The founder of Scaale group Kaushal Chokshi gave a talk about building value to exit at Startup Turkey 2016. He build his group based on his observation that there is a lack of global investors who can help the startups and who can invest in international deal flow. He reminded us that investors invest in exits and explained that Europe doesn’t have a startup problem but a scale up problem because the entrepreneurs don’t think about exit. Here are his recommendations.
“You can have a fantastic outcome if you go global and think about your exit from day one.”
There are 3 types of exits: IPO, Get acquired, Strategic investment.
Each of these take a different time and this is one of the reasons why you should think it through from day one. It will allow you to select your investors, your market and your strategy. However even with this aim in mind, the company should still be built for real business. And whatever you do have smart global capital.
Those were some of the points that Kaushal Chokshi developed during his speech:
Preparing for exit
Create benchmark for each fund raise
Look at the possible valuation at each fundraise
Calculate your dilution at each benchmark
For each fundraise think about resources and expertise you will need for next benchmark
If scaling isn’t your thing exit early
Consider all stakeholder’s interest in your plan
Select your investors as per the exit plan which includes benchmarks
Select global investors as they can bring their connection including potential acquires
Consider global strategic acquirer for maximum arbitrage
Involve your smart investor to take you all the necessary benchmarks
And about revenue
Cash is king, 90% of business you need cash and if you focus on revenue, your fundraising will be easier, you can preserve your equity and you will be in a much better situation in terms of maintaining your control over the company
Look at the emerging markets
Turkey is an amazing geographic situation, it is well connected and should be seen as a hubspot
It is not easy in a startup mode to understand this global context. If you have those global investors they can bring you those unique markets and your costs of entry and margin could be much better
The People
Make sure everyone is on the same page about exit plan from the start, if you know from the beginning you will be able to bring them on the same vision
Have human capital from around the world
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