What Every Startup And Corporate Should Know About Exits
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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.
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What Every Startup And Corporate Should Know About Exits
- 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)
- 4. 4 JUMP BIKES Uber, $200M HARMONIX MTV, $175M Makeblock (val. $367M) Memphis Meats (Gates…) BitMEX Formlabs GetAround Some SOSV Startups
- 5. We want 800 exits
- 6. 800 IPOs?
- 8. Seed SeriesA
- 9. ourstartup
- 10. The pom-pom, and the fear of missing it. After that, nothing else matters.
- 12. End game
- 13. Founders get paid Investors get paid
- 14. We need to learn
- 17. Founders, CFOs, VCs, corporates, bankers, lawyers, stock exchanges…
- 18. JOHN CHAMBERS CISCO CHAIRMAN EMERITUS 20 YEARS, 180 M&As
- 22. Startups should prepare or miss opportunities and leave money on the table Lesson One
- 23. Lesson Two Corporates will need M&As to stay relevant, and should build a playbook
- 25. Some Facts Most exits are M&A Most are < $100M 2-3 years after first contact
- 29. 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
- 31. FOSO Fear of Selling Out
- 32. FOSO Save years of life, stress, and risk Get ‘Exit / Bankable’experience It’s easier next time It’s NOT what most VCs want
- 34. 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
- 36. Corporate CEO says: ‘We’re building a new and huge division around startupA. The CEO of startupA will be its leader.’
- 37. Cisco case 1/3 top leaders from M&A 100 CEOs at Cisco !
- 38. 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
- 39. When to exit? Worst time? Best time?
- 40. Worst time(s) No money No growth No morale
- 41. Best time(s) Buyer ‘needs’you Consolidation Fast growth (with perceived cap)
- 43. Why buy you? Talent Market Technology Competitor Complement segment Complement geography Next gen
- 44. Needs you?
- 45. Consolidation
- 46. My first M&A 123 Multimedia For-Side Mobivillage Index
- 47. FitnessApps UnderArmour $475M MyFitnessPal Asics $85M RunKeeper UnderArmour $150M MapMyFitness Adidas $239M Runtastic Fitbit $18M Fitstar $1B
- 48. Social Games Disney $563M Playdom DeNA $400M ngmoco ElectronicArts $750M PopCap ElectronicArts $400M Playfish Zynga $210M OMGpop $2B
- 51. PV = nRT
- 52. Angel case 2010:Angel + Seed 2011:A 2013: B 2015: C 2019: M&A
- 54. “Good tech companies are bought, not sold. The question is thus: how to get bought?” George Patterson HSBC
- 55. Imagine…
- 57. Due diligence IP ownership Staff Contracts Client contracts Product plan …
- 58. No plan B One bidder 6 months of distraction Slow BD, No fundraising
- 59. Risks Missing the exit Leaving money on the table
- 60. “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)
- 61. Do This ! 01/ Build a list 02/ Connect 03/ Stay visible
- 62. 01/ The List 01/ Partners 02/ Competitors 03/ New Entrants
- 63. Targeting Check their press Check their IR calls Ask your contacts
- 65. 02/ Connect 01/ Events 02/ Intros 03/ Media
- 66. Connect with Business Development Corporate Development VCs & CVCs Their customers!
- 67. ‘How to get our attention? Do something cool for one of our customers.’ Todd Neville, Corp Dev Team Manager, IBM
- 68. How much? $1M/engineer Comparables 2x money raised 2x previous valuation Discounted cash flow …
- 69. Pricing What would you sell for? How much is the buyer ready to pay?
- 71. Pricing Revenue = Not that important What happens with their channels?
- 72. Bankers role Bidding (fee vs higher price) Bad cop
- 73. 03/ Visibility 三⼈人成⻁虎 sān rén chéng hǔ 3 men make a tiger
- 74. Get on their radar 01/ Media 02/ Events 03/ Meetings & updates
- 75. Recap: do this 01/ Build a list 02/ Connect 03/ Stay visible
- 77. Today Innovation is accelerating You can’t invent everything Startups might kill you
- 78. Market Shifts
- 79. 18 YEARS 14 YEARS 15 YEARS 7 YEARS ? YEARSYou Startup(s)
- 85. You’re tech too John Deere buys Blue River For $305M
- 87. Do This ! Study others playbooks Build your own Start small (?)
- 89. Cisco playbook 01/ Listen to customers 02/ Match cultures 03/ Pay for value 04/ Plan careers 05/ Expect some failures
- 90. Customers
- 91. Match Cultures
- 93. Corporate CEO says: ‘We’re building a new and huge division around startupA. The CEO of startupA will be its leader.’
- 95. Expect failures Portfolio play Industry avg: 2/3? Cisco: 1/3
- 96. Do This ! Study others playbooks Build your own Start small Start now
- 97. Why M&As Matter
- 98. Cycle of Life Re-circulate talent Re-circulate capital Gain experience Grow ecosystem