Business angels seek to invest in startups with a clear exit strategy for several reasons:

1. Profitability objective: Most business angels invest in startups in the hope of making a significant return over the long term. A clear exit strategy gives them confidence that their investment can be successfully realised and make a profit.
2. Long-term planning: A clear exit strategy also allows business angels to plan their investment over the long term, enabling them to understand how the company will develop and how it will perform financially.
3. Risk assessment: A clear exit strategy also helps business angels assess the risk of the investment. If a company has a clear exit strategy, it is more likely to have a sound plan for managing risk and achieving its objectives.
4. Negotiation: A clear exit strategy can also be useful in negotiating with investors. If a company has a clear exit strategy, it is more likely to be able to negotiate favourable terms for all parties involved.

In short, a clear exit strategy is key to attracting business angels and getting them to invest in a startup with confidence. It gives them the assurance that their investment will be profitable and that the company has a solid plan to achieve its long-term goals.

KILL THE COW OR MILK IT? EXIT STRATEGIES FOR STARTUPS

One of the doubts that often arises when we are setting up our company is, paradoxically, how it will end and whether we will end up selling it. There is nothing morbid about this perfectly practical question, and it has a tremendously practical purpose: if you don't know what you are setting up your company for, you are likely to make a mistake later on.

WHAT DOES IT MEAN TO CREATE A COMPANY WITH THE EXIT IN MIND?

Although almost all of us at some point have had the romantic, adolescent idea of selling your business to Google cross our minds, most of us are sensible enough to dismiss the thought... not because it's not possible, but because it doesn't make sense to worry about something that is out of your hands. But it's still something we should at least be aware of, and apply our common sense to it.

THERE ARE REALLY ONLY 2 WAYS TO CREATE A COMPANY WITH ITS END IN MIND, THE FAMOUS EXIT:

• TO SELL; KILL THE COW:

These are companies that we create in order to sell them. While we obviously have to create a lot of value along the way, the main metric of these companies is usually growth, something that is often done at the sacrifice of other more "sustainable" variables. If this is our case, we should be clear about who we want to sell the company to (you should have in mind several possible buyers who might be really interested and usually acquire companies like yours), and above all, why such a company would be willing to buy your startup (Does it want to enter a new market? Does it need to grow more? Does it want your technology because it complements its own?...).

All of this will influence your strategy from day 1 of the company, as you will not work in the same way as if your strategy is to create a profitable and sustainable business (something that is exceptionally important). In this case, You are not going to generate value through high profits but through the purchase of your company by another, so it is key to maximise the variable on the basis of which your company will be valued (usually the users). And of course, that usually implies that we have one or more investors behind us who also push us in the growth of the company.

• TO STAY; TO MILK THE COW:

If our start-up is born with the aim of becoming a profitable and, above all, sustainable company, the approach changes completely: The main objective here is to create a solid foundation on which to grow sensibly and profitably, and to earn money through the profits generated by the company. Paradoxically, this implies that, during the In the early years, no dividends are distributed and all the profits generated are reinvested in the company itself, so that during the most turbulent period (the birth) there is a sufficient cushion to cope with threats and grow (with common sense).

In this case, the metrics with which we are going to steer the course of the company are not those related (only) to growth, but to profitability (or learning in the early stages of a startup... something more important than it seems: in startups focused on exit or sales and that base their metrics on growth, a "binary" phenomenon occurs, as they usually either succeed in a spectacular way (1/100) or die in a spectacular and very fast way (99/100). How is it possible that this is not clear, let's give an example of how exit strategy affects the direction of the company: Let's imagine that we are building a new company selling clothes. If we are guided by "milking the cow": possibly to grow and expand internationally we will focus on markets of a reasonable volume, with profitable customers. Let's say we are talking about France, the UK and Germany.

However, if what guides our company is an exit or sale to a company (perhaps to an American multinational in the fashion sector), our expansion strategy may be different: usually American companies that want to have a presence in Europe enter through the United Kingdom and quickly expand into the Nordic countries, but they usually encounter resistance to enter Mediterranean countries (cultural and social barriers, consumer profile...). In this scenario, we may decide to start our expansion in Italy, France... etc.

DOES IT MAKE SENSE TO CREATE A COMPANY TO SELL IT?

In my opinion, it is not at all a good idea to build a company with the "end" in mind and guiding our strategy to maximise the likelihood of purchase. I think that is like the milkmaid's tale, it is imagining what is going to happen and distracting us from the present. Also, the level of risk introduced by growing at several times the normal speed does not make sense.

"I know! Let's sell our company to Google for forty million dollars!"

One must create a company with a burning desire to solve a problem or to help a customer segment (+), striving to create a great product that customers will love and that will be the backbone of a profitable and sustainable company (not the same as eternal, mind you... companies also have their life cycle). Does this mean that we should not think about possible exits? Not at all! We should at all times be aware of the sales possibilities (if we are interested in exploring the option, of course) that are on the horizon, and try to maximise them... but without this forcing us to sacrifice our principles.

OTHER REASONS WHY A START-UP ENTREPRENEUR MAY DECIDE TO SELL OUT:

1. Accelerated growth: if the startup is experiencing sustained and accelerated growth, it may be a good time to sell it to a larger buyer that can provide the financial support and resources needed to continue its expansion.
2. Attractive purchase offer: if the startup receives an attractive buyout offer, it may be an opportunity to sell it for a significant profit.
3. Investor pressure: investors may be pushing for the start-up to be sold if they believe it has reached its full potential or if they are dissatisfied with its financial performance.
4. Market changes: if the market or industry in which the startup operates is undergoing significant changes, it may be a good time to sell the startup before it is affected by these changes.
5. Financial difficulties: if the start-up is experiencing financial difficulties, it may need to be sold to avoid bankruptcy.

In short, selling a startup can be a strategic decision that allows founders and investors to make a significant profit and continue with new projects.