Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

What Every Startup And Corporate Should Know About Exits

1,283 views

Published on

Startups: prepare -- Corporates: build your playbook!
Talk given at the Hello Tomorrow Summit in Paris in March 2019, inspired by the 50 speakers of the "Exit Masterclass" series we ran in 2018 in SF, NYC, London and Paris.

Published in: Technology
  • Be the first to comment

What Every Startup And Corporate Should Know About Exits

  1. 1. What EveryStartup AndCorporate ShouldKnow AboutExits
  2. 2. GLOBAL DEEP TECH SEED FUND $525M under management 800+ investments (+150/year) #3 most active globally #1 in Health Tech / IoT / Life sciences HANDS-ON CAPITAL Focused accelerators Pre-seed: $100k-$250k Follow-on: up to $2M About SOSV SOSV PROGRAMS Hardware HAX (SF, Shenzhen) Biotech IndieBio (SF) RebelBio (London) Social & Mobile Chinaccelerator (Shanghai) MOX (Taipei) Food Food-X (NYC) Blockchain dLab (NYC)
  3. 3. 4 JUMP BIKES Uber, $200M HARMONIX MTV, $175M Makeblock (val. $367M) Memphis Meats (Gates…) BitMEX Formlabs GetAround Some SOSV Startups
  4. 4. We want 800 exits
  5. 5. 800 IPOs?
  6. 6. Seed SeriesA
  7. 7. ourstartup
  8. 8. The pom-pom, and the fear of missing it. After that, nothing else matters.
  9. 9. End game
  10. 10. Founders get paid Investors get paid
  11. 11. We need to learn
  12. 12. 7 “EXIT MASTERCLASS”
  13. 13. 50 SPEAKERS 500+ Participants
  14. 14. Founders, CFOs, VCs, corporates, bankers, lawyers, stock exchanges…
  15. 15. JOHN CHAMBERS CISCO CHAIRMAN EMERITUS 20 YEARS, 180 M&As
  16. 16. First impressions
  17. 17. Startups VCs Orbits
  18. 18. Startups VCs Corporates Bankers Lawyers PE Orbits
  19. 19. Startups should prepare or miss opportunities and leave money on the table Lesson One
  20. 20. Lesson Two Corporates will need M&As to stay relevant, and should build a playbook
  21. 21. Part1 WhatFounders ShouldKnow
  22. 22. Some Facts Most exits are M&A Most are < $100M 2-3 years after first contact
  23. 23. A B C D Survivalcurve USstartupsfounded between2003-2013 Pre-A ~40%can’traiseB ~75%can’traiseC
  24. 24. A B C D LikelihoodofAcquisition USstartupsfounded between2003-2013 Pre-A M&As ~60%byA ~80%byB
  25. 25. Lastroundbeforeexit(2015) Seed / Angel B A C D E+ Other
  26. 26. VC-Backed Exits
 in 2017 (US & EU) IPO $13.5bln 114 deals 9% PE Buy-Out 18.5% M&A $67bln 1,265 deals 72.5% 1/3 above $100mln 88.7% of exit value Source: PItchbook, 2017 data
  27. 27. CEO’s job: Maximizing optionality
  28. 28. FOSO Fear of Selling Out
  29. 29. FOSO Save years of life, stress, and risk Get ‘Exit / Bankable’experience It’s easier next time It’s NOT what most VCs want
  30. 30. FOSO Myths 01/ It’s a shame not to build a unicorn 02/ It’s a shame to sell early 03/ You can’t get rich quick 04/ Corporates are boring
  31. 31. Corporate CEO says: ‘We’re building a new and huge division around startupA. The CEO of startupA will be its leader.’
  32. 32. Cisco case 1/3 top leaders from M&A 100 CEOs at Cisco !
  33. 33. When NOT to exit? Revenue / profit Massive momentum Strong confidence in next 2-3 years Everyone is pumped up! + Softbank won’t invest in your competitor
  34. 34. When to exit? Worst time? Best time?
  35. 35. Worst time(s) No money No growth No morale
  36. 36. Best time(s) Buyer ‘needs’you Consolidation Fast growth (with perceived cap)
  37. 37. Why buy you? New market Existing market
  38. 38. Why buy you? Talent Market Technology Competitor Complement segment Complement geography Next gen
  39. 39. Needs you?
  40. 40. Consolidation
  41. 41. My first M&A 123 Multimedia For-Side Mobivillage Index
