Goal : The Path Of Exit

1958 Words8 Pages
Goal: The Path to Exit

Total Word Count in this Document: 1951

Title: The Path to Exit

Earlier this year, a startup that I had invested in came to me with a big problem. Things weren’t going so well, and all parts of the startup were feeling worn out. The had a serious lack of energy and morale. Their biggest problem, however, was their shortage of cash. Even if they let a few employees go and cut out all unnecessary expenses, they only had 90 days of money left in the bank.

They came to me as a team, ready to return their remaining funds to me and their other investors. I asked them if they had considered selling, and they admitted that it crossed their minds, but it seemed like too much work. I guided them through the steps of
…show more content…
Get Organized
As a startup, you might not have had the time to dedicate to administrative-type tasks like bookkeeping and contracts. In the beginning, there’s not much to be organized anyway. However, a lack of organization looks messy to outside buyers. While it works for you in this stage, it can instill doubt in potential buyers. Don’t make things hard for potential buyers by leaving things a mess. Focus on these areas
- Books: make sure all of your expenses are organized and entered, bills are up-to-date, bank accounts are balanced, and your finances records are in order.
- Contracts: If your contract data is not easily accessible and organized, it is essentially useless to potential buyers
- IPs: Have a system in place to define your private and public IP addresses and how they are allocated amongst locations, subnets, users, etc.
- Cap Table: Simplified, your cap table should tell potential buyers who owns what. You can have holders grouped into simplified buckets called “founders” and “investors.” You could even include formulas that map out the hypothetical sale of your startup. Not only will it impress buyers, but having an updated and organized cap table allows you to make good decisions quickly.

Use the tools at your disposal to get organized. Cloud-based tools allow you to save and share documents with potential buyers, and many of them are free to use. Consider
Get Access