Hot answers tagged exit-strategy
14
Let's assume you can get a meeting with Bigcompany (which may not even be possible). And assume that Bigcompany hasn't already thought of your idea.
Put yourself in Bigcompany's position. Someone, out of the blue, brings you a barely functional product that integrates with your software and does something. Do you even care? If the idea seems worthwhile, why ...
11
To me, the obvious starting point is your 600 customers. Do you even know why they are your customers? It seems to me you do not know what they really like about your product, and what they think could be added or improved. Do you know anything about those that did not choose your offering? It would be useful to know why they did not go with you.
I ...
11
I took a look at your web site. You have chosen an unbelievably competitive market, where your competition can afford to run TV ads during the Super Bowl. Your chance of success is vanishingly small.
So ask yourself, how much in sales did you make in the last quarter? And how much in the quarter before that? Is the sales number at least doubling every ...
9
Sorry to hear about your situation.
You're in there three years - it would be a shame not to benefit from it (especially given recent events).
What does your agreement state? Do you have a vesting schedule? Is there a early exercise on change of control clause?
Can you have (have you had) a sitdown with the other founder and have a heart to heart?
...
6
GET A SALESPERSON. I can't believe you don't have one. Bring someone in who will sit there all week long and call up every single condo and try to get them to buy. Pick a wealthy neighborhood and work down the streets, one at a time, cold calling. Call every single happy customer and ask them to refer two others.
If the salesperson doesn't pay for ...
6
I'm guessing that the investors would not be surprised to hear that you are ready to move on to other things. After all, that's what entrepreneurs do.
Any legal obligations you have will be in writing. Make sure you re-read any contracts you have between yourself and the company.
Beyond legal obligations, I would just approach the majority investor(s) ...
6
There isn't really much you can do to protect yourself against competition. That is one of the aspects of a free market.
Even a patent won't help you against a much bigger competitor, as they can tie you up in court cases for years and bankrupt you, if they choose.
The best thing you can do is use your agility to your advantage. That is, launch, get users ...
5
I have been in a similar situation. We had a team of 3 engineers working, some on equity, some on part salary, and we needed something that a so-big-you-heard-of-them company had. We approached them, gave our spiel.
They basically told us that we couldn't possibly have accomplished what we had already accomplished in the time we claimed to. (We had.) Nor ...
4
I'd look at it from the point of view of the companies who might buy you out in x years time. They either want to do one of two things:
Remove you from the market because they are losing too many customers to you.
Add your product to theirs because you add useful features, you have higher growth and you open up new markets for them.
(1) is quite a ...
4
He cannot GIVE his shares back (unless that was in his employment contract via a vesting clause). The corp (or you) can BUY the shares (buy all the shares for $1, if you both agree).
One key issue in legal stuff is the concept of 'consideration.' In short, this means someone cannot give something without getting something in return. Fair doesn't factor into ...
4
Tell your customer that...
- You appreciate the offer
- You are honest and the truth, at this stage of your startup, is that you cannot give them the level of service they require because you are small, have other projects under way, have personnel rotating, etc.
- HOWEVER, tell them at what minor scale you can operate, so you let the door open to still ...
3
There are two angles - the legal and the practical. Legally, if you have shareholder agreements, then it should be pretty clear what will happen. If you're vested (or if you had no vesting) then you own the shares and there's not much the other shareholders can do about it. If you're not vested then the shares go back to the the company. If you have no ...
3
Pretty much the same thing happened to me (the technology guy in the company). We ended up closing the company and released the source code to the customers. I ended up continuing to do for the existing customers for changes / enhancements / support, but it only requires a fraction of the time than before than when my effort was on cranking out new features ...
3
Questions that I would consider when thinking about a buy-sell agreement include:
Background Question: Is the LLC manager managed or member managed? This will determine if some of the questions below are relevant or not.
For what exits will a member/manager be paid and will there be a discount for different exits? Examples include:
Retirement receives ...
3
It sounds like you have a good business, but one that is not appropriate for venture capital.
