Here is Why You Need a Good Startup Exit Strategy

Startup Professionals Musings

If you startup is your dream, why would you want to think about an exit? There are two very real and practical reasons why you need to plan an exit: Outside investors want to collect their return. Assuming your startup takes off, you will probably find that the fun is gone by the time you reach 50 employees, or a few million in revenue. So here are the most common exit strategies and considerations these days for planning purposes: Merger & Acquisition (M&A).

What Startups Need to Know About Exit Strategies

Up and Running

The exit strategy isn’t about you, it’s about your investors. Startups looking for angel investors or venture capital (VC) absolutely need an exit strategy because investors require it. The exit is what gives them a return. Exit strategies related to startup funding are quite often misunderstood: The “exit” in exit strategy is for the money, not the startup founders or small business owners.

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8 Keys To Preparing Early For Your Next New Venture

Startup Professionals Musings

Although many won’t admit it, true entrepreneurs can’t wait to exit their current startup, and build a new and better one with their next great idea. For these reasons, I always look for an overt exit strategy in every startup I might consider for an angel investment.

6 Strategies For Startup Exit That Investors Accept

Startup Professionals Musings

Yet one of the first things a potential equity investor asks about is your exit strategy. Here are three important reasons for the question: Good investment paybacks normally require an exit event. Startups with no exit planned will minimize investor returns. No exit.

8 Steps to Exit Your Startup With Pride And Profit

Startup Professionals Musings

Although many won’t admit it, true entrepreneurs can’t wait to exit their current startup, and build a new and better one with their next great idea. In addition, current investors want to see every startup go public or be acquired, as an exit event, so they can get their due return for that investment which has been tied up for the last few years. For these reasons, I always look for an overt exit strategy in every startup I might consider for an angel investment.

Startup Exits Should Be Positive and Planned Early

Startup Professionals Musings

If you startup is your dream, why would you want to think about an exit? There are two very real and practical reasons why you need to plan an exit: Outside investors want to collect their return. Assuming your startup takes off, you will probably find that the fun is gone by the time you reach 50 employees, or a few million in revenue. So here are the most common exit strategies and considerations these days for planning purposes: Merger & Acquisition (M&A).

Build your own Startup Death Clock

A Smart Bear: Startups and Marketing for Geeks

Maybe you should be spending your time getting revenue instead of ruminating on the philosophy of startups with strangers in the comment section of some blog. Of course as you improve your profitability — hopefully through more revenue but possibly through lower expenses — this date will change. First we track our expenses measured daily as "monthly accural revenue for past 30 days." Second we track the same concept but with revenue.

Sideways Startups: An Investor’s Dilemma

Gust

One-half of angel-funded companies fail, which is why a winning Investment Strategy for Angels includes diversification. Amidst all the talk of failures and exits, we forget there are actually three possible outcomes for angel-backed startups. Typically, angel-funded companies that are going sideways have 1-10 employees and sufficient revenues and earnings to be sustainable, but are not attractive acquisition candidates to larger companies.

Outside capital: do or die?

Gust

So: think deeply about the nature of your competitive advantage, your basic revenue vs. expense model, and whether the perception of a well-funded venture is important or not. Invested Interests angel investment angel investors board of advisors entrepreneurs entrepreneurship execution exit strategy fundraising startups tactics venture capitalA gigantic percentage of startup literature concerns how to raise capital.

Keep It Under Your Hat: Valuation Caps and the $650 Million Sale of MySpace for $125 Million

Gust

Depending on the circumstances, they can shape the fundamentals of an exit, redistribute value among stakeholders, or even kill a deal altogether. This discussion expands on my Quora answer to a specific question: “ Why were the stock options of MySpace employees worthless even though the company was sold to News Corporation for hundreds of millions? ” The complete story includes a startup-within-a-startup, investments and exits by two VC firms, and some genuine corporate drama.

How I Started, Grew & Sold An E-commerce Business For Quarter Million Dollars ($250,000) – Part 2

Entrepreneurs-Journey.com by Yaro Starak

This article picks up from that point onward, discussing the challenges we ran into once we went into operation mode, the invaluable lessons that only first-hand experience can teach, the exit strategy which was the $250,000 sale of the website, and finally my overall concluding thoughts on the entire experience. The Exit Strategy One fine weekend afternoon I received an email indicating interest in our business, and whether we were open to discussing the potential sale of it.

How to value your company for sale (Part 1)

A Smart Bear: Startups and Marketing for Geeks

They’ve heard rules of thumb like “A growing software company is worth 5 times their trailing 12-months revenue.&# Even narrowing the field as much as feasible, revenue multiples varied between 1.2x The “Multiples&# argument does work well in industries where company’s growth and revenue is highly predictable. accounting, law, design) where the mechanisms for revenue and profit are well-known.

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How To Find Support Resources For Your Startup Stage

Startup Professionals Musings

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). Growth and exit stage. This normally means more than 30 employees, and more than $1 million in revenue.

