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
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.