Later today I’m presenting at the annual Rincon Ventures Summit in Santa Barbara
I thought you might like to see an advance copy of what I’m going to cover.
I speak privately a lot about getting an exit at a startup. I haven’t spoken publicly about it much but since Rincon asked – I agreed.
The main points I’m going to cover today are to demystify a lot of misperceptions people have about startup exists, notably:
- Acqui-hires are not that frequent, are hard to come by and people make much less money than you think (investors & founders). Often they are “soft landings” for PR purposes
- The median VC exit price for deals is $70 million (FLAG Capital via Bryce.VC). I’m assuming that’s for positive outcome deals. And I’m certain that many of these deals are not great returns for people because too much money went in
- There is a mythology amongst some LPs (funds that invest in VCs) and some VCs that “entry price doesn’t matter – only investing in the absolute best entrepreneurs.” That’s bullshit. People justify winners after the fact.
- There simply aren’t a lot of exits above $100m or even IPOs. So entry price matters a lot. Bimodal returns are a fallacy, many great VC funds are built on the power law curve.
- Companies are bought, not sold
- You need to build relationships early. People who tell you otherwise are wrong. They say the same about VC. They are wrong there, too.
- Being a radar screen of a buyer helps. So, too, does PR. Much as tech companies & VCs hate to admit it.
- You need to understand motives of buyer (talent, product, revenue, strategic purchase) and where you fit in
- People hate to acknowledge that location of team matters. Often it does. Outsourcing can be cheap. Remote teams can be higher retention for staff. Both can hurt you in an acquisition.
- Don’t put all your eggs in the “corp dev basket” – often deals are champions by the business units (product or sales)
If you have any problems downloading deck from above SlideShare presentation you can try this link.
(Cross-posted @ Both Sides of the Table)