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Start at the End Your Exit Strategy Part 4

by Basil Peters on June 3, 2009 · 0 comments

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.

Part 1 of this video is online here.

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.

Part 1 of this video is online here.

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