socialmedian: Planning Your Exit

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Planning Your Exit

Source: readwriteweb

Aug 13, 2009

Summary

This is one post/chapter in a serialized book called Startup 101. For the introduction and table of contents, please click here.

If you have raised money from investors, you will need to sell the company at some point for them to get a financial return. It's simple: if you don't want to sell your company, then don't raise external equity capital; if you want to maintain control indefinitely, then opt to incur debt instead (and meet your debt covenants). You may find an unusual breed of equity investor who is looking for long-term dividends. But the normal deal with venture investors is to sell the company within approximately five years so that they can get a capital gain.

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Four Tips to Get a Sky-High Valuation

Ever hear about those deals that have sky-high valuations at exit? How do they do that? Here are the four things you need to do:

Create competition for a critical scarce asset. The best exits come when two Goliaths fight in a market and you have that one critical strategic thing (customers, users, technology, whatever) that makes the difference. Two

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