A good way to evaluate startups is to look at the revenue-to-funding-raised ratio.
Here’s a look at 2 BI players:
Domo, which has filed for its IPO, has a revenue:raise ratio of 0.16.
By contrast, Tableau had a revenue:raise ratio of 8.51 at the time of its IPO.
To be very clear, a high ratio indicates a company can turn funding into revenue (this is a good thing). So in this case, which company would you want stock options in? The answer is obvious.
Note: Domo’s last private company valuation was at $2.3B (clients can see its insane valuation multiple here). After its recent IPO filing, we highlighted the company’s overvaluation vs other BI companies in a recent client note. It reduced its IPO valuation by 75% last week.
BTW, who gets creamed in that valuation demolition? Employees.
A worldwide phemonenon
Companies in the Silicon Valley metro area have seen 12K deals since 2012 — more than all non-US metro hubs combined.
But investment is growing outside of California. We look at where deals growth is up and where it’s down in our new Global Tech Hubs Report.
Do my options have a chance of being valuable?
So the idea is pretty simple.
First, you’d upload your startup offer letter (or details on the options you have which you might exercise). You’d include details on options (quantity, strike, etc.), plus some supplementary info that you might know about the company.
We’d use CB Insights data to assess the company, industry, and comps, and assess odds on your options being worth anything.
It’d be free.
So would you do it? Click below to vote.
Since some of you will write saying that the revenue:raise ratio is imperfect or that some startups are in markets that haven’t been invented yet, here is the reality.
No analytics will tell you that you are at the next Google or that your options will def be worth zero.
But being more informed with data and information before making a large life commitment (of time or money) is a good idea.
Today, most employees at startups are at an information disadvantage and this idea might help fix some of that.
Of course, if you choose to ignore the data, that is fine. There are plenty of non-financial reasons to join a startup.
AI for all
Microsoft is buying AI startup Bonsai as part of its goal to make AI “more accessible and valuable for all.”
In a lively conversation at Future of Fintech, Ripple CEO Brad Garlinghouse chatted with Fortune’s Jeff Roberts about the future of Ripple and why he believes XRP is better than Bitcoin (transaction speed), among other things.
Jeff also asked Brad if he owns any Bitcoin. Watch the video here, where these questions — and more — are answered.