We’ve gone through a number of investor presentations now, filled out lots of forms and gotten lots of questions. I am not a spectacular fundraiser, but have now been around the block a least a little bit (albeit a rather small block). And as I have talked to Angel investors and institutional investors, I always get the same question (although not from Friends and Family, interestingly). And I have come to both understand, loathe and now love that question: “What is your exit strategy?” At first it always seemed to be a question of ‘have you thought this through?’ or ‘how are you going to turn this thing into a billion dollars for me?’ or ‘does this mean you have figured out how to out Google, Google?’ But then I came to realize (with no small amount of prodding), that they are really asking something else. They are really asking about themselves. What they are really asking is this: “When are you going to provide me a liquidity event?” Meaning - “when am I going to get some return on my investment?” For an Angel investor, this liquidity event could be from follow on Institutional funding. Likewise for an early stage VC. For later stage VC’s, it more around who is going to acquire you (there is no illusion around IPO’s today - and particularly for our space). And here is why I love this question: It reveals the truth - it’s all about money. For the entrepreneur, it’s all about what they are building, and the passion - but that’s not the case for an investor, it’s all about return on investment. Since I’ve come to realize that, the answer is so much easier: We expect multiple liquidity events planned over three investment rounds - for your easy exit at your comfortable return; culminating in an acquisition between years 3-5. And we’re working hard to minimize your risk and reduce your exposure through actioning multiple investment channels.

Originally published on WordPress on January 10, 2007. Migrated to this blog on May 29, 2025.