VentureArchetypes LLC at VentureArchetypes LLCMark, this is a killer deck. Would you want to come speak at the next StartupExits.com conference in January? I'll email you an invitation...it's a fun show.6 months ago
Planning for an ExitSome Lessons for VCs & EntrepreneursMark SusterRincon Venture Partners LP & CEO Summit,November 2012@msuster
Understanding the Market for Venture Exits
Most Entrepreneurs Have Unrealistic Expectations of Exit Values IIcan always get can always get acqui-hired for acqui-hired for 15 million bucks 15 million bucks
Or As Pandodaily Put It
Of course it’s much harder than that – but youwouldn’t know it from the press
Most VCs Don’t Have a Strong Sense of Exit Values Either. It’s Not Only HRs
The Fallacy of Bimodal Returns. Great Funds Often Built in the MiddleSource: USV returndata per AVC.com
The Reality Is - There Aren’t Many VC Exits > $100 millionSource: Capital IQ And Many of These Raised Huge Sums of Money so Returns Aren’t Clear
And There Aren’t Many VC Tech IPOs EitherSource: Capital IQ
The Median VC Exit Value for 2010 Was $70 million Guess What? Entry Price MattersSource: Flag Capital via Bryce.VC
What Does This Mean forEntrepreneurs and VCs?
I Recommend Entrepreneurs Start Lean, Only Go Fat If Product/Market Fit FatProgress / Capital Keep Options Open Inflection Point Time
When The Hors D’oeuvres Tray is Passed Take Two
And Put One in Your Pocket
Just Don’t Take the Whole Tray!
As a VC We Try to Lean in Early on Winners & Avoid “The Mark Up Game”ownership % 3 Get 2 30% Ownership in Solid Performers 1 Lean Early on 20-25% 20% Big Winners Small Initial Check 10% $0.5 $2m $4m $8m Total investment ($m)
“Fat is good when you’re on to something really special, but … Sometimes NOT Having a Big VC Above you in the Cap Table is a Great Thing for both VC & Entrepreneur” It Keeps a lot More Options OpenSource: Mark Suster. Having been burned before by misaligned incentives on exits
Selling Your Company
Companies Are Bought, Not Sold PR Matters. I know. It shouldn’t. It does. Get Biz Dev or Sales Deal People buy people they know. Start Early. Need to Take Early Meetings (just like raising VC) Leverage VCs. Corp Dev use as a quality filter Use Banks Wisely. Some deals fees nothing compared to price increase, closure %. But bank must have skin in the game.
Need to Know What Type of Acquisition You Would BeValue to Acquirer Defensive Move Can’t Afford to Strategic Have A Threat Competitor Own Avoid or Delay Revenue Disruption Driver Product Gap Talent Hire $1m / Dev Location Matters Purchase Price
Organizational Purchases Champion Beat You You UpSell Your Product Business Buyer IT Dep’t Legal / FinanceSell Your Company Sales Product Corp Dev In some companies Corp Dev leads strategy / investments. In others they are the deal execution teams. Know your buyer.
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