Virtual Companies Sell for More Money (and the Founders Keep More of It)

BY David Rowat

Virtual Companies Sell for More Money
(and the Founders Keep More of It)

| Online presentation to the AngelForum

June 18, 2020.

| The founders of virtual companies (where there is no physical head office and everyone works online) take home more of the proceeds when the company exits, compared to conventional bricks & mortar companies. That’s because virtual companies are leaner and need less money to grow, which means the founders are less diluted when the company exits.

HIGHLIGHTS OF WHY VIRTUAL COMPANIES ARE BETTER FOR FOUNDERS  

Virtual companies:

  • Are easily established, efficiently financed, and quickly scaled
  • Attract the best workers worldwide, and supersede geographic boundaries
  • Have significantly lower costs
  • … all of which makes them more valuable to Buyers
  • Reduce dilution to founders
  • Minimize corporate income taxes, and taxes on the sale of the company
  • … which means the Founders keep more of the exit proceeds.

We review the acquisition of a virtual company which recently sold for over $100 million in under 60 days.