Venture capitalist Chris Sacca announced his retirement from startup investing today. This also means that he will not be on the hit TV show Shark Tank, at least for the next season. His firm, Lowercase Capital, will likely be run by partner Matt Mazzeo, but it’s reported that there is no new fund in the cards.
For those in tech, Sacca is perhaps best known for his early-stage investments in companies like Twitter, Twilio, Kickstarter, Bitly, Typekit, DailyBooth, SimpleGeo, Gowalla, Lookout, Instagram, Uber, Posterous, Medium, and Automattic. All of these were either funded by him personally or through Lowercase.
But he struck a chord with those outside of Silicon Valley through his role on Shark Tank. Sacca wrote that the person who was the most disappointed that he won’t be around for a third season was Mark Cuban: “Despite what you might surmise from on screen, he and I are actually good friends, just…
Tmon, a mobile ecommerce company based in Korea, has closed a $115 million funding round from new investor Simone Investment Managers, with participation from existing shareholders, including a number of sovereign wealth funds.
The latest tranche of funding elevates Tmon into the much-coveted “unicorn” brigade, with an estimated value of around $1.2 billion.
Giving to charity is an important line item in my family budget — but it’s only one line. There are far more charitable organizations that I want to support than I can possibly give money to.
But what if there were a way to support your values without having to free up more money to give to charity? In fact, there is a way. You can do the same things you always do with your money — bank it, invest it, spend it on utilities, and shop — all while providing important financial benefits to the causes you care about.
Socially responsible robo-investing
I’ll never forget the stricken look on my financial adviser’s face when I told him I was uncomfortable with big oil, tobacco, or firearms as investments in my retirement portfolio. He took a deep breath and told me that I would probably have to be a little flexible about that if I wanted to maintain my passive investment strategy. The only other option would be to individually choose the investments I wanted so that my money was aligned with my values. Not only would that be expensive and time consuming (someone would have to do the stock picking), but it would not necessarily grow my money.
Passive investors like me now have the option of investing in funds that only go to companies we approve of. The new robo adviser OpenInvest offers investors the ability to personalize the specific issues they care most about. You simply create an “issue profile” that narrows down the types of companies you would either like to invest in or steer clear of. The robo adviser’s algorithm then creates a basket of about 60 stocks that match your values and should match the returns of the broader market.
It’s hard to imagine life without your cellphone — which makes it an excellent tool to help support your values. Simply changing your cellphone provider can make paying your bill part of your activism.
When I graduated from school and started working, my parents and friends told me repeatedly how important it was to start saving for retirement. But when I looked into opening an account, most institutions required $1,000 or more to get started. I didn’t have that much money to set aside, and it seemed so overwhelming. So I didn’t open an account until years later.
I’m kicking myself for it. The earlier you start saving for retirement, the more compound interest it builds and the less you need to invest to retire comfortably. I missed out on years of interest because I was too intimidated by account minimums, and didn’t think of alternatives. (See also: 10 Signs You Aren’t Saving Enough for Retirement)
Instead of making my same mistakes, you can start saving for retirement today by opening a Roth IRA. Below, find out why Roth IRAs are such a useful option and where you can open one without a lot of startup cash. (See also: 4 Reasons Why a Roth IRA May be Better Than Your 401(k))
What is a Roth IRA?
If you’re just starting out, don’t have access to a 401(k), or want to supplement your retirement nest egg, a Roth IRA is a fantastic savings vehicle.
Unlike a 401(k), where you make your retirement contributions with pretax dollars, with a Roth you contribute your after-tax income. While that means you don’t get an upfront tax break, you won’t owe money on account withdrawals once you retire. You already paid taxes, so you can take out the money free and clear.
A Roth IRA is a perfect tool for young people just starting out. Because your contributions are made after taxes, you can take out the principal from the Roth IRA in the…
Hewlett-Packard is putting on its headsets. One of the world’s oldest technology companies is investing in the fledgling virtual reality market by becoming an investor in The Venture Reality Fund.
The exact amount wasn’t disclosed. But HP Tech Ventures, the new corporate venture arm of HP, has joined as an investor The VR Fund, which has become one of the most active investors in VR, augmented reality, and mixed reality startups. It is HP’s first move into VR investments.
The VR Fund has invested in a number of early-stage startups developing infrastructure, tools, platforms, content and apps for the mixed reality ecosystem.
The VR Fund will provide HP with early access to leading AR/VR/MR technologies with commercial applications in HP’s target markets including office, retail, healthcare, manufacturing and education. The VR Fund’s…
If you’re a founder, early employee, or investor of a growing SaaS startup, chances are that the word “Exit” has crossed your mind. Generally, you have two options: get acquired or go public. While the former has long been a viable option, the public market for SaaS businesses is relatively new. Salesforce.com was the first of its ilk to go public (in June 2004); the stock priced 30 percent above the initial filing range and ended its first day of trading up 56 percent. That success demarcated the market’s receptivity to SaaS companies, and a precedent was formed. Blackbaud and RightNow followed in subsequent months, and so have 75+ other SaaS businesses since then.
To understand what it takes for these companies to exist in the public markets, I and James Shalhoub, an investment banking associate at Jefferies, reviewed each of their S-1s and compared their IPO profiles.
At a glance
Based on historical data, the “median SaaS company” at IPO is 10 years old with ~530 employees, generates nearly $100 million in run-rate revenue, grows at 48 percent, and still operates at a loss. Founders, early employees, and investors would likely see their SaaS companies price above the filing range to achieve a ~$600 million market cap and watch their shares pop 32 percent after their first day of trading. The table below shows a range of the general IPO data points for these businesses.
