources of money. Raise money first from leads you get yourself. Those will on average be better investors. Plus you’ll have an easier time raising money on these sites once you can say you’ve already raised some from well-known investors.

What’s the best way to use crowfunding platforms?

Sam Altman (President at Y Combinator)
The separation of advice and money – Sam Altman

On the positive side, founders may end up with less total dilution and get to choose whatever advisors they want [with funding platforms]. On the negative side, advisors probably wont work quite as hard for a company that they don’t have a lot of capital invested in.

What’s the best way to use crowfunding platforms?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Decoupling Advisory From Custody – AVC

I think the idea of a 10 year fund where the VCs have custody of the LPs’ capital and make all the decisions is not going to be the norm. Companies like our portfolio company CircleUp and AngelList are building important new platforms and paving the way with regulators to allow the same kind of thing that is happening in the stock market to happen in the venture capital market. And that’s a good thing. Change is good, even in my own business.

What’s the best way to understand investor behavior?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Qualified Small Business Stock – AVC

For the past twenty years, the US federal tax code has included provisions that allow startup investors to get favorable tax treatment on the capital gains they earn on early stage investments. These provisions are in Sections 1202 and Sections 1045 of the tax code. Sec 1045 allows a “tax-free rollover” which means that you can avoid paying the capital gains tax if the gain is “rolled over” meaning invested back into another QSSB. Sec 1202 allow… (read more)

What’s the best way to understand the differences between being public and private?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Blurring Of The Public And Private Markets – AVC

Staying private won’t shield you from the pains of going public. Because the lines are blurring between the private and public markets and we are in for more blurring and it will come faster in the coming years.’