What amount of revenue is required for a healthy exit for a startup in an industry that is worth tens of billions?



If you are going to sell — $10-$15m in recurring revenues is a GREAT time to sell. Relatively speaking, at least.

$10m or so in ARR is often in my experience a “local maximum”. When your traction will be most valued by potential acquirers, because you’ve proven you are a market leader, with real revenues ($10m+), that the acquirer believes they can “easily” scale to hundreds of millions and beyond:

And at $10m-$15m in ARR, usually you haven’t raised too much venture capital. So it’s fairly easy to get a deal done where everyone wins.

More here: Acquisitions — If You Do Sell, Try to Make Sure It’s At a Local Maximum

I’m not saying you actually should sell. But if you are going to sell — this is often a good time to do it.

You can grow another 2x or 3x in revenues from this point, and not see a 2-3x step up in valuation …

And it’s the time when you can get pretty decent amounts of venture capital, too. So if you raise instead of sell … then the “overhang”, the amount you have to return to VCs and sell for to make it all work … goes way up from here.

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Published on May 9, 2016
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