Start at the End – Your Exit Strategy – Part 4
Highlights of Start at the End – Your Exit Strategy – Part 4:
- The Unintentional Moonshot – 92% of exits don’t work for traditional Venture Capital funds.
- In the 1990s the time from VC investment to exit was only 2 or 3 years.
- Today, the median time from when a VC fund invests to an exit is about 7 years.
- But that actually means, on average, you will be stuck in your company for about 12 years after the VCs invest.
- That doesn’t seem possible. Aren’t most VC funds only 10 year funds?
- The truth is that the average VC lifetime is closer to 15 years now (for technology VC funds).
- This means entrepreneurs and angel investors have two choices:
– angel investors and an exit in 3 to 5 years, or
– traditional Venture Capital funds and an exit in 10 to 14 years
- Why angel investors are much better aligned with entrepreneurs than traditional (big) Venture Capital funds.
- The first data to show this effect comes from Professor Rob Wiltbank.
- Fascinating new insights from mining the Brobeck law firm’s data.
- This research shows that when Angels and VCs invest together it doesn’t work out as well.
- Companies backed by angels alone are just as likely to have successful exits as VC backed firms.
- Statistically, entrepreneurs should pick angels or VCs – but not both.
- Checklist to determine whether your company would be better off financed by angels or VCs.
- Conclusions for entrepreneurs and your optimum strategy for success.
Many of the lessons I’ve learned are described in my new book on exit strategies for entrepreneurs and angel investors – www.Early-Exits.com.