Carey Lai's Corner

A former lemonade stand entrepreneur turned Venture Capitalist

WHAT DO YOU CONSIDER LATE STAGE?

venture_capitalEveryone defines later-stage venture differently.  Some people define late-stage as user, customer, or product traction.  For me, it’s even simpler.  If a company is approaching $1M in revenue per month, that’s a late stage company for me.  Why the magic number of $1M?  It’s simply a matter of time and focus.  Since I have yet to find a company who can manufacture more than 24 hours per day, I have to define my focus.  I could have said 1 customer or 1 million users, however, I’ve found that $1M of revenue per month is a decent starting point.  Additionally, I’m experienced investing in companies with at least $1M/month in revenue.  Therefore, I feel comfortable I can bring a differentiated perspective.

Advertisements

2 comments on “WHAT DO YOU CONSIDER LATE STAGE?

  1. TZ
    April 20, 2011

    Granted I know nothing about investing, let alone late-stage investing, if you’re going by your $1M/month ruler, a company like GroupOn would’ve reached “late-stage” by their sixth month. Aren’t there some types of companies (cash cows, etc), that should be held to a different metric?

    • CL
      April 20, 2011

      For me, the $1M/month revenue run rate is simply a way for me to focus on companies I would define as later-stage. However, you’re right that there are companies, particularly in the Consumer Internet space that fly through the $1M/month revenue run rate quickly. Groupon is a great example. It simply means I need to identify those types of companies much earlier in the process. For example, if I were to evaluate a Software as a Service (SaaS) company, it would most likely hit its $1M/month revenue run rate in year 2, assuming things go according to plan, sometimes sooner, sometimes later. A mobile applications business might take several years to achieve the metric. So, there’s a whole spectrum of companies out there that will hit the run rate at different moments in time. It’s my job to identify and invest in them as they approach the $1M/month metric.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Information

This entry was posted on April 20, 2011 by in Uncategorized.
%d bloggers like this: