OCSC Renewing Startup Company Member: BehaveWare
OCSC Renewing Sponsor: Blue C Creative Marketing Agency

If Startups and Investors Don’t Agree On an Exit

An article we liked from Thought Leader Dave Berkus:

What if you and your investors don’t agree on an exit?

First, the implied promise:  Money

Taking money from professional investors such as angels or VCs usually requires that you agree to seek an exit for those investors in your plan, often targeting five to seven years as the ideal period for growth before a liquidity event.

Of course, even though that is your contract with the investors, way over half of those implied contracts never work out that way.

What if you later decide to just keep control?

It is perfectly OK for you to want to grow your company and plan to keep control for you and your offspring, with no intention to sell. There’s a name for this. We say that you are growing an evergreen enterprise, one in which outside money is to be taken in the form of loans or royalty agreements, not shares of stock or ownership.

Investors will not be happy and will usually react.

Of course, you will find yourself in opposition to your investors and some of most of your board members if you do this after taking outside investment. There are clauses in preferred stock investment agreements allowing the investor in many cases to...

Read the rest of this article at berkonomics.com...

Thanks for this article excerpt to Dave Berkus.

Photo by MART PRODUCTION from Pexels

Want to share your advice for startup entrepreneurs?  Submit a Guest Post here.

WHAT’S YOUR NEWS? - Submit your company news, deals, opinions, or job listings here for FREE PUBLICITY.

See the Directory of OC StartupsJoin the OCSC to list your company, too!

AND - Subscribe for FREE OC Startup News here!

OR, WHAT DO YOU THINK?  LEAVE A COMMENT BELOW!

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)