Don’t raise venture capital. Your business does not have the profile to generate the right return for a real venture capital fund. VCs are looking to fund businesses that can grow to fifty plus million dollars in revenue and that can be exited for hundreds of ...
3
It sounds like you want an Angel investor, not VC.
I know this sounds pedantic, but "VC" generally means someone looking for 10x return over 5 years, and you can't provide that, nor does it sound like you necessarily want to, and that's OK!
Angels are much more flexible because they are (generally) just accredited investors and therefore are interested in ...
3
Why don't you take a loan or find investors who want a revenue stream?
If I were in your shoes I would try to run as lean as possible and get one year of a profitable business completed, and then consider a loan.
Get your books in order, then go to a bank for a loan or at least talk to a banker or two.
You'll be far better off than with VCs involved and ...
3
in design: use the same design values as the would-be suitor (simplicity if they value simplicity most, formal if they are a long standing formal business, etc... basically showing the same values to the public)
development: use the same technology (not just underlying, but also if they are using web 20.0 ajax-y forms, you use them as well, etc...)
...
3
An exit strategy -- if you choose to include it -- is how the investor is going to get a return on their investment. The time period and amount would be sufficient if the proposed investment vehicle is a loan. It the investment vehicle is equity then the exit strategy would be if the goal was to go public, merge with a partners, be purchased by a competitor ...
3
Your bargaining position is weak. Ultimately it sounds like you can only sell it to them. If it's a big big company, they have a lot lot of software engineers. If one person can do it and it's such a good idea, they can drop 5 engineers on it and have it finished before you do.
When pitching to large companies, you need something with a sale price in the ...
3
Corporate Finance 101!
You should close your business if the value you are creating is lower than the cost of creating that value.
Note: I am not defining value as pure cash. But in order to make this decision you have to apply some kind of cash value to intangible assets (R&D, fulfilling a dream, etc).
Could you be getting a better return on your ...
3
It's not clear what's going on here. It sounds like you're considering accepting an angel investment that requires you to have an exit event within some sort of timeframe. Frankly, that's a bit aggressive for an angel--they're typically more willing to wait for a while. So, you may want to ask yourself if you have the right investor.
In any case, of ...
3
Working for a startup, can be a very different experience compared to a well established company. Aside from the sort of questions you might expect about the compensation package, you should probably talk about the people, the work ethic/expectations, the culture they wish to build.
Additionally, talk a lot about the product, and about the "why" in the ...
2
If you take money but it's at a valuation that is high enough that the VC does not have a majority stake and you're lawyer is on top of things you should never be in a position where the VC can shut you down or make you sell against your will. Most VC's will want the right to stop you from selling or diluting them in ways they don't agree with but that's ...
2
Having once been CEO of a small public company, my very abbreviated answers are as follows:
VCs leave? It depends. In many cases yes particularly if the fund that they used to invest in your company is nearing its life end.
Ownership to stock holders? The company doesn't give ownership in an IPO. Ownership is determined by the amount of stock purchased ...
2
I did exactly this -- we sold off 4 of our 6 products.
The best target to acquire the products are your own customers, because they already understand your products both technically and (sometimes) from a marketing point of view.
Sometimes selling your software makes sense, but more likely it's folks who used to work for one of your customers but who are ...
2
In the deals that I have been involved with, the parties usually found each other by introduction from the hardware vendor that there was an opportunity to purchase the software outright or offload some of the support.
The transitions took varying lengths of time and there was always a seller support clause for a period of time (6-12 months) at some ...
2
Leaving a startup you founded is a big decision to make. There are several reasons you can tell your investors as to why you want to leave. All are "acceptable" in terms of their view of you. These include:
The company is moving into a different stage and my skill set does not match anymore
You have another opportunity that you cannot pass up.
In terms ...
2
As Gary and Keith have already said, maybe a startup's code and other assets can be sold.
In principle there is nothing special about selling the sourcecode, copyright, and any other rights to a codebase developed by a failed startup. You'll need to decide between selling the whole company, and selling just the product. In both cases the trick is to find ...
Only top voted, non community-wiki answers of a minimum length are eligible
