SC Moatti - The exit playbook: Yes, it STILL exists
Exit is the dream on the horizon for many founders, but it often seems like a black box or a game of chance, especially during these times of crisis. So how do you bake an exit strategy into your business from day one, whether it’s a merger/acquisition, or an IPO, or something else—particularly as COVID-19 impacts economic activity and companies shy away from making deals? In this session, Silicon Valley serial entrepreneur turned venture capitalist SC Moatti will share best practices to get your company ready for an exit, from understanding what acquirers look for to making sure you’re positioning yourself and your team for financial success and preserving core parts of your business through the transition. You will walk away understanding how the decisions you make today affect your exit options during and after these testing times: which investors you choose, how you build your team, and more.
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SC Moatti - The exit playbook: Yes, it STILL exists
- 1. THE EXIT PLAYBOOK SC Moatti | Mighty Capital | sc@mighty.capital (Yes, it exists)
- 2. Includes all Fund I investments as of 9/30/18, including 1 exit. An early-growth VC firm investing in companies building products that count, products that transform business & life at scale
- 3. RESOURCE FOR 300,000+ PMs: 100+ EVENTS & 3,000+ VIDEOS, PODCASTS, & ARTICLES All programs authored by C/VP-level product execs & focused WHAT MAKES A GREAT PRODUCT? Committed to INCREASE DIVERSITY & INCLUSION in product ONE OF THE LARGEST NETWORKS OF PRODUCT MANAGERS IN THE WORLD
- 4. Starting Early Maximizes Outcome 0 1 2 3 4 5 6 0 1 2 3 4 5 6 7 InvestmentReturn(times) Years from Investment Optimum time to start the exit Optimum exit time IRR = 124% More typical exit time IRR = 15% Fastest Growth Phase More typical time to start the exit Source: Woodside Capital Partners.
- 5. T C P Team Buyer: corporation struggling to innovate or hire, or coming late to market Customers Buyer: corporation or private equity firm looking to consolidate a market segment Profit Buyer: public company in need to boosting its top line growth and stock price Exit = Sale, but What Gets Sold? Typically <$20M Typically $20-50M Typically $50-100M What about “Unicorns”, who buys them? What about >$100M exits, who can afford them? What about strategic M&A, who does them? ALMOST NOBODY
- 6. The Facebook Effect • Business owners don’t need a degree • Build it and they will come • Investors have no say
- 7. 15% of Forbes 400 CEOs are college dropout
- 9. Build it and they will come
- 11. Which is the better investor?
- 13. SMART MONEY
- 14. The 5 Ps of a killer business plan • Product: your business equation • Price: your valuation • Promotion: warm intros • Placement: professional investors • People: management team
- 15. Product = Equity Investors buy your Company Customers buy your Product
- 16. The business equation 16 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = # 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 × 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛
- 17. The business equation 17 Velocity plays a key role in growth strategies 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = # 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 × 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛
- 18. The business equation 18 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = #𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 × # 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 × 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛 Acquisition Engagement Monetization
- 20. Terms matter List price (valuation methods) Term sheet (total cost of ownership)
- 21. Promotion = Warm Intros Vs. (only super early) (only super late) (never!)
- 22. Placement = Professional Investors
- 23. Segment to better target
- 24. People = Management Team Complementary skillset Compatible communication style Comparable risk profile
- 25. THANK YOU. SC Moatti | Mighty Capital | sc@mighty.capital