Dave Theus’ Post

In the early stages of a startup, every financial decision can impact your ability to scale. Yield, or the return on your idle cash, may be overlooked—but it can be a critical factor when managing runway and growth. For many startups, unallocated capital sits in low-interest accounts or is underutilized, which may represent a missed opportunity. By aiming to maximize yield—whether through high-yield accounts, short-term investments, or other financial products— startups may be able to generate passive income that can help extend their runway. While extra returns might seem small, over time they can compound, giving you more financial flexibility and potentially reduce the pressure to fundraise prematurely. Why does this matter? With high burn rates and ongoing pressure to scale, early-stage startups should ensure that their capital works as hard as they do. By leveraging yield strategies, startups may be able to extend their runway and keep more control over their growth trajectory. At Arc, we believe startups should leverage every financial tool available to them. -- 𝘈𝘳𝘤 𝘪𝘴 𝘢 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘵𝘦𝘤𝘩𝘯𝘰𝘭𝘰𝘨𝘺 𝘤𝘰𝘮𝘱𝘢𝘯𝘺, 𝘯𝘰𝘵 𝘢 𝘣𝘢𝘯𝘬. 𝘛𝘩𝘪𝘴 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘪𝘴 𝘧𝘰𝘳 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘱𝘶𝘳𝘱𝘰𝘴𝘦𝘴 𝘰𝘯𝘭𝘺 𝘢𝘯𝘥 𝘴𝘩𝘰𝘶𝘭𝘥 𝘯𝘰𝘵 𝘣𝘦 𝘤𝘰𝘯𝘴𝘪𝘥𝘦𝘳𝘦𝘥 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘰𝘳 𝘵𝘢𝘹 𝘢𝘥𝘷𝘪𝘤𝘦. 𝘍𝘰𝘳 𝘪𝘮𝘱𝘰𝘳𝘵𝘢𝘯𝘵 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘢𝘣𝘰𝘶𝘵 𝘈𝘳𝘤, 𝘴𝘦𝘦 𝘰𝘶𝘳 𝘥𝘪𝘴𝘤𝘭𝘰𝘴𝘶𝘳𝘦𝘴 (https://lnkd.in/e5VUM_R4).

The most perverted view today is to identify startups purely from their balance sheet and profit potential. Arguments based on just these parameters are usually the starting of all evil. Startups are not purely financial instruments to generate wealth. They are way too broad in their impact and emancipatory in nature going beyond balance sheets and profits. They shape the future of folks who work within the organization, impact customers' lives, and have a deep sociological impact that shapes the way we function in society as a whole. Mindlessly investing, buying stocks, and cheering for business based on narrowed opinions just make us accomplices in these noises and evil.

