The founders of startups are often a target. They build for customers, speak to their users, pitchent for their teams. But when they raise funds with Venture Capital funds, they forget a fundamental truth: the only “product” that the investor buys is A clear and credible liquidity perspective in a horizon of 5 to 10 years.
What the VC buys is not a neat interface, nor a curve of MRR. He acquired a non -liquid titlewith the assumption that this title may one day be sold to a strategic buyer or introduced into a public market. Everything else – traction, team, technology – is only a means of achieving this purpose.
💸 What an investor wants: convert the illiquid into cash
A venture capital fund has a limited lifespan. Generally 10 years. During this period, it deploys its capital in unlisted companies in exchange for capital shares. These titles do not sell, do not be negotiated, do not generate dividends. As long as there is no exit, They are worth nothing operational.
The only way for a fund to generate performance is to reach a output (exit) : a buy -back operation (dirty trade) or an IPO (IPO), which transforms private shares into usable liquidity. The reasoning is simple: out of ten investments, nine will produce no return. The tenth will therefore have to compensate for all losses and generate a significant multiple (X10 to X50) to allow the fund to fill its commitments to its Limited Partners (LPS).
🎯 Exit is not a secondary scenario, it is the alpha and the omega
Many founders approach the question of exit with embarrassment, even condescension. Some relegate it to a blurred line in their deck. Others evoke, with a confusing balance, ineffective strategies: redemption by a fund of Private Equity, distribution of dividends, or repurchase of shares by secondary investors.
These options are incompatible with the logic of venture capital ::
- Private Equity : weak, multiple valuations on too low Ebitda (often x4 to X6), little interest in companies still in the growth phase.
- Dividends : Out of words in a model based on growth, where any excess cash must be reinvested.
- Secondary : exceptional, and generally reserved for late internship or founders, never for VCS Early Stage.
- Management Buyout : not relevant at the scale of a fund. These operations allow you to “get out properly”, not maximize the performance of the portfolio.
In other words, The only relevant exit scenario for a VC Early Stage investor is ::
- A strategic redemption by a listed or capitalized companywith a structured M&A logic.
- A IPO In a liquid and regulated market (Nasdaq, Nyse, Euronext Growth).
Everything else is out of topic.
The right exit: strategic acquisition
It is, in the vast majority of cases, The only realistic route to generate a return greater than X10.
An industrial company, a technological player, an already listed platform – in short, A strategic buyer – is capable of justifying a high multiple if your solution responds to a structural issue of its development: acceleration of innovation, penetration of a market, strengthening of its value chain, elimination of an emerging competitor.
But these buyers do not act in a vacuum. They have M&A processes, external growth theses, acquisition history. This is what the investor expects you: a Serious analysis of the previous ones (comps), multiple practices, active actors in your sectortheir ability to buy businesses of your size, your model.
Not a powerpoint. A demonstration.
IPO: the exception, not the rule
Yes, an IPO can generate multiple superiors. But the figures are final. In 2023, only 6 tech ippos took place in the United States. In 2022, 4. During the years of Post-Covid euphoria, the average was briefly gone (91 in 2021) before falling violently.
The IPO is reserved for a elite : companies with more than 100 M € income, online profitability, international traction, solid governance, and an immense addressable market. If you do not meet these criteria, Do not mention the IPO in your Pitch Deck.
Build your exit as a product
This is the blind point of 80 % of pitchs: the founders have a product for their customers, but No product for their investors.
Exit is a product. It has its users (strategic buyers), triggers (sectoral cycles, internal deadlines of buyers, competitive tensions), and its specifications: market share, technological barrier, patents, key team, commercial pipeline.
A good founder knows how to design a roadmap for the product. An excellent founder also knows how to build a roadmap towards resale.
Forgotten kpi: exit-feediness
Do you follow your growth metrics? Alright. But also follow your “Readiness acquisition” ::
- How many acquisitions in your sector this year at your level of income?
- What multiple are observed on your vertical? (Price-to-revenue, EV/EBITDA)
- What signals trigger the appetite of buyers?
These are these data which allow an investor to assess his probability of exit. Not your “user testimonials”.
Conclusion: the only product you sell to an investor is its release
When you raise funds, you don’t sell a product. You don’t sell a vision. You sell a action with a liquidity thesis credible. The only “Go-to-Market” that counts for a VC is that of the exit.
You don’t just build for your customers. You also build for the actor who, one day, will buy society as a whole.
If you don’t know yet Who he is, why he would buy you, how much he pays, and in what deadlines he actsyou are not ready to raise funds. You may be a good entrepreneur. But not yet a good investment product, with a good understanding.
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