David Teten

MARCH 14, 2018

VC is a “get rich slow” business, because most VC Partners will not see a carry check for 5-10 years, after waiting for both liquidity events and for LPs to be paid first. Prominent investor Chamath Palihapitiya recently announced he is launching a blank-check public VC fund, hoping to raise $500 million in an IPO.

Private Equity 60

Private Equity Venture Capital Equity Cofounder 60

Steve Blank

JULY 15, 2010

The collapse of the IPO market and dysfunctional math in the venture capital community has stacked the odds against you. Startup lifecycle in an IPO Market. Netscape’s 1995 IPO changed the rules. Number of Venture Backed Liquidity Events 1991-2000. Number of Venture Backed Liquidity Events 2000-2010.

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Berkonomics

AUGUST 27, 2020

Bankers, investors, strategic partners, and ultimately your buyer or even attorneys providing opinions for an IPO, will all be most impressed by your thoughtful early management decision to make their lives easier and their job more productive. The payoff. The post What’s a “data room” and how do you use it?

Software Review 62

Software Review Due Diligence Intellectual Property IPO 62

Steve Blank

APRIL 10, 2019

One other thing to note is that all employees – founders, early employees and later ones – all had the same vesting deal – four years – and no one made money on stock options until a “liquidity event ” (a fancy word to mean when the company went public or got sold.) That made sense. Today that’s less true.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

Startup Professionals Musings

JULY 27, 2018

Discussion of likely liquidity events and exit strategy. Since startup stock has little market value for several years until the company goes public (IPO) or is purchased (M&A), investors want to hear your strategy for offering them a good return on their investment.

Product 145

Product Intellectual Property Liquidity Event Exit Strategy 145

Berkonomics

FEBRUARY 3, 2022

First, the implied promise: Taking money from professional investors such as angels or VCs usually requires that you agree to seek an exit for those investors in your plan, often targeting five to seven years as the ideal period for growth before a liquidity event. What if you later decide to just keep control?

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

Berkonomics

SEPTEMBER 12, 2013

When we start a business, we are optimistic that we will succeed and dream of riches to follow when the company is sold or even participating in an IPO. But most of us dream of selling the business someday for lots of money and building our wealth upon that event. The liquidity event and beyond'

Liquidity Event 76

Liquidity Event Intellectual Property IPO Equity 76

Pascal's View

AUGUST 28, 2010

6) The most efficient fuel for this IPO engine is venture capital. v) “Since 1999, over 60% of IPOs have been VC-backed. Of the 85 IPOs priced so far this year, only 28 are up. Conclusion: If we don’t fix the IPO problem in America, we will not fix the job problem in America. GDP growth, the U.S. ” (ix) The U.S.

Venture Capital 56

Venture Capital America Initial Public Offering IPO 56

Startup Professionals Musings

DECEMBER 14, 2014

If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail. The control and growth dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Steve Blank

MARCH 18, 2011

Dot.com Bubble ( 1995-2000): “ Anything goes” as public markets clamor for ideas, vague promises of future growth, and IPOs happen absent regard for history or profitability. The reward for doing so was a liquidity event via an Initial Public Offering. The IPO offering document became the playbook for startups.

Internet 334

Internet IPO Silicon Valley Agile 334

Startup Professionals Musings

AUGUST 17, 2014

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. That’s why investors want to hear about your exit strategy. If you don’t have one, or intend to buy out investors with their own money, you probably won’t get much interest.

Liquidity Event 249

Liquidity Event Equity Venture Capital Merger 249

Startup Professionals Musings

AUGUST 19, 2017

If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail. The control and growth dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

JULY 19, 2013

If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail. The control and growth dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Hunter Walker

MARCH 8, 2014

The Early Team Still There and They’ll Be Your Tribe for Years : The founders and early team are still in place because there hasn’t been a liquidity event and the work is still exciting for them. Don’t think it makes total sense but hey, make it work in your favor.

Liquidity Event 134

Liquidity Event Early Stage Seed Stage Startup 134

Startup Professionals Musings

MAY 28, 2013

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. That’s why investors want to hear about your exit strategy. If you don’t have one, or intend to buy out investors with their own money, you probably won’t get much interest.

Liquidity Event 243

Liquidity Event Startup Equity Venture Capital 243

Startup Professionals Musings

FEBRUARY 13, 2016

Technically, this is your exit strategy, usually a merger and acquisition (M&A) or initial public stock offering (IPO). If you don’t plan a liquidity event, you won’t find many investors interested. How much and when do you foresee investors getting a payout?

Sweat Equity 120

Sweat Equity Advisory Board Liquidity Event Startup 120

YoungUpstarts

MARCH 11, 2015

This compensation can come in the form of a stock option , a stock appreciation right, or a similar financial instrument, which can potentially be quite lucrative for employees at the time of a merger, acquisition or initial public offering (IPO). Common shares can have value, even if other stakeholders contractually get paid first.

Valuation 100

Valuation Stock Options CPA Merger 100

Startup Professionals Musings

AUGUST 13, 2012

These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. Going public” (IPO) is another alternative, but not common. For a family business, don’t project an exit. Show how your rate of return would be attractive to investors.

Business Plan 283

Business Plan Sweat Equity Exit Strategy Intellectual Property 283

Gust

AUGUST 10, 2014

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. Thats why investors want to hear about your exit strategy.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

Berkonomics

JUNE 2, 2010

Even with fewer IPOs than a decade ago, the dream of shared wealth certainly is not dead. I know from my own experience that no matter how good you think you are at company-building, it is those who surround you with talent that make the difference and add extraordinary value to create an eventual liquidity event.