5 Red Flags Investors Look For in Startups (And How to Avoid Them) Investors are sharp. They’ve seen it all, and they know what to avoid. If you’re a startup founder pitching for funding, 𝐛𝐞𝐰𝐚𝐫𝐞 𝐨𝐟 𝐭𝐡𝐞𝐬𝐞 𝐫𝐞𝐝 𝐟𝐥𝐚𝐠𝐬 that could turn them away: 1️⃣𝙇𝙖𝙘𝙠 𝙤𝙛 𝙈𝙖𝙧𝙠𝙚𝙩 𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 If you can't clearly explain your market, why should investors bet on you? 𝗙𝗶𝘅 𝗶𝘁: Do your homework. Know your customer, competitors, and growth potential inside-out. 2️⃣𝙒𝙚𝙖𝙠 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙋𝙧𝙤𝙟𝙚𝙘𝙩𝙞𝙤𝙣𝙨 Investors need to see you understand your numbers. Overly optimistic projections with no basis? 🚩 𝗙𝗶𝘅 𝗶𝘁: Be realistic. Show a clear, achievable roadmap backed by data. 3️⃣𝙉𝙤 𝘾𝙡𝙚𝙖𝙧 𝘿𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩𝙞𝙖𝙩𝙤𝙧 “Another product like XYZ” doesn’t cut it. Investors want innovation, not replicas. 𝗙𝗶𝘅 𝗶𝘁: Clearly articulate your unique value. Highlight what sets you apart and why it matters. 4️⃣𝘿𝙞𝙨𝙤𝙧𝙜𝙖𝙣𝙞𝙯𝙚𝙙 𝙋𝙞𝙩𝙘𝙝 𝘿𝙚𝙘𝙠 Cluttered slides or unclear messaging? Immediate turn-off. 𝗙𝗶𝘅 𝗶𝘁: Keep it concise and impactful. Use visuals to tell your story, not overwhelm it. 5️⃣𝘾𝙝𝙖𝙨𝙞𝙣𝙜 𝙦𝙪𝙞𝙘𝙠 𝙘𝙖𝙨𝙝 Investors can sense desperation. If founders are only focused on securing immediate cash, rather than building long-term value, it’s a major red flag. 𝗙𝗶𝘅 𝗶𝘁: Shift the focus to long-term vision. Showcase a strategy that prioritizes sustainable growth over quick wins. Demonstrate a clear path toward scaling Before you pitch- Do a self-check. Because remember: Investors don’t just invest in ideas—they invest in founders who are in it for the long run. Eliminating these red flags can actually take you from “We’re passing” to “We’re interested” P.S. We have helped hundreds of startups avoid these gaps and raise funding. Are you ready to secure that funding? Fill the form below to know how we can help. ▶ https://lnkd.in/gABtEuY7

Due diligence is a critical process for investors considering funding a startup. It involves an analysis of various aspects of the business. Here are some key parameters and considerations for investors to include in their due diligence 1) Understand the Market: Before investing in a startup, know the market it operates in. Is it growing? Who are the competitors? Understanding the market helps you gauge the startup's potential success. 2) Check the Financial Health: Look at the startup's financial situation. Are they making money? What are their expenses? This helps you see if they can sustain and grow their business. 3) Know the Team: The people running the startup matter. Check their experience and skills. A strong and capable team increases the chances of success. 4) Protect Intellectual Property: Make sure the startup has legal rights to its inventions or creations. This protects their unique ideas from being copied by others. Test the Product or Service: 5) Try out what the startup offers. Is it useful? Does it work well? Understanding the product helps you see if there's a market demand for it. 6) Consider Risks: Every investment carries risks. Identify what could go wrong with the startup and how they plan to handle it. Being aware of risks helps you make a balanced decision. 7) Have an Exit Plan: Think about how you'll get your money back and potentially make a profit. Whether it's selling your shares or the startup going public, having an exit strategy is important. Remember, investing in startups involves risk, but thorough research and understanding can help you make smarter investment decisions. Want to understand how can you successfully do a Due Diligence of Business? DM now! #duediligence #startupfunding #riskmanagement #startupecosystem

