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Startup Exit Strategies: Are PE and EBITDA the New Black?
- Entrepreneurs must include an exit strategy in the early days of their startup if they want to engage with the world of venture capital.
- Venture capitalists are not just investors, but partners with a focus on high returns, typically within a 7-10 year timeframe.
- The financial performance of a fund is a multiplier, so its size matters, and venture capitalists must deliver strong financial results for their investors.
- In recent years, private equity has emerged as an important player in exit strategy for entrepreneurs, with PE funds accounting for 80% of exits in 2022 for European software businesses over €30 million.
- PE exit strategy means considering aligning your startup's growth trajectory with PE's expectations of high, profitable and sustainable growth.
- Startup performance is now evaluated based on EBITDA, which has re-emerged as a primary factor for evaluating startup value. Being EBITDA positive enhances your company's potential for PE exit strategy.
- Startups must prioritize profitability if they want to maximize their exit potential, whether through venture capital, PE acquisition, or even an IPO.
- Navigating the complex landscape of exits requires a keen understanding of various dynamics; preparing for a meaningful exit that aligns with your vision and investors' expectations is essential.
- Entrepreneurs can pave the way for a successful exit that maximizes their company's potential and secures their entrepreneurial legacy through strategic alignment of goals.
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