In the book Early Exits Basil Peters makes a persuasive case that both entrepreneurs and early stage investors should start planning their exit strategy from the very beginning. For technology businesses, where both Basil and I have the majority of our careers, this is especially so.
Basil relates that most larger companies are eager to do acquisitions in the $10-30M range. They know that they cannot innovate as fast or as effectively as can young startups. These companies have tremendous expertise to take a company valued at $20M and turn it into a $200M company using their skills and infrastructure. Basil argues that you should be positioning your company for sale in that $10-30M sweet spot.
Basil also discusses how VCs need companies to grow into $200M a year monsters in order for their business model to work. While the entrepreneur and angel investors receive excellent returns when a technology company is sold for $20M, they have to wait a long time and often see far lower returns when a VC invests and waits for a $200M exit.
Whether you are an entpreneur just starting a business or an investor looking to put your money in one, Early Exits provides advice won through hard fought experience and comes with real life examples of what works.