Investors are sharp. They’ve seen it all, and they know what to avoid. If you’re a startup founder pitching for funding, 𝐛𝐞𝐰𝐚𝐫𝐞 𝐨𝐟 𝐭𝐡𝐞𝐬𝐞 𝐫𝐞𝐝 𝐟𝐥𝐚𝐠𝐬 that could turn them away: 1️⃣𝙇𝙖𝙘𝙠 𝙤𝙛 𝙈𝙖𝙧𝙠𝙚𝙩 𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 If you can't clearly explain your market, why should investors bet on you? 𝗙𝗶𝘅 𝗶𝘁: Do your homework. Know your customer, competitors, and growth potential inside-out. 2️⃣𝙒𝙚𝙖𝙠 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙋𝙧𝙤𝙟𝙚𝙘𝙩𝙞𝙤𝙣𝙨 Investors need to see you understand your numbers. Overly optimistic projections with no basis? 🚩 𝗙𝗶𝘅 𝗶𝘁: Be realistic. Show a clear, achievable roadmap backed by data. 3️⃣𝙉𝙤 𝘾𝙡𝙚𝙖𝙧 𝘿𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩𝙞𝙖𝙩𝙤𝙧 “Another product like XYZ” doesn’t cut it. Investors want innovation, not replicas. 𝗙𝗶𝘅 𝗶𝘁: Clearly articulate your unique value. Highlight what sets you apart and why it matters. 4️⃣𝘿𝙞𝙨𝙤𝙧𝙜𝙖𝙣𝙞𝙯𝙚𝙙 𝙋𝙞𝙩𝙘𝙝 𝘿𝙚𝙘𝙠 Cluttered slides or unclear messaging? Immediate turn-off. 𝗙𝗶𝘅 𝗶𝘁: Keep it concise and impactful. Use visuals to tell your story, not overwhelm it. 5️⃣𝘾𝙝𝙖𝙨𝙞𝙣𝙜 𝙦𝙪𝙞𝙘𝙠 𝙘𝙖𝙨𝙝 Investors can sense desperation. If founders are only focused on securing immediate cash, rather than building long-term value, it’s a major red flag. 𝗙𝗶𝘅 𝗶𝘁: Shift the focus to long-term vision. Showcase a strategy that prioritizes sustainable growth over quick wins. Demonstrate a clear path toward scaling Before you pitch- Do a self-check. Because remember: Investors don’t just invest in ideas—they invest in founders who are in it for the long run. Eliminating these red flags can actually take you from “We’re passing” to “We’re interested” P.S. We have helped hundreds of startups avoid these gaps and raise funding. Are you ready to secure that funding? Fill the form below to know how we can help. ▶https://lnkd.in/gMy77rwt

5 Red Flags Investors Look For in Startups (And How to Avoid Them) Investors are sharp. They’ve seen it all, and they know what to avoid. If you’re a startup founder pitching for funding, 𝐛𝐞𝐰𝐚𝐫𝐞 𝐨𝐟 𝐭𝐡𝐞𝐬𝐞 𝐫𝐞𝐝 𝐟𝐥𝐚𝐠𝐬 that could turn them away: 1️⃣𝙇𝙖𝙘𝙠 𝙤𝙛 𝙈𝙖𝙧𝙠𝙚𝙩 𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 If you can't clearly explain your market, why should investors bet on you? 𝗙𝗶𝘅 𝗶𝘁: Do your homework. Know your customer, competitors, and growth potential inside-out. 2️⃣𝙒𝙚𝙖𝙠 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙋𝙧𝙤𝙟𝙚𝙘𝙩𝙞𝙤𝙣𝙨 Investors need to see you understand your numbers. Overly optimistic projections with no basis? 🚩 𝗙𝗶𝘅 𝗶𝘁: Be realistic. Show a clear, achievable roadmap backed by data. 3️⃣𝙉𝙤 𝘾𝙡𝙚𝙖𝙧 𝘿𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩𝙞𝙖𝙩𝙤𝙧 “Another product like XYZ” doesn’t cut it. Investors want innovation, not replicas. 𝗙𝗶𝘅 𝗶𝘁: Clearly articulate your unique value. Highlight what sets you apart and why it matters. 4️⃣𝘿𝙞𝙨𝙤𝙧𝙜𝙖𝙣𝙞𝙯𝙚𝙙 𝙋𝙞𝙩𝙘𝙝 𝘿𝙚𝙘𝙠 Cluttered slides or unclear messaging? Immediate turn-off. 𝗙𝗶𝘅 𝗶𝘁: Keep it concise and impactful. Use visuals to tell your story, not overwhelm it. 5️⃣𝘾𝙝𝙖𝙨𝙞𝙣𝙜 𝙦𝙪𝙞𝙘𝙠 𝙘𝙖𝙨𝙝 Investors can sense desperation. If founders are only focused on securing immediate cash, rather than building long-term value, it’s a major red flag. 𝗙𝗶𝘅 𝗶𝘁: Shift the focus to long-term vision. Showcase a strategy that prioritizes sustainable growth over quick wins. Demonstrate a clear path toward scaling Before you pitch- Do a self-check. Because remember: Investors don’t just invest in ideas—they invest in founders who are in it for the long run. Eliminating these red flags can actually take you from “We’re passing” to “We’re interested” P.S. We have helped hundreds of startups avoid these gaps and raise funding. Are you ready to secure that funding? Fill the form below to know how we can help. ▶https://lnkd.in/g94hNhYG

