The Startup Checklist

25Keep Your Eye on the Exit and Reap the Benefits of Success

The whole purpose of founding and building a scalable, high-growth startup is to benefit from the growth in its value that you have created. While it is possible to build a big company and continue to own and operate it for the rest of your life while making a handsome living off the profits it generates, that option becomes less available as more and more people begin to have an economic interest in the venture's outcome.

The kind of high-growth enterprise that I have been discussing throughout this book is one that has received economic investments from angels and venture capitalists. It has recruited top-notch talent who are incentivized, at least in part, by stock options. Perhaps it has acquired other companies along the way in exchange for shares of its stock. These other players now have an interest in the outcome of the business, and virtually all of them, for legal, personal, or other reasons, have entered into relationships with you with the expectation that you will guide the business to an exit.

In practice, most employees in high-growth businesses receive stock options that vest over four years. At the end of that period, the company will need to grant them additional options as an incentive to stay, or else they will move on to another company. Angel investors assume that the companies they back will return their funds, plus profits, within six to nine years. Similarly, venture capital funds raise money ...