The Startup Velocity Question: What is the Right Exit Strategy?

Sometimes, the answer is to give up on the Unicorn dream and seek an exit.

It is expensive to build a full-fledged sales organization.

The right answer may be to find a workable Positioning and seek an exit.

VCs assume 9 out of 10 of their investments are going to fail.

One will be a home run.

And that home run will pay for the rest to make the portfolio economics work.

It is well within the calculation of VCs that some of their ventures would need to seek an early exit. Instead of a portfolio company shutting down and offering a write-off outcome, if a 2X or a 3X return can be achieved, that is highly desirable.

Do your homework on how to achieve such an exit.

Present a gameplan to your investors.

They will respect you.

Note, Positioning is at the heart of successful exits.

So you have to fix your Positioning.

You have to Position for an early exit with a clear understanding of the gap in the product capabilities of the acquirer.

You have the understand the Pricing implications.

You have to analyze the bottom up TAM potential of such an exit.

You have to accordingly manage the exit price expectations of your investors.

Key Takeaways:

• Seeking an early exit can be a viable strategy when Unicorn status is unlikely.
• VCs expect most investments to fail. 
• Making 2X-3X returns attractive alternatives to write-offs.
• Positioning is crucial for a successful Exit.
• Understanding the acquirer’s product gaps, pricing implications, and TAM potential is essential.
• Managing investor expectations is key in planning an early exit.

My Question to You:

Are you seeking an early Exit?

If you think you need help, consider 1-on-1 Private Consulting with me. I will diagnose and create a path forward in an hour.

Photo Credit: Dimitris Vetsikas from Pixabay

This segment is a part in the series : The Startup Velocity Question