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 Balance Sheet – AVC

The top line, cash, is the single most important item on the balance sheet. Cash is the fuel of a business. If you run out of cash, you are in big trouble unless there is a “filling station” nearby that is willing to fund your business. Alan Shugart, founder of Seagate and a few other disk drive companies, famously said “cash is more important than your mother.” That’s how important cash is and you never want to get into a situation where you run… (read more)

What’s the best way to understand investor behavior?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Grind – AVC

I started yesterday at 8am with a breakfast meeting. I ended around 8:15pm when I wrapped up a pitch meeting in my office. In between those two meetings I did ten other meetings for a total of twelve meetings in a bit more than twelve hours. Of those twelve meetings, one was a three hour board meeting, one was a breakfast meeting with another venture investor, one was a lunch meeting to talk about CS Ed in NYC, four were pitch meetings, one was … (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 Balance Sheet – AVC

After cash, I believe the liability section of the balance sheet is the most important section. It shows the businesses’ debts. And the other thing that can put you out of business aside from running out of cash is inability to pay your debts. That is called bankruptcy.

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 your company’s financial position?

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

In summary, the Balance Sheet shows the value of all the capital that a business has built up over the years. The most important numbers in it are cash and liabilities. Always pay attention to those numbers. I almost never look at a profit and loss statement without also looking at a balance sheet. They really should be considered together as they are two sides of the same coin.

What’s the best way to understand the difference between CFO and VP Finance?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
VP Finance vs CFO – AVC

A VP Finance is what you need when you want a leader who will keep the wheels on the bus, who will make sure there are financial controls in place, who will make sure the books, records, and reports are accurate and timely and well presented, and who will make sure you have the right amount of accountants and clerical staff on hand to manage the work of the finance organization. A VP Finance is largely about “what happened” and a little about “wh… (read more)

What’s the best way to understand the difference between CTO and VP of Engineering?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
VP Engineering Vs CTO – AVC

A VP Engineering is ideally a great manager and a great team builder. He or she will be an excellent recruiter, a great communicator, and a great issue resolver. The VP Eng’s job is to make everyone in the engineering organization successful and he or she needs to fix the issues that are getting in the way of success. A CTO is ideally the strongest technologist in the organization. He or she will be an architect, a thinker, a researcher, a teste… (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.’

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

One last point and I am done with this week’s post. When you are doing projections for future years, I encourage management teams to project the income statement first, then the cash flow statement, and then end up with the balance sheet.