This article discusses the importance of thinking about exit strategies for startups, particularly acquisition, as part of their overall business planning. The author, Kittu Kolluri, shares several tips and anecdotes from his experience as a venture capitalist at Neotribe Ventures.
Here are some key takeaways from the article:
- Don’t wait until you need to raise money: Think about exit strategies at least six months before your next funding round.
- Always be selling: Continuously think about how to position your company for acquisition, even if you’re not actively seeking a buyer.
- Proactively target corporate venture capital: Building relationships with CVC divisions of large companies can lead to potential acquisition opportunities.
- There’s no shame in the short game: Walking away with a significant exit is not a failure; it’s a success.
- Celebrate cheap losses as much as huge gains: The technology business is first and foremost a business, and sometimes playing the short game is the best way to win.
Kolluri also shares several examples of successful exits, including:
- A startup that was acquired by Apple and Google at a 5x return on investment.
- Another startup that was acquired by a large telecommunications company after being approached by CVC investors.
- A third example where a startup’s valuation increased significantly due to its acquisition by a larger company.
Overall, the article emphasizes the importance of thinking strategically about exit opportunities and building relationships with potential acquirers, even if you’re not actively seeking a buyer.