Mastering the Art of Exit Strategy

While looking at SBA definition of Startup, you might have noticed that it says:   

"Startups have some unique struggles, especially in regard to financing." 

During their financial struggle, silicon valley startups normally look for funding towards angel investors or venture capitalists. Here a fundamental question arises; what can be the return on Investment (ROI) for an angel investor or venture capitalist? exit strategy gives the answer of this basic question.

So what is an Exit Strategy?

An exit strategy is to plan what may happen if an investor who has previously put money in a startup years before, will get their money back?


As a startup you must have an exit strategy for your investors and yourself.

• For investors an exit strategy enables them to cash in on their investments.
• For co-founders an exit strategy also protects the value of your startup.

Below are some common examples of exit strategies:

1. Initial Public Offering (IPO)
2. Private Offering
3. Merger & Acquisition

Conclusion

In short investors want to know how they will get their money back before they invest it in your startup. A startup must be able to write and pitch an effective exit strategy to protect its own value and to enable its investors to get their return on investment after a predetermined criteria meet or exceed.