Interesting benchmarks, but it’s unfair to apply these metrics to the entire SaaS universe. We consolidated the SaaS IPOs into three groups based on equity value at IPO: market cap of $500 million or less, between $500 million and $1 billion, and greater than $1 billion. We then analyzed relevant SaaS benchmarks, related to growth, profitability, capital allocation, and efficiency, to uncover deeper trends.
High expectations for growth
While public investors demand higher revenue growth from technology companies over other industries, the benchmark is set even higher for SaaS companies. After all, one merit of these companies is the ease with which they can deploy their product. Management can, in turn, spend more resources on acquiring new customers and expanding sales within existing accounts. The stakes are high for larger SaaS companies, though, as demonstrated in the chart to below.
SaaS players that achieved a $1 billion+ market cap at IPO had a median trailing 12 month (LTM) growth rate of 85 percent, helping fuel their larger valuation. The achievement does not go unnoticed, however. Every single one of these companies priced above their filing range and had a median first day close of +64 percent –…
More and more Americans are choosing an employer-sponsored 401(k) as their preferred way to build up their nest eggs. As of 2014, an estimated 52 million Americans were participating in a 401(k)-type plan.
When used properly, a 401(k) can be a powerful tool to save for your retirement years, but there are a couple of crucial pitfalls that you have to watch out for. From high fees to limited investing choices, here is a list of potential downsides to 401(k) plans — and how to work around them.
1. Waiting to set up your 401(k)
Depending on the applicable rules from your employer-sponsored 401(k), you may be eligible to enroll in the plan within one to 12 months from your start date. If your eligibility kicks in around December, you may think that it’s fine to wait until the next year to set up your retirement account.
This is a big mistake for two main reasons.
First, contributing to your 401(k) with pretax dollars allows you to effectively reduce your taxable income for the current year. In 2017, you can contribute up to $18,000 ($24,000 if age 50 or over) to your 401(k), so you can considerably reduce your tax liability. For example, if you were to contribute $3,000 between your last two paychecks in December, you would reduce your taxable income by $3,000. Waiting until next year to start your 401(k) contribution would mean missing out on a lower taxable income!
Second, your employer can still contribute to your 401(k) next year and make that contribution count for the current year, as long as your plan was set up by December 31 of the current year. Your employer contributions have to be in before Tax Day or the date that you file your federal taxes, whichever is earlier.
How to work around it
If you meet the requirements to participate in your employer-sponsored 401(k) toward the end of the year, make sure to set up your account by December 31st. That way, you’ll be ready to reduce your taxable income for the current year through your own contributions and those from your employer before their applicable deadline (December 31 and Tax Day or date of tax filing (whichever is earlier), respectively).
2. Forgetting to update contributions
When you set up your 401(k), you have to choose a percentage that will be deducted from every paycheck and put into your plan. It’s not uncommon that plan holders set that contribution percentage and forget it. As your life situation changes, such as when you get a major salary boost, marry, or have your first child, you’ll find that your contributions may be too big or too small. (See also: 5 Times It’s Okay to Delay Retirement Savings)
How to work around it
To keep a contribution level that is appropriate to your unique financial situation, revisit your percentage contribution every year and whenever you have a major life change. Don’t forget to also check whether or not you elected an annual increase option — a percentage by which your contribution is increased automatically each year — and adjust it as necessary.
3. Missing out on maximum employer match
Talking about contributions, don’t forget that your employer may contribute to your plan as well. In a survey of 360 employers, 42 percent of respondents matched employee contributions dollar-for-dollar, and 56 percent of them only required employees to contribute at least 6 percent from paychecks…
A lot has happened since now-president Donald Trump and candidate Hillary Clinton debated on October 9 at Washington University in St. Louis. If you’re like most taxpayers, you probably don’t remember the candidates bantering about something called “carried interest.”
During the debate, Trump was asked what steps he’d take to make sure that the wealthiest of U.S. taxpayers pay a fair share of taxes. Trump responded by saying that he’d eliminate carried interest. What Trump actually meant, though, was that he would change the way carried interest is taxed. Clinton, too, supported making this change. And so did former president Barack Obama.
You can be forgiven if you have no idea what carried interest is. That’s because it’s something that only benefits the general partners who manage private equity and hedge funds. And most of us can’t invest in these private funds because it is so expensive to do so. Investors must usually pony up at least $250,000 to make an investment in one of these funds.
Carried interest is one way that the managers of these expensive hedge funds and private equity funds make a profit. But just because carried interest only benefits a select few, doesn’t mean that it’s not important to the U.S. economy. According to the Tax Foundation, if Congress taxed carried interest as ordinary income, it could cost the country 2,200 jobs. On the positive side, the Tax Foundation said that changing how carried interest is taxed would also generate about $15 billion during the next 10 years in the form of more taxes…
If you pay close attention to investment news, it’ll either make you laugh or it’ll drive you bonkers. Within the same hour, and on the same market news website, you will often see completely contradictory articles. One says the market is headed higher; the next says the market is about to tank.
What’s a smart investor to do? Be very careful about your information diet.
More Information, Less Success
In the late 1980s, former Harvard psychologist Paul Andreassen conducted an experiment to see how the quantity of market information impacted investor behavior.
He divided a group of mock investors into two segments — investors in companies with stable stock prices, and investors in companies with volatile stock prices. Then he further divided those investors. Half of each group received constant news updates about the companies they invested in, and half received no news.
Those who received no news generated better portfolio returns than those who received frequent updates. The implication? The more closely you monitor news about your investments, the more likely you are to make changes to your portfolio — usually to your detriment.
In another study, renowned human behavior researchers Daniel Kahneman, Amos Tversky, Richard Thaler, and Alan Schwartz compared the stock/bond allocations of investors who checked on their investments at least once a month against those who did so just once a year. Those who took in…