Liquidity Event 86

Liquidity Event Stock Options IPO Stock 86

Hunter Walker

NOVEMBER 20, 2013

3) The Alternate Liquidity Syndicate. Institutional VCs rely a model which optimizes for billion dollar outcomes via an acquisition or IPO. Or have different liquidity assumptions beyond acquire or IPO. Maybe they’d throw off cash dividends for years to come.

Syndicate 98

Syndicate Syndication South America Seed Stage 98

David Teten

JUNE 17, 2015

But the bad news: according to CB Insights , the average time for VCs to exit via M&A is 5 years, and via IPO is 7 years. Angels usually invest before VCs, so they should budget for at least 1-2 more additional years before liquidity. Roach; also see Expected Returns to Stock Investments by Angel Investors in Groups.).

Angel Investor 60

Angel Investor Angel Groups Liquidity Event IPO 60

Startup Professionals Musings

MAY 13, 2011

These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. Going public” (IPO) is another alternative, but not common. For a family business, don’t project an exit. Show how your rate of return would be attractive to investors.

Business Plan 290

Business Plan Sweat Equity Exit Strategy Intellectual Property 290

Berkonomics

DECEMBER 17, 2020

The strong advantage is that these organizations will stay with a company from acceptance to ultimate IPO or M&A sale, helping financially and with education, encouragement and introductions along the way. For early stage investors, the usual expectation is seven years from investment to expected liquidity.

Equity 62

Equity Finance Liquidity Event Angel Groups 62

Berkonomics

AUGUST 29, 2013

Of course, once the amounts from a sale or IPO exceed all the preferences by a substantial amount, everyone is happier since the preferred shareholders must either take their multiple of investment or convert to common, losing their preferred preferences, and participate ratably (or equally) with all the common shareholders.

Delaware 66

Delaware Liquidation Preference Liquidity Event Preferred Stock 66

Gust

AUGUST 5, 2012

These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. Going public” (IPO) is another alternative, but not common. For a family business, don’t project an exit. Show how your rate of return would be attractive to investors.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Startup Professionals Musings

APRIL 22, 2010

These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. IPO as an exit strategy is not recommended these days. For a family business, don’t project an exit. Show how your rate of return would be attractive to investors.

Business Plan 186

Business Plan Exit Strategy Sweat Equity Intellectual Property 186

ithacaVC

DECEMBER 14, 2011

Yes, it is possible to issue preferred stock without liquidation preference, but that is rarely done. Rather, preferred stock has the right upon a liquidation event to get its money back (a 1X LP) or, sometimes, a multiple of its money back (for example a 2X LP). million balance. ($3 3 million) to Series A LP. ($10

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

The Next Web

OCTOBER 7, 2013

What you need to consider: - x : percent ownership upon a liquidity event. Is there an IPO story here? Again this is somewhat simplified as the liquidity event (sale or IPO) may come as cash, stock, or a combination of the two. It doesn’t matter how high your offer is if your startup fails.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Gust

NOVEMBER 4, 2011

Redpoint was understandably disappointed that it didn’t get the chance to see its MySpace investment through to an IPO or later liquidity event at a higher multiple. News also funded the $69 million Intermix needed to buy out the 47% minority interest immediately so that it owned 100% of MySpace, Inc. of MySpace, Inc.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Gust

SEPTEMBER 5, 2012

Angel investors don’t expect to get repaid, nor do they really want to get repaid; the return on their investment, if the startup proves a success, will come in conversion to equity followed by an eventual liquidity event (sale or IPO of the company), with a return of at least 5x or 10x the initial investment if all goes well.

Finance 134

Finance Convertible Security Equity Seed Stage 134

Berkonomics

JULY 23, 2020

Of course, once the amounts from a sale or IPO exceed all the preferences by a substantial amount, everyone is happier since the preferred shareholders must either take their multiple of investment or convert to common, losing their preferred preferences, and participate ratably (or equally) with all the common shareholders.

Delaware 62

Delaware Liquidation Preference Preferred Stock Early Stage 62

Startup Professionals Musings

JUNE 6, 2022

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. It’s a lot easier to buy stock in a startup than it is to sell it.

Liquidity Event 300

Liquidity Event Angel Investor SEC Accredited Investor 300

Startup Professionals Musings

MARCH 13, 2020

Define an exit strategy for investors to liquidate their share. They prefer a liquidity event such as an IPO or an acquisition by an existing large industry player, with a valuation at that time of five multiples or more of your projected revenues. Back up your projections with a simple financial model.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

Startup Professionals Musings

SEPTEMBER 6, 2019

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. It’s a lot easier to buy stock in a startup than it is to sell it.

Liquidity Event 224

Liquidity Event SEC Entrepreneur Accredited Investor 224

abovethecrowd.com

APRIL 20, 2016

The pressures of lofty paper valuations, massive burn rates (and the subsequent need for more cash), and unprecedented low levels of IPOs and M&A, have created a complex and unique circumstance which many Unicorn CEOs and investors are ill-prepared to navigate. If 1999 was a wet (read liquid) bubble, 2015 was a particularly dry one.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). These are all rare, but real, and fortunately not anything we’ve dealt with in our firm.

Venture Capital 122

Venture Capital Cap Table LP Equity 122