Generally speaking, there is no legal or contractual way to make a VC sell / exit. There can be some exceptions, but usually there are no “drag along” or forced put rights in standard terms and conditions.
Unless (x) the VCs control the company (own > 50%+) AND (y) are willing to step in and put a CEO in, or be the CEO … the founders have a lot of de facto power here.
Because they can give the VCs a choice — take the keys, or let us sell.
So most VCs that have been around for a while generally adopt 1 of 2 attitudes here:
- the founders know when to sell, and as long as we make money, we are supportive (even if the VCs would rather not sell) and/or
- the VCs have a bench of CEOs to put into companies.
Smaller funds rarely have a bunch of CEOs waiting to join portfolio companies. Large funds usually do.
But in the end, if you are doing reasonably well, haven’t raised a ton of capital, and want to sell for > 3x the amount of capital raised … the VCs in the end should let you sell. Because they’ll make money, and the alternative is, they may have to run it.
Personal example: in my first startup, we sold for $50m after 12.5 months. The VCs make a quick 5x, but it didn’t “return the fund” for any of them. They would have preferred we not sell. But, it was the right decision.
So I didn’t ask. We respectfully, but nicely, told them we had the offer and recommended we take it, but wanted their thoughts and feedback. In the end, they all got that and agreed. Even the ones with Big Funds.
You will hear horror stories, and they are real. But most of the horror stories (not all, but most) are really where the sale price is < 3x the amount raised, and/or a huge amount of capital went into the company and an outside CEO was brought in. In lower drama situations, the founders are the de facto decision makers here.