It may seem a little incongruent to discuss exit within the same breath as Capital Raising, but for many entrepreneurs who create Start-Ups, and certainly those involved in Series A and B funding, it will be a pressing question.
For many start-ups, the most obvious exit is via an acquisition. This is when another company buys all or most of the own business and takes over control of it, but there are other types of exits too, including:
- Refinancing: selling to a different investor, such as a venture capital company;
- Merger: uniting two companies into a new one to gain market share, expand reach or gain economies of scale; and,
- Initial Public Offering (IPO): selling shares to the public.
The ideal timing for these events will depend on the success of the venture, the need for more finance, investor requirements and market conditions.
It’s never too early to start planning your exit strategy. Your strategy will direct many of the business decisions you make, including:
- how you run your company;
- which partnerships you pursue;
- how you establish your financial reporting system; and,
- what funding choices you make.
While exiting most often refers to money, for the Early-Input Management you will need to decide on an exit route for yourselves as well. For example, you may want to exit the business:
- to realise the capital you have built up in it;
- to start a new venture with a new idea; or,
- because you may not be the right person to take the larger-scale, established business forward.
Having seen in all before, either in the Cannabis-Space or when one of the Co-Founders was “in the City”, at The Canna Consultants our advice is that its never too early to start thinking about Capital Raising and Exit – the two often go hand-in-hand because success breeds the need for both.