The startup ecosystem is enamored with unicorns but the reality is that many exits are ‘small’. Most of them are of the order of tens of millions of dollars. Those that are successful are the ones consciously pursued with a well-planned founder exit strategy. For first-time founders, who have taken on personal as well as professional risks, such early exits are a legitimate way of building financial security. I gave a talk in 2020 on founder exit strategy to shed light on this aspect of entrepreneurship. SINE, the venture incubator at the Indian Institute of Technology, Bombay hosted this as a ‘Power Hour’ session.
Increasingly, teams – not individuals – tend to launch startups because complementary skills improve the odds of entrepreneurial success. These teams go through an intense few years in pursuit of a high-growth opportunity. The flip side of high-velocity startups is the investment of time, effort, and savings into a new venture. Clearly, co-founders deserve to take some of the profits ‘off the table’ if their entrepreneurial venture is performing well.
In fact, an ‘early’ exit for the co-founding team is the norm. Most ventures end up getting bought out in a valuation range of $20M to $100M. However, is the exit a last-ditch salvage attempt or a well-executed business outcome? The latter requires not only the active participation of the Board and CEO but also the involvement of a seasoned professional to drive the deal.
Entrepreneurial Exit Coach
A coach can significantly improve the magnitude and probability of exits by guiding co-founders through the exit process. This person acts as a sounding board, devil’s advocate, and trusted counsel – all rolled in one!