It is only human to say that you cannot predict the future.
Entrepreneur: “We have to be ready for the next pitch. No matter what!”
*One week later*
Investor: “Hey! Are you planning to lower your future price?”
Investor: “Right; Also, you need to expand your target segment to reach an older audience, don’t you agree?”
Entrepreneur: “A 100%.”
Investor: “I like this. We click. Alternatively, I believe you should enter the cheeseburger market.”
Entrepreneur: “I mean, we’re a SaaS cloud solution, but… yeah, it sounds like a project. Burgers matter!”
Investor: “Wow, I thought we weren’t thinking alike. All is well, finally; What is your plan after 3000 years?”
Entrepreneur: “Well, assuming global warming doesn’t kill us, our exit strategy dictates that we’ll have an IPO in five years. Then our stock will rise to $500, but there is a projected recession in 2099, which will drop to $1.
However, we will retain it and the stock will continue to grow for another 1000 years. Until the zombie invasion of 3012, we face a steep decline in cloud solutions, as our studies indicate that most zombies will not use the cloud. So our stake will then drop to 50 ZepaCoin, which is the planned cryptocurrency of the world, apparently.
Investor: “Yes, correct; I love that your exit strategy is perfectly planned. This is what I look for when I invest. I need to know that you are aware of the impending zombie apocalypse and that you have a plan to survive it.
If you come across an investor like the above, I advise you to avoid them. Mainly because they don’t believe global warming will kill us all.
Well, that’s a joke. That being said, I’ve been a business consultant for over ten years, and I’m sure The average pitch deck’s exit strategy slide is ineffective 99.99% of the time.
One is to predict your income; At least there is some science behind it. However, predicting how your startup will fare in terms of an acquisition, acquisition, or IPO is useless because it’s almost certainly wrong.
When Lyft started, they had no idea they were going to have an IPO. They were on the verge of selling to Uber and other companies. Tesla was almost sold to Google.
That being said I would rely on their exit strategy:
- We are may Have an IPO.
- But we could be bought by a bigger competitor.
- Finally, if we see a small company filling our product, we may Buy this.
Let’s rewrite the above – our exit strategy “We have no clue but hope for the best. We will decide when the time comes,” he said.
When Guy Kawasaki has a famous pitch deck template, you might think you have to follow it to be successful. I mean, he’s a Silicon Valley expert, right?
Yes, he is. No, you don’t need to follow it. There are over a hundred different sources, such as Guy Kawasaki, that list their recommended 10-page-pitch-deck structure. It doesn’t matter at all.
If you have a product with solid traction, One or two slides Can take you to the big leagues. So, the idea behind these templates is to learn from each slide.
If you are a non-drag startup, but the template has a drag slide, You don’t have to add it (You have none, for heaven’s sake.)
Starting by trying to outwit VCs and investors is like starting a soccer game by running at the goalkeeper in the first 10 seconds; It rarely works.
Are you really going to make $50 million in 4 years? Statistically speaking probably not. However, it shows that you have a strong and solid plan. This shows that It is possible.
But ask any investor who invested in Tesla if they thought their share price would have a 29,207% slope. They will believe you are out of your mind and won’t invest in Tesla because it looks like a scam.
However, all of the above is what I call an acceptable statistical scheme. $50 million in 4 years based on variables like market growth, similar companies, competitors, team experience etc.
If everything goes according to plan, you can earn this amount if you have nothing “$8 billion in accounting errors” Like FTX.
However, the exit strategy is much less statistical. Instead, it is pure conjecture as you state your end plan with your beginning.
You can say, “Well, it’s the same. Investors should know that I am ambitious enough to say that my exit plan is to have an IPO in five years.
But the number of companies doing IPOs is negligible compared to the number of global startups.
Even if you believe its importance in planning, that doesn’t mean it should make the final cut for your ten-page slide deck. There are more important things.
That’s it only I advise my clients to create one (Only if an investor or VC asks for a blunt exit strategy.)
If so, I’ll build one while informing the VC that it has more accuracy. They may be looking for someone with an acquisition mindset rather than IPOs.
Something not too emotional about their startup. In that case, articulating an exit strategy clarifies future dialogue.
Planning is good. Not over-planning. It is acceptable to develop an exit strategy. Adding it to your pitch deck is useless. Sincerely, I believe so, I’ve seen over a thousand pitch decks While working in this entrepreneurial world for over ten years.
If you think I’m wrong, tell me why in the comments and we’ll have a fun conversation teasing our brains.
Best wishes on your upcoming entrepreneurial journey!
I am Al, a business consultant in Zurich, Switzerland. I believe in the power of providing value to you, the reader. If you are interested in the value of my content, please follow me on various social media platforms. Oh, and I also write content on myself Startup blog.