Starting With The End In Mind

Hands holding paper rocket with cloud in background.

Over the last 5 to 7 years, we have seen more and more startups that have defined their ambition based on an earlier exit point as compared to most Deep-Tech startups.
Rather than setting their ambition goals on a certain market share and a revenue target, they set their ambition on being high-volume (HV) ready and, at that point, find a suitable “mothership”. There are several reasons why this strategy is seeing more adopters. Most important is the lengthy path for a Deep-Tech startup to reach that “market share” objective. That path might take 8-10 and sometimes 12 years with a high number of venture rounds which dilutes their original ownership to a thin percentage. Markets might change, the venture capital scene might change, etc. Therefore, planning for a 3-5 year path to bring a product to the high-volume marker and at the same time looking for a suitable acquirer where the product would fit with the acquirer’s marketing and sales organization not only secures a much faster exit but also a more secure one. Despite the obvious lower valuation, founders hold a much larger percentage of the company’s outstanding share capital.

 

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