Categories ArchivesBusiness Insights

May 2019 Market Update & Outlook image

Monthly Recap Another busy month of data and dram with the markets dropping and trade war escalating. To recap, here are just some of the noteworthy events and stories from May: President Trump increased tariffs on Chinese goods to 25% which caught the markets off guard. China responded with their own set of tariffs on around $60B worth of US goods. This continued escalation adds uncertainty at a fragile time in the economy and will surely knock some growth off GDP. Beijing’s threat to use its dominance of rare earths in the trade war risks serious disruption to U.S. industry, by starving manufacturers of components commonplace in everything from cars to dishwashers and military equipmentWith the trade wars front ...

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February 2019 Market Update & Outlook image

Monthly Recap February we witnessed the same recurring themes and headlines in the US and abroad. The equity markets posted solid gains as the markets seem to believe that the Fed has got it's back once again. To recap, here are just some of the noteworthy events and stories from February: Amazon pulls out of NYC due to political backlashThe U.S.’s financial burden is growing despite a strong economy. Total public debt climbed to more than $22 trillion as of Feb. 11, according to a Treasury Department report. The US avoided another government shutdown, however, the President then declared national emergency to use funds to build the great wallBernie Sanders announced his candidacy for the presidency in 2020Trump met ...

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Cut Capital Gains Liability by Investing in Opportunity Zones image

What does it take to spur private capital to invest in areas that are struggling to create jobs and develop their communities? Would a tax break on capital gains realized by investors be enough to inspire them to reinvest those gains in low-income urban and rural communities across the country? Congress has decided to give that theory a try by creating something called Opportunity Zones: designated areas of the country that are crying out for long-term investments but which, until now, have offered little incentive for such speculation. The idea, established by Congress in the Tax Cut and Jobs Act of 2017 (TCJA), offers a mechanism that enables investors with capital gains tax liabilities across the country to receive favorable ...

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Founder Dilution: What It Is and How It Affects Founder Equity image

Equity

As a startup that is raising capital, the amount you own today of your company will decline depending on how much capital you raise, how many times you raise, your pre-money valuations and any investor preferences along the way. This is known as dilution and being able to map this out from day one and in multiple scenarios is important so that, as a founder you can protect your equity (possibly). As more funding rounds occur, early investors will also become diluted – not just the initial founders. There are key dilution definitions each founder needs to fully understand.   Keep in mind that there may not be anything you can do to prevent yourself from being diluted over time.  That ...

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A Complete Guide to Series A Funding image

After your business has shown some kind of a track record, Series A funding is useful in optimizing both your product and your user base. This may offer opportunities to scale your product across different markets, expanding your user base. In this round of funding, it’s critical to have a plan for developing a business model that will generate long-term profit. The investors involved in a Series A round of funding tend to come from more traditional venture capital firms. (Rather than the risk-takers who offer seed money, for example.) With all of that said, there are two important questions you must ask yourself as a founder seeking funding: When should I seek Series A funding? What is the process ...

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2017 Tax Cuts & Tax Strategies for Small Business image

It turns out that 2017 was a pretty good year for businesses in the US, at least in terms of tax cuts. In fact, regardless of your political leanings, it cannot be denied that the Tax Cuts and Jobs Act of 2017 included reducing tax rates for businesses and individuals. (There were also additional tax benefits for individuals, as we shared in a previous post). Of course, as with all things government and IRS-related, it would be something of an understatement to claim that interpretation and implementation tend to be somewhat complex. In an effort to provide a bit of clarity and guidance, we share this piece, published by financial planner and strategist Michael Kitces, at his blogsite, Kitces.com. Proactive Section 199A ...

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Can you Really Sell Your Company and Not Pay Capital Gains Tax? image

Every now and then Congress gets something right; or, at least, half-right. One can certainly argue that such is the case whenever they provide incentives to encourage taxpayers to invest in qualified small business stock companies. Which Businesses Qualify? Of course, with the IRS being the IRS, understanding which small businesses qualify for such incentives can be a bit confusing. For non-corporate holders of QSB stock, that is, venture capitalists, angel investors, small business owners, and entrepreneurs, to benefit from this change, you must first understand the definition of a “qualified small business stock”. In an effort to keep this as simple as possible, to qualify as QSB stock under IRS Section 1202 a business is defined as: • The stock ...

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Designing Company Culture image

  A company's culture is so important and not be overstated.  Every single company that I know who's "successful" had a great company culture.  And it wasn't by accident.  The founders I know and work with were aware of their company's culture and did everything they could to shape it and guide it in the right direction.  It rarely happens without effort, energy and a plan (much like success).  Most people can think of jobs they've had where culture was poor if it existed at all.  A good culture is typically obvious the second you walk in the door and can be felt by the energy of employees and environment.  So where do you start if you've never designed culture ...

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The Emotional Cost of Being a Startup Founder image

I think society and the press glamorize the life of a startup founder from the show Silicon Valley to entrepreneur magazine and the Inc 5000 list.  In reality, it can be a lonely and emotionally draining experience whether you're solo or have cofounders.  Some people don't view emotions as a cost since most think of costs in terms of customer acquisition, hiring talent, technology, etc.  The emotional cost is often not discussed enough.  Startups.co had a great post detailing this and have included it below.  Hopefully, this helps you if you're already on the journey or about to make the plun   The Emotional Cost of Being a Startup Founder Source: Startups.co   If you’re interested in starting a dialogue and learning how we ...

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SAFE vs. Convertible Debt For Raising Capital image

Until recently, I never heard of a SAFE, which stands for simple agreement for future equity.  SAFE was created by Y Combinator to provide simpler, more easily understood seed investment.  There are key differences between SAFE's and convertible debt and as an investor or founder, you need to be aware which is best for you.  In Austin, I have only seen 1 SAFE investment and countless convertible debt offerings.  It could simply be that SAFE's aren't as well understood or used in Austin and it's easier to go with what people know. Recently, there's been a few articles claiming that they're bad for founders and other article rebuffing that notion.  Techcrunch recently released a post entitled "Why SAFE notes are ...

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