Startup investors look for an exit in the 5-7 year range.
As a startup, you need to consider the exit from the beginning as the exit strategy can inform your decisions around funding, hiring, and more.
Here are several exit options to consider:
– Mergers and acquisitions – most companies exit by being bought by a bigger company
– Going public – some companies still use an IPO for an exit. It can be expensive due to compliance, so fewer companies take it
– Private equity firm – more companies are staying private longer and often use PE firms to give the early investors an exit
– Revenue sharing – some investors exit by taking a revenue share for their return
– Liquidation – some companies can be sold for the assets to provide a return to the investors
– Share buyout – some investors will accept a buyout of their shares from the company to provide an exit in the event there is no other option
If your investors are family members or others who do not expect to be paid back, then you can skip the exit and just maintain the business
As you launch and grow your business, keep a list of potential exit options and consider what you would need to do to achieve it.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.