As a founding director of Borland International, I had significant shares in that company when it went public in 1986, and that gave me an exit.I’d acquired the shares as compensation for planning and advice, not by investing money; so the return wasn’t measurable in the standard way.
As a founding director of Borland International, I had significant shares in that company when it went public in 1986, and that gave me an exit.I’d acquired the shares as compensation for planning and advice, not by investing money; so the return wasn’t measurable in the standard way.Tags: Case Study On Production And Operations Management With AnswersAn Expository EssayCbse AssignmentSwat Team Research PaperEssays On Look Back In AngerEssay On Changes In N CinemaNus Ngs Coursework PortalProcess In Organizing A Research Paper
Having a minority share in a healthy, growing company, without any prospect of an exit, is a terrible scenario for investors.
My own angel investment activities include more than one investment in companies that are still healthy, still growing, still have happy founders, but no good prospects for exits in the foreseeable future.
So startups looking for angel investors or venture capital (VC) absolutely need an exit strategy because investors require it. And the rest of us, starting, running, and growing a business, but not looking for outside investors, will probably need an exit eventually; but there’s probably no rush.
The exit strategy related to startup funding, is what happens when investors who had previously put money in a startup get money back, usually years later, for a lot more money than they initially spent.
My general view on Exit Strategy is that it is a very difficult issue to answer properly because it is very difficult to forsee the future and each investor will have their own interpretation of the ‘correct’ answer.
But there are options open that must be analysed within the context of your business and industry so that a credible discussion can take place such that your potential investor has confidence in the abilities and ambition of your team.
And that should not be confused with similar phrasing describing the investors’ exit: an exit at “5X,” for example, would be one in which the investors received an actual exit amount, in money or shares they can sell, of five times what they originally invested.
You can understand how investors feel about exit strategy if you consider what happens to investors who don’t get exits. They put money into a company, but they get nothing back.
It is generally acknowledged that Management Team and Exit opportunity are the two most important factors. There is a brilliant video by Seth Godin in which he talks about a lot of things to include dealing with Investors and Exits, whereby he says that you have already agreed to sell your entire company when you raise one dollar of investment.
I am often asked, ‘Can a startup raise equity investment and not do an exit, i.e. It is the second of the videos in this blog and both are definitely worth watching.