  42. 42. FitnessApps UnderArmour $475M MyFitnessPal Asics $85M RunKeeper UnderArmour $150M MapMyFitness Adidas $239M Runtastic Fitbit $18M Fitstar $1B
  43. 43. Social Games Disney $563M Playdom DeNA $400M ngmoco ElectronicArts $750M PopCap ElectronicArts $400M Playfish Zynga $210M OMGpop $2B
  44. 44. Growth Time Inflection point Asymptote EXIT HERE? Fast growth
  45. 45. PV = nRT
  46. 46. Angel case 2010:Angel + Seed 2011:A 2013: B 2015: C 2019: M&A
  47. 47. Develop 6th Sense
  48. 48. “Good tech companies are bought, not sold. The question is thus: how to get bought?” George Patterson HSBC
  49. 49. Imagine…
  50. 50. Due diligence IP ownership Staff Contracts Client contracts Product plan …
  51. 51. No plan B One bidder 6 months of distraction Slow BD, No fundraising
  52. 52. Risks Missing the exit Leaving money on the table
  53. 53. “Selling starts on day 1. And only the CEO can do this. Work out who will be your buyer. Constantly articulate why a company should buy you. Bring clear messages so it can be presented upwards.” Chris Gilbert, Ubiquisys (acq. Cisco, $300M)
  54. 54. Do This ! 01/ Build a list 02/ Connect 03/ Stay visible
  55. 55. 01/ The List 01/ Partners 02/ Competitors 03/ New Entrants
  56. 56. Targeting Check their press Check their IR calls Ask your contacts
  57. 57. 02/ Connect 01/ Events 02/ Intros 03/ Media
  58. 58. Connect with Business Development Corporate Development VCs & CVCs Their customers!
  59. 59. ‘How to get our attention? Do something cool for one of our customers.’ Todd Neville, Corp Dev Team Manager, IBM
  60. 60. How much? $1M/engineer Comparables 2x money raised 2x previous valuation Discounted cash flow …
  61. 61. Pricing What would you sell for? How much is the buyer ready to pay?
  62. 62. Pricing Revenue = Not that important What happens with their channels?
  63. 63. Bankers role Bidding (fee vs higher price) Bad cop
  64. 64. 03/ Visibility 三⼈人成⻁虎 sān rén chéng hǔ 3 men make a tiger
  65. 65. Get on their radar 01/ Media 02/ Events 03/ Meetings & updates
  66. 66. Recap: do this 01/ Build a list 02/ Connect 03/ Stay visible
  67. 67. Part2 WhatCorporates ShouldKnow
  68. 68. Today Innovation is accelerating You can’t invent everything Startups might kill you
  69. 69. Market Shifts
  70. 70. 18 YEARS 14 YEARS 15 YEARS 7 YEARS ? YEARSYou Startup(s)
  71. 71. S&P 500 Lifespan Rolling7-yearavg. 90yearsin1935 18yearsin2014
  72. 72. Google233 Amazon82 Facebook77 Apple105 Microsoft219 Cisco216 Intel93 TOTAL1,024 Baidu10 Alibaba24 Tencent12 Softbank10 Rakuten32 TOTAL716 Acquisitions
  73. 73. Investments Google81+623 Amazon78 Facebook12 Apple10 Microsoft106+255 Cisco200 Intel57+1,286? TOTAL2,000+ Baidu89 Alibaba150 Tencent351 Softbank169 Rakuten63 TOTAL822
  74. 74. You’re tech too John Deere buys Blue River For $305M
  75. 75. InvestmentsYou’re tech too
  76. 76. Do This ! Study others playbooks Build your own Start small (?)
  77. 77. M&ASkillset Deal flow Valuation Negotatiation Integration
  78. 78. Cisco playbook 01/ Listen to customers 02/ Match cultures 03/ Pay for value 04/ Plan careers 05/ Expect some failures
  79. 79. Customers
  80. 80. Match Cultures
  81. 81. Corporate CEO says: ‘We’re building a new and huge division around startupA. The CEO of startupA will be its leader.’
  82. 82. HR Matters Integration Incentive Management Autonomy Career
  83. 83. Expect failures Portfolio play Industry avg: 2/3? Cisco: 1/3
  84. 84. Do This ! Study others playbooks Build your own Start small Start now
  85. 85. Why M&As Matter
  86. 86. Cycle of Life Re-circulate talent Re-circulate capital Gain experience Grow ecosystem
  87. 87. Thank you! ben@hax.co @benjaminjoffe www.slideshare.com/hax_co www.hax.co/startup-exits

×