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Startups, Always "Mind" the Exit

What's the Ultimate Goal for a Startup Company? Which Metrics do Drive the Exit Valuation? How to Build your Exit and Fundraising Strategy?
by

Alberto Onetti

on 8 September 2015

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Transcript of Startups, Always "Mind" the Exit

FUNDRAISING is not a one-time event, rather a MILESTONE BASED PROCESS


1) Rollercoasting
metrics
do not help
2) Running out of cash
brings to DoD zone (Death or Dilution)
3) Downrounds
may compromise your exit strategy

KEEP ALWAYS YOUR EYE ON THE BALL, i.e. THE EXIT
Alberto Onetti
Chairman, Mind the Bridge Foundation
twitter @aonetti
... crossing the Finish Line
DRIVING EXIT VALUATION
#STARTUPS, ALWAYS "MIND" THE #EXIT
The final goal (Dave McClure)
Scalable
Cash-flow-profitable
Customer Acquisition

The ultimate metric
Turn into cash-flow-positive

The ultimate proof of success
Have an Exit at a «fair» valuation

FIRST, SHOW ME THE MONEY
COOL, WHAT’S A «FAIR» EVALUATION?
Price vs Amount of Capital raised
Liquidation preferences
(not all investors cross the finish line)
Management Carve-Out
(not all founders cross the finish line)
Price vs Time
Better «quick and dirty» than never

Price vs Deal Terms
Cash vs Paper
Earn-out
Lock-up

METRICS?

1. Amazing
Team

2. Outstanding
Technology


3. Sustained Growth
(Trailing )


4. Exponential Growth
(Forward )


LOW vs. PREMIUM
REVENUE MULTIPLE
SHIT HAPPENS,
MOST OF THE TIME
WHAT'S YOUR ULTIMATE GOAL ?
It’s like taking drugs,
addictive and expensive
“Money is like gasoline during a road trip
You don’t want to run out of gas, but you’re not doing a tour of gas stations.” (T.O’Reilly)

"Raising a lot of money gives the illusion that a startup has made it." (M.Andreessen)
No exit, no "real" party.

“Kicking the can down the road is not a strategy” (F.Sturgis)
Don’t raise another round just for kicking the can another mile.

LESSONS LEARNED
Which ones to use?
It really depends
which
stage
the company is in
by Alberto Onetti @aonetti
1) Hiring is an easy-sounding solution to many problems startups face. But once you stop being lean, you can become
slow to execute
and don't
operate efficiently
2) When you're a bloated company,
raising money
to support that size operation can be hard to do
3) If you have a high burn rate, no one will
buy
you

High burn rates
are dangerous
You are not done
if you’ve slipped into working regular hours and your Facebook feed slowly fills up with snaps from weekends away on city breaks, at parties and gigs—  I’m here to tell you your startup is already dead (Paul Smith)

You have far more to do and far more to prove after you raise money, than you do before.

RAISING MONEY DOESN'T MEAN TO BE SUCCESSFUL
Full transcript