5 Steps For Penetrating A New Market

YoungUpstarts

Between choosing location in new cities to creating an exit strategy after you attain success, penetrating a new market requires a strategic plan. Defining your market and performing due diligence is crucial in understanding market potential and justifying new market strategies to stakeholders and investors. This will also help you optimize your growth marketing strategies for scale. Decide on Growth Strategies. Map Out an Exit Strategy.

How To Sell Your Business For Maximum Profit And Why It’s Best To Sell When Business Is Thriving

YoungUpstarts

by Michelle Seiler Tucker , author of “ EXIT RICH: The 6 P Method to Sell Your Business for Huge Profit “ Successfully starting and growing a business can be a tough challenge for even the most adept entrepreneurs.

8 Indications Of A Real Entrepreneur Versus A Hacker

Startup Professionals Musings

External investors expect a documented business plan, with clear targets on funding needed, use of funds, revenue projections, return potential, and exit strategy.

10 Keys To Investor-Friendly New Venture Financials

Startup Professionals Musings

In that context, I offer the following financial projection strategies, from my own experience: Forecast a business that has plenty of room to grow quickly. If you insist on projecting $100 million in sales the first year, smart investors will likely run for the nearest exit.

10 Key Business Plan Elements Not In A Product Spec

Startup Professionals Musings

All startups, including non-profits, need revenue to thrive, such as such as from subscriptions, retail, online, licensing, or services. They want to see revenue to share in the return. Here I recommend a 5-year projection of revenues, expenses, and funding requirements.

Smart Entrepreneurs Plan Ahead For A Startup Exit

Startup Professionals Musings

Yet one of the first things a potential equity investor asks about is your exit strategy. Here are three important reasons for the question: Good investment paybacks normally require an exit event. Startups with no exit planned will minimize investor returns. You probably will do that job poorly, unless you plan your exit early, to move on to your next startup role, to do that better the next time. No exit. entrepreneur exit IPO lifestyle m&a startup

8 Angel Funding Realities In Search Of A New Venture

Startup Professionals Musings

Make sure these cover your business model and exit strategy, so the angels see how both of you will make a reasonable return. To be fundable, fifth year revenue projections need to be in the $20-$100 million range.

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8 Key Business Elements Set Startup Investor Interest

Startup Professionals Musings

Strategies that I do not recommend include opening the discussion with a big number, hoping to make a more reasonable value feel like a good deal, or starting with a tiny number, hoping to entice interest from everyone.

For Equity Investors, A Startup Has To End To Win

Startup Professionals Musings

Yet one of the first things a potential equity investor asks about is your exit strategy. Here are three important reasons for the question: Good investment paybacks normally require an exit event. Startups with no exit planned will minimize investor returns. You probably will do that job poorly, unless you plan your exit early, to move on to your next startup role, to do that better the next time. No exit. entrepreneur equity investors IPO startup exit

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Machine Learning Meets the Lean Startup

Steve Blank

While these acquisitions have teams of great researchers, they rarely contribute actual revenue generating products (because most never reached that stage when they were acquired.) The irony is that the acquisitions made later in the hype cycle – when companies have built real products that customers want, are the ones that generate revenue and profit for the acquirer. Exit Strategy. Exit Strategy was building the penultimate planning tool.

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Machine Learning Meets the Lean Startup

Steve Blank

While these acquisitions have teams of great researchers, they rarely contribute actual revenue generating products (because most never reached that stage when they were acquired.) The irony is that the acquisitions made later in the hype cycle – when companies have built real products that customers want, are the ones that generate revenue and profit for the acquirer. Exit Strategy. Exit Strategy was building the penultimate planning tool.

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Funding Alternatives Change As Your New Venture Grows

Startup Professionals Musings

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). Growth and exit stage. This normally means more than 30 employees, and more than $1 million in revenue. Some entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan.

How Leadership Styles Evolve To Match Business Stages

Startup Professionals Musings

An exit strategy is being discussed by senior management and funding partners. There was no consensus as to when the product would be completed, what the definitive specs were and what revenues could be generated. By Ernst Gemassmer, Chairman, Startup Professionals As a retired executive I now reflect on my own leadership styles in different situations during my extensive career.

7 Things To Consider When Buying Property For Your Business

YoungUpstarts

You should consider more than just the purchase price and the potential revenue-generating potential of your property; you’ll also need to consider the ongoing maintenance costs. Have an exit strategy. Finally, have some kind of exit strategy in place before you purchase the property, so you can make a more logical decision for what type of property to buy.

Seek Support Organizations Based On Startup Stage

Startup Professionals Musings

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). Growth and exit stage. This normally means more than 30 employees, and more than $1 million in revenue. Some entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan.

These 10 Key Elements Make a Business Plan Fundable

Startup Professionals Musings

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Describe your market penetration strategy, sales channels, pricing, and strategic partnerships. Exit strategy.

5 Ways to Make Your Startup a Choice Investment

Startup Professionals Musings

This requires a visible focus on the company’s revenue model, the costs to get there, and cash on hand. Exit strategy. What’s most realistic these days is an exit via sale to an existing major company for which you solve a meaningful problem. Shooting for that sort of exit over a three to five year period is usually the best strategy. No exit strategy means no return to investors. People with money to invest have choices.

