One advice startups often get when developing a successful business is to think about the exit strategy from the early days. Admittedly, is not an easy thing to do as entrepreneurs focus on growth and the next phase in the life cycle of their venture. However, it is important to plan for that milestone even before the entrepreneurs embark on the financing path. Exits bring liquidity to the system, make it more dynamic and stimulate growth.
Venture Ideas @ EPFL asked in 2014 Swiss Start-up exits: Can we have more?. One thing that both the M&A experts and entrepreneurs agreed was that taking business to the next level gets easier with a strategic corporate partner. The exit therefore has to be well prepared so that value creation is maximized for all stakeholders and that the growth can continue internationally.
WEF’s 2014 report on Europe’s Competitiveness – Fostering Innovation Driven Entrepreneurship offered a three phase life cycle model (Stand Up, Start Up, Scale Up). The cycle is conditioned by the individual factors (skills, attitudes and cultural framework) on one side and by the ecosystem factors represented by the regulatory and market framework as well as the network of support organisms such as advisers and partners on the other. Together they ensure a know-how transfer that creates opportunities for growth.
Source: WEF, 2014
This entrepreneurial life cycle turns into a loop stimulating serial entrepreneurship that is fostered by successful exits. Those serial entrepreneurs with multiple venture experience in turn become investors, role models and mentors themselves. They continue contributing to a more dynamic ecosystem and a more competitive economy altogether.
Pamela Dennis, a successful entrepreneur and adviser to Fortune 100 companies states in her recent book Exit Signs that 87% of small and mid-size businesses have no exit plan. This puts them at risk of being sidetracked or taken over at no terms of their own. Her advice to business owners is to focus on building the business into a saleable, attractive and well documented venture with a focus on building relationships with the potential strategic acquirers early in the business life cycle. This will, she says, allow them to be bought rather than having to sell when they decide the time is ripe.
Exit Accelerator is a grass-roots, not-for-profit association, with the aim to boost the Swiss start-up and SME ecosystem by promoting conversations about exits. We believe that exits are one of the important milestones in the life of a business. Companies grow and develop over multiple years, often with exits there is a change in leadership, and an opportunity appears for them to start building great new companies again. The money is recycled and reinvested in the startup ecosystem, creating jobs, and supporting other innovative ventures.
Entrepreneurs that lead their business to a successful exit have a story to tell that startups and more mature SMEs can learn from. Learning first hand from those who did it is second only to doing it yourself. Exit Accelerator looks forward to open the stage to such conversations.