The Exit Mindset When Raising Capital
We understand start-ups, we too are a start-up in an early phase. We have joined the scaling journey for many companies, and have learnt the importance for a well thought out exit strategy.
For example, the key factor for high-growth is steady cash flow and financial stability. When entering the growth phases of the business cycle, funds are critical and equity capital can be the lifeblood of the business. This primary resource comes from a variety of individuals and institutions, each with different expectations and preferences, each will require strong reassurance that their ROI expectations can be met and what can be achieved, realistically.
For that reason, having a viable and appropriate exit strategy is vital. Firstly, it signals that you know your limitations, and second, it testifies that you have a contingency plan in place. These are dynamic times and creative solutions are needed in avoiding or distancing external business challenges. Understanding your maximum capacity might be one of the most overlooked skills in the growth capital space, and yet, we know very well that everyone and every team has limits, nobody can do everything on their own.
Raising funds is hard work, it requires a strong understanding of what your team can actually achieve, this must be established with realistic projections, mapped to specific time periods. Considering what the exit could look like, just means that there is a plan from start to finish. To most founders, exit means selling the owner’s stake in the company. However, sometimes they may choose to hire a management team to run the business while retaining their equity. We’ve seen this in many examples from Silicon Valley when founders took a step back, bringing in an experienced CEO to grow the company further.
It is important to plan your exit strategy as early as possible, even if doing so is not your intention. Make sure to put in extra time to develop a clear exit plan as part of your business plan and investors’ pitch.
At Kapvista, we help founders raise capital by introducing prospective investors that are looking for exactly what your company may have to offer.
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