5 Clues To Investor-Friendly Financial Estimates

Startup Professionals Musings

Aggressive revenue projections and growth rate. Revenue in the fifth year should be at least $20 million, with a growth rate average of 100% per year. In other words, revenue projections are not the place to be too conservative or wildly optimistic. Financial projections for investors should always show an annual cost of goods sold and gross margins line, as well as revenue. That’s why investors want to hear about your exit strategy.

Equity 203

Why Pitching Your Product Is Not Enough For Investors

Startup Professionals Musings

Potential investors love to see gross margins in the fifty percent range or greater, with recurring revenue through subscriptions, follow-on sales, or services. Customized marketing strategy and realistic sales plans. “If If we build it, they will come” and “word of mouth” are not credible marketing strategies these days. Five-year financial projections of revenue and expenses. Discussion of likely liquidity events and exit strategy.

Investors Expect Ten Essentials in a Business Plan

Startup Professionals Musings

Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Describe your market penetration strategy, sales channels, pricing, and strategic partnerships. Exit strategy.

How to Pitch to Investors in 10 Minutes and Get Funded

Up and Running

Your revenue or business model. Customer acquisition: Marketing and sales strategy. Show what you’re projecting in revenue (per product) over the next three to five years. Your exit strategy. If you’re seeking large sums of investment capital (over $1M), most investors will want to know what your exit strategy is. Image via WOCinTechChat. I know what it’s like to pitch to investors—both angels and venture capitalists.

Adding Slides Does Not Enhance Your Investor Pitch

Startup Professionals Musings

In this section, you need to be passionate about recurring revenue, profit margin, and volume growth. Implicit in this is the go-to-market strategy. Describe marketing strategy, sales plan, licensing, and partnership plans. Project both revenues and expense totals for next five years, and past three years. Exit strategy. What is the planned exit strategy (IPO, merger, sale, including likely candidates)? What is the timeframe for the exit?

Financial Management Guide For The Self-Employed

YoungUpstarts

As a management tool, develop a business plan with a five year projection and an exit strategy. Do not be afraid to create more than one revenue stream. At the end of the day, a dollar from one revenue stream is as good as four quarters from another. You may love what you do and be filled with passion for every customer you serve as a self-employed business owner, but enthusiasm does not pay the bills. For that, you need a great product and good financial management.

10 Business Elements Required to Rise Above the Crowd

Startup Professionals Musings

Common failures I see along these lines include: solutions that are "nice to have" but don't address painful problems; a business model that lacks a means for bringing in revenue; and a founder who has turned a blind eye toward his or her competitors. Validated pricing and a sufficient revenue stream. Free products may sound attractive, but every business requires at least one revenue stream to survive.

Join The Unicorn Club Of Billion-Dollar Companies

Startup Professionals Musings

Premium ventures need real traction, such as 100 million users, 10 million in revenue, or brand recognition around the world. Additional defensibility elements that unicorn investors look for include speed of implementation, rate of revenue and user growth, and exceptional team strength and leadership. Credible yet flexible exit strategy.

8 Ways An Investor Pitch Differs From A Product Pitch

Startup Professionals Musings

Every customer understands that your solution has to generate more revenue than cost, but you should not put that data in a customer pitch. Of course, these should never be in a customer pitch, but investors expect an overall strategy with specific budgets, milestones and metrics. If we build it they will come” is not a marketing and sales strategy. Projected revenues and expenses over the strategic period. Potential investor return calculation and exit strategy.

Helping Entrepreneurs Succeed: Dick Costolo

Scott Edward Walker

In this interesting, three-minute clip from a few years ago, Dick provides the following four nuggets to entrepreneurs: Have an authentic company voice; Have an entrance strategy, not an exit strategy; Don’t maximize short-term revenues by sacrificing long-term goals; and. To Our Clients & Friends: Welcome to our weekly series “ Helping Entrepreneurs Succeed.”

5 Rules of Thumb for Startup Financial Projections

Startup Professionals Musings

Aggressive revenue projections and growth rate. Revenue in the fifth year should be at least $20 million, with a growth rate average of 100% per year. In other words, revenue projections are not the place to be too conservative or wildly optimistic. Financial projections for investors should always show an annual cost of goods sold and gross margins line, as well as revenue. That’s why investors want to hear about your exit strategy.

Savvy Entrepreneurs Look for More Than Funding

Startup Professionals Musings

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). Growth and exit stage. This normally means more then 30 employees, and more then $1 million in revenue. Some entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan.

What’s the Difference Between a Small Business Venture and a Startup?

Up and Running

Difference #3 – planning for the ‘end’ or the exit strategy. “Startups looking for angel investors or venture capital (VC) absolutely need an exit strategy because investors require it. The exit is what gives them a return.” If you’re pitching for VC funding without an exit strategy, you’re unlikely to get it. Venture capitalists need an exit strategy as they need to maximize their ROI.