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VC exit, the beginning and the end reflect each other
01 Complete an investment ,VC Three rights are enough
02 Lean isn't just about quitting , More in the temperament of investment
03 Exit time planning , The beginning and the end guide each other
Entrepreneurs with financing experience are turning to VC pitch When you are alone , Exit strategies are often mentioned . Because they are eager to make a guarantee , Prove that you have reached out to a project that can bring returns .
But the interest of good venture capital institutions in the ultimate exit goal , It may not be as big as the founders thought . in fact , Venture capital is more like a strategy of getting rich slowly , well VC Usually have enough patience and concentration . They are willing to devote themselves to a long-term project 10 In the year of investment , Wait for the right opportunity , And believe in The founders who can build an enduring company , There is no shortage of opportunities and time for exit in the future . Then wait until the end of the life of the Fund , Make an exit choice .
therefore , With an enterprise from investment to exit ,VC There is not much information to absorb and do . This can be better reflected when it comes to quitting , Do things carefully , But not miscellaneous . Just like we have written many issues about VC Quit weekly , From microscopic mathematical calculation , To the macro strategy and attitude , The articles in this series eventually merged , About VC The conclusion of exit is less and less , Not more and more .
1 Complete an investment ,VC Three rights are enough
Angel investor Brad Feld Share , He once attended a Harvard Business School Forum , A wise old VC Said a word that moved him very much ：
「 Venture capital , Three rights are enough ： The upside 、 The downside 、 Know what happened .」
As the venture capitalist said ,VC And the founders 、LP Signed between term sheet Very meticulous , It may be four to eight pages long , The final document may have 100 Multi page , however VC There are only three things that really need to be clarified in each cooperation ：
（1） The upside ：pro-rata The right to . When the project goes well ,VC Hope to be able to continue to invest , Maintain your ownership .
（2） The downside ： The right of priority liquidation . When the project is not going well ,VC Will prepare to take out the money first .
（3） Know what happened ： Board Seat . Many people think that , Having a seat on the board brings great power and responsibility . actually , It is mainly to let people know what actually happened , Especially in a fast-growing start-up company .
As USV Of LP,Brad Go to Fred Wilson I searched my blog to find out if he has written similar topics , As a result, I found an article Fred 's post , The title is 「 Three conditions that must be met in venture capital 」, It coincides with the above three aspects .
Fred He owes his insights to his first venture capital mentor Milt Pappas,Milt Think , What VCs really care about is focusing on making things simple .
Fred Wilson writes , He 20 When I was a few years old , Managing partner of his first venture capital institution Milt Pappas Tell him , There are only three really important terms in venture capital （ Of course , In addition to the price ）：
Priority in liquidation
The right to participate proportionally in the next few rounds
The right to board seats
after that Fred Wilson I've been watching Milt These three terms . For more than twenty years , Only very special times Fred Completed some... Without board seats deal, Other times basically follow Milt Give him advice .Fred Believe in Milt That's right. , These three things can save his investment more than anything else .
（1） Priority in liquidation ： If you invest 100 Thousands of dollars , Buy a business 10% Shares of , The next day, the entrepreneur received another company 500 A $million acquisition offer, He may choose to accept it . Finally, the enterprise gets 450 Thousands of dollars , And you only get 50 Thousands of dollars .
Of course , You can negotiate to get a stop deal The right to , but Compromise between entrepreneurs and the exit they crave , It is not a good way for venture enterprises to succeed . Better say ,「 Give me a choice , So I can get my investment back , Or let me get the agreed ownership , Whichever is greater 」. This is liquidation priority , Simple and clear .
（2） Participate in the next several rounds of investment in proportion ： Probably the most important clause . In the early stages of venture capital , A few investments usually bring the vast majority of the fund's returns . When you're involved in one of the projects that pays off tremendously , You need to be able to all in. In the next round of financing , The right to proportional participation is equally important , Can protect VC From being wiped out in highly diluted financing .
（3） Board Seat ： This is not all VC All concerned about . But without it , You can't have a real impact on your investment . This is the best way to ensure that the investment goes smoothly , When the investment is not going well , The board seat gives you the right to decide how to solve investment problems .
