Scale Up Exits

| Business

A recent ‘Exit Story’ Panel Discussion was held at Perth-based co-working space Flux.

The panel participants were

  • Glen McIvor of Solv,
  • Stephen Langsford of TyreConnect,
  • Olivia Humphrey of Kanopy,
  • and Doug Fitch of Agworld.

The interviewer was Derek Gerrard of Purpose Ventures.

Here are a few of the key points:

The time between startup and exit ranged from approximately 6 to 12 years.

The exit had specifically taken only about three weeks for one of the panelists, whereas for another it was an arduous year long process.

Regarding the exit, the point was made that although at times you might feel it’s out of your control, ultimately the deal won’t happen without you and keeping this in mind is critical for your negotiation.

When it comes to exiting, your cap table (investors) can play a key role in your exit. If you’ve taken on numerous investors, you might find it a difficult process to get them aligned with the exit. In fact, it’s likely that different investors will want different outcomes, especially if they are from different jurisdictions with different tax outcomes. As a result, founders should keep this in mind throughout their journey.

Each exit has made them “financially free”, but importantly they weren’t primarily motivated by this.

Rather than focusing on the money, the panelists were driven by their vision and purpose. They felt that if they had focused on the money they would not have achieved what they wanted to achieve.

Some of the panelists were first-time founders and some seasoned entrepreneurs. They had worked incredibly hard to achieve their success, with one of them noting that he had only about three weeks off in total the last decade and seldom a Saturday off.

They have not always succeeded, but importantly recognised that failures are “learnings”.

When asked what was a key tipping point in their journey, the response was winning that first key customer. The common theme was that potential customers might be very interested in your product or service, but hesitate to purchase because they are unsure about your credibility and long-term staying power. After winning their first key customer, a well-known brand, they were able to leverage that situation to help prospective customers get past this prior hurdle. Naturally this led to the question ‘how do you win that first key customer’. Network was the key. Know someone who knows someone within the well-known brand’s organisation who can help setup an introduction and internally push your case.

Whilst many early startups are capital poor and can start off with informal arrangements amongst co-founders, the point was made that you should setup for success which means putting in place the best founder and early investor agreements. The last thing you want are people (co-founders, employees, contractors, investors) holding your startup hostage or finding yourself with terrible equity interest.

One of the final key points of the night was that participating in the startup community was critical.

If you’re in Perth and wondering where you might start to participate in the startup community, then consider heading along to Morning Startup – Perth. Morning Startup is a fortnightly morning catch-up where founders, potential entrepreneurs and others in the startup community (VCs, Angels, accountants and advisors ➡ Munro’s), get together to learn something interesting from the presenter and network with their peers. See here to learn more: https://www.meetup.com/en-AU/Morning-Startup-Perth/

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