Why Investors Demand a Solid Financial Model for Your Startup? Investors are keenly aware that a well-constructed financial model is essential for the success of any startup. A startup financial model isn't just a tool for the founder; it's a critical document for investors. It validates how much capital is needed to launch and scale, while also projecting potential returns on investment. Investors are unlikely to back ventures without a robust financial plan ready for analysis. An Effective Financial Model comes from detailed business plans, allowing founders to base projections on informed assumptions. These models offer a comprehensive view of the startup's financial health—covering costs, revenue, cash flow, and profit & loss statements. For instance, the assumptions driving a SaaS business model differ significantly from those of a Freemium model, leading to variations in their respective financial models. Investors rely on these projections to assess the viability and scalability of the business. Having a solid startup financial model in place demonstrates your preparedness and builds investor confidence, increasing the likelihood of securing the necessary funding. I've secured $1.6 million in funding for start-up founders by preparing effective Financial Models and Business Plans, let's get the necessary funding for your start-ups. #Startups #Funding #BusinessPlans #MillionSecuredInFunding #KPMG #FinancialModels

Vinod Khosla: An investor is an employee you can’t fire In the clip below, Sam Altman asks Vinod how founders who want to build significant companies that will be around for decades should think about their investors. Vinod believes that money is the smaller part of what you get from an investor. “Advice and the right approach is the much more important part.” He warns that investors who are happy with 3x their money may want to sell before you do. People who care about your vision won’t, and they’ll be much more tolerant when things inevitably go wrong. To figure out if an investor will care about your vision, you have to talk to other founders—especially founders with a large vision who had hiccups along the way. “When things go wrong along an ambitious path is when you can actually judge an investor. I think an investor is an employee you can’t fire, and that’s how you should think about it.” He continues: “Most investors are negative value add to a company that’s trying to be ambitious if they’re just trying to get to liquidity as soon as possible.” When a founder comes to Vinod with an ambitious vision, he tries to help them think through the steps to get there and how to thoughtfully discover the risks on the path to that vision. Sam Altman adds: “The only recipe I’ve ever seen work for making really impactful companies is both a giant vision and a good step one, two, and three. You have to have both, and neither without the other will work.” Source: Y Combinator --- We curate the top 1% of startup advice from the world’s best founders and investors. Join 7,000+ founders who read the free newsletter at startuparchive.org

