The entrepreneur’s guide: Tips for your next startup exit

What’s the best way for a startup founder to ensure that his or her company is well-positioned for success?

The answer isn’t a secret: it’s about preparing your business for an exit. If you’re not planning for how your startup will be sold, acquired, or taken public, then you’re missing out on some of the most important decisions in your company’s life cycle.

An exit strategy can prove invaluable in helping startups grow and scale into sustainable businesses – especially when paired with industry insights from investment firms like First Round Capital.

The Entrepreneur’s Guide to Exits

An exit is the sale of your company. Why would you want to sell your business? The biggest reason is that a sale allows you to cash out and get some return on all the hard work you’ve put into building it.

Your motivation for selling may be different from mine, but we both have one thing in common: We want to get the best possible deal for ourselves and our investors.

There are many ways to achieve this goal. So, how to succeed as an entrepreneur, founder, and investor?

Selling a startup is a lot like getting divorced. You’re going to be in it for the long haul, so you want to make sure that you’re on the same page and that you’re prepared for the ups and downs of marriage.

Don’t let the initial excitement of a new relationship cloud your judgment when making an acquisition offer or accepting one.

When Should You Sell Your Company? The answer to this question depends on the stage of your startup. You should be ready to exit when you have a profitable, growing business that has a good team and product.

How to Sell Your Company for 10x (or More)

  • Consider selling to a competitor.
  • Find out what they are worth, and then find a buyer that is interested in more than the product or service you can provide them.

The Groupon story is the perfect example of this. Groupon was sold for $1.35 billion, but the founders only got $0.10 per share. They had to split that money with other investors who had their own stakes in the company.

So it was a lot less than you might think at first glance.

The founders each got about $1 million from the deal–not bad for an investor, but not great considering how much more they could have made if they’d sold earlier on (and hadn’t brought a ton of new investors into the company).

Things to Look for During a Tech Startup Acquisition Review

  • Look for a good team.
  • Look for a good product.
  • Finally, you need to consider the market.

You can have the best team and product in the world, but if there is no market for your product or service, then your company will fail and you will lose everything!

Common Pitfalls That Can Trip Up a Technology Startup Acquisition

When you’re in the process of selling your company, here are some things to look out for:

The founder is the first to go. This one is always true and often comes as a shock to founders.

They aren’t prepared for how quickly things can change after a deal closes or what it will mean for them personally. It’s not uncommon for founders to think they’re going to stay on board after the sale, only to find out later that their role has changed or been eliminated altogether.

The founder is last to know about important details about the acquisition process (such as whether or not there will be an offer).

The founder gets fired in most acquisitions.

This isn’t necessarily because they did anything wrong—it’s just that an acquirer needs someone who can run things effectively right away and understands how everything works inside of their new organization (which includes knowledge of existing systems) while also having enough experience in running startups successfully before joining forces with another company.

Forget About the Exit Strategy – Here’s Why It’s Important to Build Companies That Last

If you’ve been building a company for a while, it might be time to consider something that’s important but often overlooked: the exit strategy.

The term “exit strategy” has gotten a bad rap over the years. When people think about an exit strategy, they typically assume it means selling their business. And while that is one way to get out of the startup game, it’s certainly not your only option.

In fact, if you spend all your time thinking about how to sell your company instead of focusing on making yours as valuable as possible (and having fun along the way), then maybe now’s not the right time for an exit strategy after all—because chances are good that your business will fail!

Reasons Startups Fail and How to Avoid Them

No market need. If your product or service doesn’t fill a need, people won’t buy it.

Lack of funding. Your startup may be able to grow quickly but will burn through its cash reserves quickly if it doesn’t have a steady flow of funding coming in each month.

Poor leadership. A good leader can turn around almost any bad situation and make things work out for his or her company; a bad leader can cause problems that no one else can fix, leading to the failure of their business venture.

No product/service differentiation (or some other critical component).

If there’s nothing that makes your startup stand out from its competitors—or if you’re not doing something new with what already exists—then there’s no reason why customers should go with yours instead of someone else’s solution to the same problem they’re looking at solving themselves right now!

Bad timing: Being too early or too late in introducing a new idea into the marketplace can doom even the best ideas from being successful.”

Mistakes Startups Make When Seeking Funding–and How to Avoid Them

In seeking funding, it’s important to avoid four common mistakes:

Being too ambitious or too conservative. If you’re a tech startup and you’re wanting to expand globally, but have only limited channels for doing so, you might not be prepared for the amount of time and effort that goes into developing overseas partnerships.

Likewise, if you’ve just launched your company and want to expand right away—even though there are still kinks with your product or service—you need to take care not to overextend yourself.

Not being timid enough while also not being too timid. If your goal is expansion within a year or two of launch and growth thereafter, then don’t get hung up on old limitations or fears holding back progress in those areas (such as hiring new employees).

On the other hand, if these fears persist even after having gained some traction at home (or abroad), then they may actually serve as legitimate roadblocks preventing further expansion until they’re addressed directly by addressing whatever underlying issues cause them in the first place.

This way when it comes time for global expansion down the line all parties involved will know exactly where everyone stands with regard

Knowing how to sell your company can make the difference between success and failure

Knowing how to sell your company can make the difference between success and failure. Selling a business is often as much about timing, circumstance, and luck as it is about knowing what you’re doing.

A lot of startup owners are afraid of selling their businesses because they haven’t been successful at launching their own companies yet. The truth is that no one wants to sell their company until they have to, but if you know how to sell then it’s easier than you think!

First things first—don’t wait until your company is in trouble before looking for a buyer.

It’s better if you try and find potential purchasers while things look good so they’re more inclined to buy from you when times are tough (which happens more often than not). Also, don’t be afraid of getting out of a bad deal.

There are plenty of buyers who will take over liabilities like debt or bad contracts with no questions asked!

Conclusion

If you’re in the midst of selling your startup, remember that the process is more complex than it seems.

The key to a successful exit is understanding when and why you should sell. It’s also important to understand how much money different types of investors are willing to pay for different companies at different stages, as well as what kind of value they’re looking for in return.

This guide has given you some great tips on how to prepare yourself before starting this process so that when it comes time for an acquisition review or acquisition offer (depending on what type of exit strategy you have), there won’t be any surprises!