M&A/Exit vs Becoming a Unicorn (e.g. NeXT & Apple)

M&A/Exit vs Becoming a Unicorn (e.g. NeXT & Apple)

M&A/Exit vs Becoming a Unicorn (e.g. NeXT & Apple)

The Exit Path executive event on May 2 helps entrepreneurs, investors and corporate leaders on the journey to exit

In a recent article by CB insights ‘Venture Capital Funnel Shows Odds of Becoming a Unicorn Are Less than 1%’ and having a M&A or IPO exit at 28%’.

‘The data bears out the conventional wisdom: Just over 70% of startups stall at some point in the VC process and fail to exit or raise follow-on funding.’

‘Of the 1,098 tech companies we tracked that raised seed rounds in the US in 2008-2010, less than half, or 46%, managed to raise a second round of funding. Every round sees fewer companies advance toward new infusions of capital and (hopefully) larger outcomes.’

‘Three hundred and six (28%) of the 1098 of companies that raised a seed round in 2008–2010 exited through an M&A or IPO within 6 rounds of funding.’

Out of 1098 seed funded companies only 505 or 46% raise a 2nd round of which 14% exit. And the spiral goes down on both the numbers that can raise money in subsequent rounds and that have exits.

Know How Your Assets Impact Valuation & Put Your Company in the Path of an Acquirer

Being a ‘Valley Native’ I’ve been fortunate to have personally seen and been a part of many exits and one IPO. No surprise statistically that only one ended up as a Unicorn or $1B valuation and then within days the market fell out and we were no longer a Unicorn (more like a rhino.)  Let’s just take an old/high-profile and majorly historical exit — like the sale of NeXT to Apple.

Being one of 8 people to work closely on the deal, NeXT was an intended Unicorn that ended in a grand exit on a different scale. Many people do not realize that leading up to the sale of NeXT to Apple we were gunning for an IPO. We had drafted the prospectus, were in a tedious 9 month quiet period as we watched the market dance and sway and never felt comfortable to pull the trigger. These were the earliest days of the commercial Internet in the late 90s and no one knew how to value Internet companies)  Then along comes the idea to sell NeXT to Apple as we knew they were in the market for an operating system. So we did what any nimble start up would do and we positioned ourselves around our operating system (btw *not at all how we were positioning ourselves for the IPO as an Internet infrastructure company) and we sold the company.

If you’re VC funded you will have strong pressure to be the Unicorn that delivers 4x return to the whole fund (thus causing the pressure to become a Unicorn.) As CB Insights quoted Steve Blank. . . ‘the VCs business model becomes your business model.’ And while an exit may not always deliver the same level of return you can do well by your company to position it in the sweet spot for a potential acquirer. By looking and continually highlighting all aspects that impact your company’s valuation (e.g. defensible IP, team, user/audience base, differentiated business model) and doing a market assessment of which companies are lacking some of your assets, you can see perhaps a way to position your company in the path of a potential acquirer.

This is all to say that. . .there are so many market, life, potentially formidable variables on the path to being a unicorn that only setting your sights there is truly like living in a fantasy world. Instead, also set your sights on the perfect potential acquisitions highlighting assets/valuation in a desirable way and then be ready for all of that to go out the window as well as your acquirer may be a company you could not have seen coming. Know what companies share your values, pathos and ideally those that are cash rich and position your company to be in their undeniable path. This is a deep topic so I suggest you attend our panel in Zurich to find out more.


Nicole DeMeo is a Strategic Advisor, Angel Investor and Go-to-Market Strategist. She has been a part of 7 exits and 1 IPO. She has a passion for supporting and collaborating with female founders and investors and for fun makes wine and has a vineyard in Mendoza, Argentina. You can find/follow her on LinkedIn and on most networks as @techiecat.


Exits Foster Ecosystem

Exits can benefit start-ups and small and medium-sized enterprises (SMEs) with new resources, investors can realize their returns, and as cash is liberated, it is often to be invested in new projects and companies. Founders may also become investors or start yet another company, reinforcing the ecosystem, creating new job opportunities and helping other startups succeed.

With a greater likelihood of having some sort of exit we at Exit Accelerator would like to invite you to one of our executive events to help entrepreneurs, investors and corporate leaders on the journey to exit : The Exit Path on May 2nd in Zurich Switzerland.

Join us to connect with the key players in the exit/M&A space, bring your perspective on the challenges and what needs to change, what the focus and efforts should be to improve and increase the number of exits in Switzerland.

Understand exits from the entrepreneur, board member, and corporate buyer perspectives learning from first hand experience with IPOs, trade sales and acquisitions, as well as advisory from both sides at the table. This is a highly interactive session where the audience asks the questions and our world-class panel shares their stories. We are going to discuss topics such as:

  •      Understanding valuations: from founders to investment bankers
  •      Increasing valuation: driving value through marketing and branding
  •      Negotiating exits: building a position of strength
  •      Effective collaboration: merging corporate & start-up ethos for success


David Butler
In the Zurich startup scene since 2009, managing events for entrepreneurs, connecting founders and investors, advising startups, with a passion to inspire the next big thing.