Raising funds at the pre-seed stage is a crucial step for startups, yet many overlook key aspects that investors scrutinize. Simplifying the complex journey into technical and crisp terms, here are the critical areas often missed: 📍 1. Market Validation: Startups must demonstrate demand for their product or service through customer feedback, sales data, or user engagement metrics. This validation shows investors a clear market need, reducing perceived risk. 📍 2. Business Model Clarity: A coherent and sustainable business model is essential. It should detail how the startup will generate revenue and achieve profitability. Investors are keen on understanding the unit economics and long-term financial viability. 📍 3. Team Composition: The team's expertise and balance are critical. A blend of technical know-how, business acumen, and industry insights is often more convincing to investors, highlighting the team's capability to execute the business plan. 📍 4. Competitive Analysis: Comprehensive knowledge of the competitive landscape is necessary. Startups should articulate their unique value proposition and competitive advantage, demonstrating awareness of both direct and indirect competitors. 📍 5. Financial Projections: Realistic and detailed financial forecasts are crucial. Startups need to outline how they'll use the funds to hit growth milestones, showing investors a path to ROI. 📍 6. Legal and Regulatory Awareness: Ensuring compliance with legal and regulatory frameworks is non-negotiable. Startups must show they've considered these aspects to avoid future pitfalls. 📍 7. Scalability Potential: Demonstrating the product or service's scalability is vital. Investors look for scalable business models that promise substantial growth with minimal incremental cost. In essence, pre-seed startups should focus on providing solid market validation, a clear and sustainable business model, a well-rounded team, in-depth competitive analysis, realistic financial projections, compliance with legal and regulatory requirements, and a demonstrable potential for scalability. These elements form the backbone of a compelling pitch to investors, showcasing not just the idea's brilliance but its practicality, profitability, and potential for success in the real world. #startup #enterpreneurship #vcfunding #preseed #funding

💡 𝗙𝗼𝗿 𝗧𝗲𝗰𝗵 𝗦𝘁𝗮𝗿𝘁𝘂𝗽 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀, 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝘁𝗵𝗲 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗶𝘀 𝗮 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗜𝗺𝗽𝗲𝗿𝗮𝘁𝗶𝘃𝗲 💡 The cost of capital isn’t just a financial metric, it’s a decision-making tool that shapes your funding strategy, growth trajectory, and, most importantly, your level of ownership and control. In 𝗣𝗮𝗿𝘁 𝟭 of our new article series, we delve into the fundamentals of the cost of capital and explore why traditional approaches like WACC and CAPM fail to capture the unique realities of high-growth Tech startups. Here’s a snapshot of what we cover: 📌 𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗖𝗮𝗽𝗶𝘁𝗮𝗹? Learn how it’s calculated and why it’s critical for startups. 📌 𝗪𝗵𝘆 𝗧𝗿𝗮𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗠𝗼𝗱𝗲𝗹𝘀 𝗙𝗮𝗹𝗹 𝗦𝗵𝗼𝗿𝘁 𝗳𝗼𝗿 𝗦𝘁𝗮𝗿𝘁𝘂𝗽𝘀 Tech startups face challenges like: • Negative cash flows and long sales cycles. • High customer acquisition costs (CAC). • A necessity for growth, not just a choice. 📌 𝗧𝗵𝗲 𝗧𝗿𝗮𝗱𝗲-𝗼𝗳𝗳𝘀 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗠𝘂𝘀𝘁 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗲 Equity means dilution. Debt demands discipline. Which is right for your business?  🔍 𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀: The funding decisions you make today directly impact your company’s long-term success. Founders who understand the nuances of their cost of capital can secure the right type of funding while maintaining financial flexibility and control. 🔗 𝗥𝗲𝗮𝗱 𝘁𝗵𝗲 𝗳𝘂𝗹𝗹 𝗮𝗿𝘁𝗶𝗰𝗹𝗲 𝘁𝗼 𝗱𝗶𝘃𝗲 𝗱𝗲𝗲𝗽𝗲𝗿: https://lnkd.in/dKkZRddV 🔥 𝗡𝗲𝘅𝘁 𝘂𝗽 𝗶𝗻 𝘁𝗵𝗲 𝘀𝗲𝗿𝗶𝗲𝘀:  We’ll break down the 𝗿𝗲𝗮𝗹 𝗰𝗼𝘀𝘁 𝗼𝗳 𝗲𝗾𝘂𝗶𝘁𝘆 and provide a practical calculator to help you measure its impact. Plus, discover 𝘄𝗵𝗲𝗻 𝗱𝗲𝗯𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗿𝗶𝗴𝗵𝘁 𝗰𝗵𝗼𝗶𝗰𝗲 and whether 𝘃𝗲𝗻𝘁𝘂𝗿𝗲 𝗱𝗲𝗯𝘁 fits into your funding strategy.