Exit Strategies for Startups
April 20th, 2010 in Getting Ready, Startup Tips
A heated debate is taking place around Foursquare considering a sale to Yahoo. It is believed that Foursquare is in the midst of an aggressive courtship on behalf of Yahoo, who is willing to pay as much as $125 million for the year old startup. Some are freaking out asking Foursquare ‘not to sell’ and the gurus are speculating that Foursquare is trying to push its valuation higher than what Yahoo is offering. What Foursquare does, only time with tell, but this has definitely made me think about ‘exit strategies’ for startups and the importance of having one.
When you are starting up or as you form strategies and plans to grow your startup, you need to think about an exit strategy. Will you establish a lifestyle business that generates income without plans of selling it in the future, or will you build equity in a business that you will convert into cash? Depending on your goal, the business you choose and the way you decide to grow it should be aligned with the end-game objectives. The common exit strategies are; sale, mergers, IPO, buyout or liquidation of assets.
Some may not find laying too much importance of exit strategies as correct, arguing that you will never want to build something by always having a motive of leaving. But whether you want to move on to you next entrepreneurship venture or whether you stick to a business plan for a long time, it is important to have a succession plan in place for your startup.
We suggest you read this post at ReadWriteWeb for more information.
While the idea of an exit strategy might sound negative, crafting one can help you plan how to make the most out of a good situation, not simply escape a bad one