The last time I presented at an event for investors, the first five people all asked me the same question, “Any exits yet?”
The more years I spend focusing on revenue-based investing, the more that question is getting on my nerves. Perhaps some of that is on me, as the talks I give are generally titled “Investing without Exits” or “Alternative Exits” or “Structured Exits”, co-opting the meme of an “exit” without meaning an acquisition or IPO. Perhaps my frustration would lessen if I just interpret that question as “How is your investment cash flow?”
Trouble is, that is not what the questioner is thinking. The more investors I talk to about revenue-based investing, the more I see that the paradigm of early-stage investing via buy and hold equity is so ingrained into the startup culture that just about no one notices that those investment structures are a choice.
It is a choice by the investors to use an investment structure designed for unicorns, when 99.9% of all startups are going to be some other breed of animal. It is a choice by the entrepreneurs to structure their Angel rounds using the “standard” terms, which inevitably put them on a path where their investors will insist that they sell their company.
There are other choices, and slowly but surely, as I talk more and more about these alternatives, investors globally are starting to share their stories of their first alternative structures.
Paradigms don’t shift themselves.