Of venture capital term sheet There are many other provisions in the , Yes Time meeting Come in handy . Like the protection clause 、 Right of first refusal and right of CO sale 、 Anti dilution protection 、 Redemption rights, etc . Some of these Provisions did come in handy , They're also very useful . however , There are several common venture capital terms ,Fred Wilson stay 23 They have hardly been used in practice for years . That doesn't mean they're useless , There are not even best practices , But it does mean that some things are more important than others .
In negotiations , The key is to know what you have to have , What should you have , There's nothing you can still live .
2 Lean isn't just about quitting , More in the temperament of investment
This is not just applied to investment projects .Fred Wilson Think ,「 Lean 」 It is a mentality that the founder of the fund and his team need to have in all aspects of the business .
If lean can be applied to recruitment 、 marketing 、 Financial and all other aspects , Get a fast 、 Flexible companies , Especially when things are like this in many ways at full speed When it develops .
USV It is a capable venture capital institution .Brad and Fred That's because it's in the middle of nowhere 2003 Established at the end of the year USV When , They talked about the characteristics of all the venture capital institutions they didn't like , Finally, I found the law of lean .
In the process of discovering this Law ,Fred Before that Flatiron My experience is very enlightening . stay Flatiron In the first two or three years , It's basically just him and Jerry. They are deeply involved in all investments , Well done during that time .1999 In the middle of , They wantonly 「 carnival 」, Raised a sum of money 3.5 Billions of dollars , Moved into a huge office , Hired 25 Employees , They don't participate much in a lot of investments . As a result, in that period , They did a very unsatisfactory job , Become bloated .2001 year ,Flatiron Had to stop working ,Fred stay Jerry and Bob Took over the follow-up management of the investment project with the help of , Basically back to the early model , At that time, it returned to the previous range .
experienced Flatiron after ,Fred Think The size of the venture capital team is not important , He believes that what venture capital needs is a small team composed of highly involved partners , In addition to building good relationships with entrepreneurs , Nothing else .
2011 In the year ,USV There is a small team ,Dorsey In charge of the office ,Christina Responsible for investment ,Gary Handle portfolio business . That's it . To this day ,USV Still maintain a lean and flat team , So that they can Focus on the most important things , Respond quickly to opportunities , Focus more on the outside than on the inside .Fred Looking at most of the VCs he admires , I also see a similar lean law .
3 Exit time planning , The beginning and the end guide each other
stay VC There is a saying in the world of old guns ,“ Good companies are bought , Not sold ”. This is especially true for the best companies , The same is true for most other companies , For the worst companies, it's not at all .
Venture capital institutions are often a small number of investors , Have no right to unilaterally sell the company they invest in , They need the cooperation of other investors , what's more , The cooperation of the management team including the founder is required .
“ Buy a company ” yes inbound, The acquirer comes to the door by itself , but VC And the founders don't want to let go , Often have quite good bargaining power ;“ The company sold ” yes outbound,VC And founders need to talk to potential acquirers pitch own , Generally, in such cases , The board of directors should take the initiative to find the right banker To cooperation , Let the whole process be controlled , So that the company can sell at the right price .
「 At what time do mergers and acquisitions exit 」 There are no answers like manuals ,SaaS The founders Jason Lemkin Think , If your intuition tells you , It's time to take a step forward , Then go ahead . Even if the price is different from what you want , Also accept and complete the transaction . most important of all , If you need more time to think , Then speak up . Tell the acquirer truthfully , You need another week or two to discuss internally .
When one thing comes to an end , It can better show its whole picture . It's like quitting a project , It always reflects the climate of investment . Electronic signature company founded in EchoSign By Adobe After acquisition ,Jason Answered a question , About how and why you became a venture capitalist ：
（1） Can take some great trips in the business world .
（2） Well done , You have a better chance of making money .
（3） Less ego, Less drama, Less greed and arrogance , A little more integrity and Zen .
These are the reasons to be a venture capitalist , At the same time, it's a 16-17 The promise of the year （10 Years of fund life ,3 Only fund , Apart, 3 year ）.VC There is a time scale of ten years to lean yourself and invest , Then generate a complete answer when exiting .
This article is from WeChat official account. “ Tracing the yuan and cultivating the new ”（ID：EnvolveGroup）, author ： Tracing the yuan and cultivating the new ,36 Krypton authorized release .
author[36kr],Please bring the original link to reprint, thank you.
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