Exit strategy?

Hey Founder, do you know how to answer one of the most important questions an investor will ask you: "What's your exit strategy?" 🤓 👇

What the investors are really asking:

This is a multi-faceted question. Investors want to know about the deal you’re offering to them, typically investing funds for shares of your business. But they are also interested in the timeframe over which they are expected to invest and thus when they will see returns.

This requires founders to be clear on what the business is meant to do for them personally, and how long they intend to be committed to building the business.

Where you should look for the answer:

Every founder is different. Some see their startup as a lifelong endeavour, channelling their passion to make a difference. Others see it as a medium-term enterprise, designed to be a stepping stone to the next challenge/business, so will have clear strategies for exit, e.g. a trade sale, IPO or bringing new executives in.

Neither is right or wrong. The only strategy that is wrong is not to have an answer for this question. While it may feel strange to start thinking about an exit just as you are starting a business, it is important to reflect individually on your personal goals and what the business is meant to do for you. Is it to achieve financial goals, recognition, or give back? Again there is no right answer, only the one for you. Teams should reflect on this question alone then share their thoughts, as if goals are radically different, then there needs to be a plan to manage these – and we have seen potentially hugely successful teams disintegrate because their goals have differed.

How to make your answer compelling:

Honesty works! We are not saying bare your soul and deepest motivations to investors, but do give them an idea of if/how/when you may think about an exit. They need to know because this will Impact their ability to realise a return on investment.

Use your knowledge of the external environment in which you will be operating to think about credible exit options. And be open to investors goals as you discuss these.

If you need help with your exit strategy or pitch preparation, our team of mentors can get you investor ready. Learn more and book a FREE chat.