Sell your Startup for $20 Million instead of $200 Million after several rounds of Venture capital. Which option is better?
- A lower-valued startup takes less time to scale and less outside capital for lift off which means you have a likely exit sooner and own a higher percentage of your companies when you exit.
- There are also fewer acquirers as the price of your company increases. And when an acquirer does come along, there’s more due diligence which means sealing the deal can take much more time.
- Assuming that you successfully execute a sexy multi-million dollar exit, you need to know that your share of that “exit” is likely to be less than 10% of the sale price after all the dilution, liquidation preferences and down rounds…
- Ask yourself this: Do I want to work 3 to 5 years for the risky opportunity to maybe earn $500,000 on average in salary?