Meaningful VC Exits - Deepstash
Meaningful VC Exits

Meaningful VC Exits

medium.com

6 ideas

·

34 reads

4

The Psychology of Money

Learn more about moneyandinvestments with this collection

How to develop a healthy relationship with money

How to create a budget

The impact of emotions on financial decisions

The Psychology of Money

Discover 52 similar ideas in

It takes just

7 mins to read

Defining a meaningful exit

Let’s start with some venture math assumptions: 

  • An early-stage venture fund is going to invest in 20 companies 
  • The fund aims to get a 3x gross return 
  • The expected distribution of outcomes is: 1/3 losses, 1/3 money-back, 1/3 successes 
  • The expected distribution of the successful outcomes is: 1 home-run (a company returning the entire fund) + 5 meaningful exits (companies returning the amount required up to 3x gross fund return.)

A meaningful exit can be defined as a company about to return 1/3 of the fund.

5

14 reads

Determining the Revenue Targets for Meaningful Exits

Before we can determine the revenue targets, again, we need some more assumptions: 

  • A SaaS company with 75% gross margin can be sold for 5x ARR 
  • A marketplace company with 15% take rate can be sold for 1x the last twelve months gross merchandise value  
  • An e-commerce company with 30% gross margin can be sold for 2x the LTM revenues 
  • In all cases, Net Debt at the time of exit equals zero, so Enterprise Value = Equity Value 
  • In all cases, the same growth rate is assumed 

4

7 reads

Final Remarks

  •  Not every company can grow quickly enough to generate Venture-Scale returns. A VC should only invest in the companies with that potential.
  • The fund size determines what a meaningful exit is. 
  • Some investors aim only at potential home-run exits. Others don’t. Both strategies have been proven successful over time. 
  • Use your gross margin and growth rate to determine the multiple you get in an exit.
  • Compare the growth rates required to hit that target given your current level. Compare those rates to those of the most successful companies.

4

5 reads

Deriving the size of revenue by companies

The purpose of this post is to derive the size in terms of revenues that a company has to achieve in a 5–7 years time window to be regarded as attractive for VC investment. We will do that for different fund sizes (Micro $50Mm- $100Mm, traditional $350Mm and MEGA $1b VC funds) and different startup business models (Saas, Marketplaces, E-Commerce) this might also be helpful for the company and its investors to plan revenue targets and required growth rates for the years ..

4

3 reads

The size of a meaningful exit

The size of a meaningful exit

The bigger the fund, the bigger the exit required to be considered meaningful. 

Assuming that the VC is going to construct a 20% ownership in a successful company over time, we can calculate how much a company must be sold to be considered a meaningful exit.  

4

3 reads

Attractive VC exits

The purpose is to help find the size in terms of revenues that a company has to reach in a 5-7 years time window to be considered attractive for VC investment.

This will be done for different fund sizes (micro, traditional and mega VC funds) and other startup business models (SaaS, marketplaces, e-commerce). This could also help the company and its investors to plan revenue targets and required growth rates from first investment to exit.

4

2 reads

CURATED BY

stallen

Insurance Surveyor

stash-superman-illustration

Explore the World’s

Best Ideas

200,000+ ideas on pretty much any topic. Created by the smartest people around & well-organized so you can explore at will.

An Idea for Everything

Explore the biggest library of insights. And we've infused it with powerful filtering tools so you can easily find what you need.

Knowledge Library

Powerful Saving & Organizational Tools

Save ideas for later reading, for personalized stashes, or for remembering it later.

# Personal Growth

Take Your Ideas

Anywhere

Organize your ideas & listen on the go. And with Pro, there are no limits.

Listen on the go

Just press play and we take care of the words.

Never worry about spotty connections

No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.

Get Organized with Stashes

Ideas for your next work project? Quotes that inspire you? Put them in the right place so you never lose them.

Join

2 Million Stashers

4.8

5,740 Reviews

App Store

4.7

72,690 Reviews

Google Play

Sean Green

Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.

Ashley Anthony

This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!

Shankul Varada

Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.

samz905

Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.

Ghazala Begum

Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.

Giovanna Scalzone

Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.

Laetitia Berton

I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!

Jamyson Haug

Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving & library

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Personalized recommendations

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

Email

I agree to receive email updates