Exit Strategy
Exit strategy simply means: how do investors get their money out of the investment? In other words, if they invest in your company, how (and when) do they get a pay-off?
Exit Strategy Options
There are two (money-making) exit strategies for investors:
- Acquisition
- Initial Public Offering (IPO) of stock
Looking at statistics, acquisition is by far the most likely exit for investors today.
The Not-so-Positive Exit
Of course, the other option is that investors could decide to shut your company down. That's a much less pleasant alternative, so the focus needs to be on creating value that will lead to an IPO or acquisition.
Potential Acquirers
You need to describe what companies are likely to acquire your company, and why. This should not be a vague, theoretical discussion. Name names, and describe why (once you've got market traction) these companies will want to buy your company.
And why would they want to buy you company at a price that would give the investors a good return?