Startups without an Exit Strategy are not committed to their company.

fire_exit-svgI heard it again this week.  The lame startup who answered that they didn’t have an exit strategy because they just wanted to create value for their customer.  I’ve heard this so many times by CEOs who think they’re being noble by focusing on their passion and commitment to the company and not to an exit – but what I hear is that they are NOT truly committed to their business.

  CEOs who don’t have an exit plan are limiting the potential for their business.

The fundamental lie of exit denial is in the belief that creating value for the customer is the same as creating value for the business.  Think about it – if you do something really well and create value for a customer, and you’re passionate about carrying out that mission to the greatest extent possible, then wouldn’t it be a good idea to identify larger companies who shared your values and could carry out the mission to even greater extents with their additional resources, capital, sales channels and expertise? Creating value for the acquirer means creating value for the customer as well – it’s rare that anyone wants to acquire a company with no customers.

But no – you’re just creating value for the customer, and then if you do that, acquisition offers will come along….eventually.  Yes, offers will come along, but they may not be from companies that share your values.  They may be from companies that want to shut you down.  They may be from companies that want to exploit your product or customers.  Just passively waiting for a suitor to come along is a cheap cop-out for lazy CEOs who believe that uncertainty means that you have to wait for whatever the world brings you.

Companies who are truly passionate about their mission are working to develop two value propositions simultaneously – the value proposition for their “first customer” who buys their product and the value proposition for the “second customer” who buys the company. Wayne Gretzky Exit Strategy

CEOs who think about the second customer are the ones who get me excited because they exhibit deep knowledge of their industry.  Like Wayne Gretzky, the hockey player who famously said “I don’t go to where the puck is, I go to where the puck is going,” these CEOs have identified a trend and they build value for companies in their industry who will be needing their innovation within a three to five year window.

To be sure, there is uncertainty.  You can’t just pick the acquirer, date and amount of acquisition.  This does not mean, however, that you can’t research comparable transactions and identify the key players and their behaviors.  You can create relationships with the companies who will be needing your technology so that when their board identifies a need for your product/service, they know that you are a key player in the industry that would be a good acquisition target and can reach out with an offer.

Identifying multiple bidders for your exit strategy not only allows you to select 6699678_sthe bidder who most closely matches your values and goals for the company, but also allows you to demand top dollar for the acquisition.

No, it’s not all about the money, but if you put your head in the sand and just wait for suitors, you will likely end up with a lower price for your acquisition and more importantly you may fail to truly carry out the mission of your company to its fullest potential.

Create a detailed exit strategy and show everyone your passion for the mission of your company.

Third Annual Cannabis Capital Summit

Meet Speakers and the Companies that will be at CCS 2016! Cannabis represents a new industry in Colorado and perhaps nationwide in the years to come. With new industries come new opportunities for business and for investors. The Rockies Venture Club presents the second annual Cannabis Capital Summit in celebration of these opportunities while also discussing the […]

Investing Across Multiple Industries

Rockies Venture Club invests in a variety of companies, not just one vertical. This allows for investments in different types of industries each with their own unique markets, experts, and strategies. Here are three of the top industries that are being invested in right now.

 

Healthcare – Digital access to health

The healthcare industry is is currently in a climb. With the integration of healthcare and technology, access, and ease of use are making old painful processes easier than ever. This telemedicine prompted the founding of CirrusMD. CirrusMD is one of the healthcare investments in the RVC portfolio. They give immediate access to healthcare providers to anyone that has text messaging, answering all your medical questions needs remotely and accurately. Its simple changes like these, along with others like new ways to track health and provide insight that are changing the landscape and making healthcare a top industry.

 

Fintech – New Access to Capital

Disrupting access to capital has been a trend in the recent past. With the emergence of crowdfunding, the old ways of getting money are facing some competition. Enter P2BInvestor. P2Bi is revolutionizing the way you get credit. By making a line of revolving credit that is secured by assets like receivables or investors, P2Bi can help improve the cash flow for small or big companies. P2Bi happens to be another RVC portfolio company, that is in one of the fastest growing industries today.

Cyber Security

Cyber Security is not stealing the thunder when it comes to trending industries, but is one of the most important. With the integration of technology into almost all other industries, the risk of security becomes even higher. Just take a look at all of the security breaches in the news. Swimlane is an RVC portfolio company that helps combat security fatigue. With the constant attempts to breach security, there are a lot of false alarms that are time consuming. Swimlane works to automate that process freeing up time and resources. Cybersecurity is a big industry and is going to continue to grow as the other industries incorporate technology into their models.

 

RVC’s Portfolio- 55% Female and Minority Led

Rockies Venture Club has funded 14 deals in the past year, bringing its portfolio mix to include 55% companies which are female and minority led vs. the national average of just 14.4%. Read more

Why Startup in Colorado?

Places like New York, Seattle, and the obvious Silicon Valley and San Francisco, are  all bursting with startups. Each has numerous accelerator programs, incubators, and attract new graduates. So why would you choose to start your startup in Colorado? Read more

Denver Startup Week 2016

Valuing Startup Valuations – Webcast

Understanding startup valuations is often a complex and murky process.  Peter gives you great insights on what you think you are worth, what you are really worth and also importantly gives you guidance as to understand valuations from the startup to exit.

Valuations

Valuations

The latest addition to our educational webinar series, covering startup valuation, is here…
Peter Adams, Managing Director of Rockies Venture Fund and Rockies Venture Club, presented “Understanding Startup Valuation”, covering the fundamentals of valuations and tools entrepreneurs can use when developing their own models.

After founding/co-founding and investing in multiple successful startups, Peter shares what he’s learned – don’t miss out on watching the replay if you haven’t done so yet!
Preview of topics in “Understanding Startup Valuation”:

How to determine valuation on an early-stage, pre-revenue company
Why traditional valuation methodologies don’t work for early stage companies
Why an exit strategy is required in order to conduct a valuation exercise
Valuation methodologies that CAN be used as part of your model
Tools and resources you can use in developing your valuation model

 

“And we have NO competition”

Please, do not ever say these words to an investor. You are essentially telling them to run. It is heard over and over, but it is never true. Maybe no one is doing the exact same thing, but someone is doing something similar and needs to be acknowledged. Read more

Attractive Pitch

The first pitch to investors is in many ways the company’s first date. It is the investors first experience with you and your company.  The end goal is to receive a second date. Yet, with many top notch pitches coming through it takes more than just a solid proof of concept and innovative idea to gain interest. Read more