Exit plans are an integral part of the initial VC investment process so it’s always built into the roadmap for up and coming startups.
As a startup founder, you’re aware that investors want to know when you plan to “cash out”. Investors what to know when they can expect a return on investment and entrepreneurs seek an exit as well to gauge their future involvement in other startups.
Here are four successful exit strategies to consider when creating your business strategy:
Merger and acquisition is common for emerging startups looking to exit but these acquisitions happen often but aren’t publicized as much as other options. Merging with a giant company within your market is relatively typical as it gives the larger companies the unique product and team that your business has already built and in return you gain a library of resources on the largest scale.
IPO is what everyone thinks of when speaking of a startup exit. Growing your startup to the stage of an initial public offering is what the industry means when they use the phrase ‘going public’. Although this exit knowingly puts your business in the shareholder’s hands because they hold equity through shares that can be traded on a daily basis.
Monetizing on your own is a road less traveled but it’s undeniable a profitable plateau that many startups have trouble reaching. If you have a secure business with a stable foundation in your industry, create monetization streams through your product that will allow you and all invested parties a consistent revenue flow. This exit allows you to keep ownership of your startup and ultimately creative control as well.
Sell. Usually happening more quietly, selling your company in your entirety is a great way to fulfill all debts and pay your salary as you gear up for your next entrepreneurial adventure. A straightforward sale of a startup tends to happen between two parties in the same personal network. But ideally, you want the candidate to have experience in the market and the intellect and ambition to grow the business to new levels.