Michael Jackson’s Post

Valuations are based on the propensity and willingness to set a certain price at a particular moment in time based on a combination of factors. It is an art, not a science. However, the maths behind financial statements and what they tell you in terms of unit economics, growth, profitability, cash generation, cash reserves, and overall business and financial health are vital for every shareholder to understand. For an entrepreneur, it is about balancing the expected milestones with realistic trade-offs along the way on both a business and personal level. Knowing what you want and when is critical. 💸⏰ Sharon Gillenwater is an exited entrepreneur that breaks down the high level maths on the sale of a company she built and bootstrapped (mostly) over 14 years (from 2008 to 2022). As we enter a different business cycle in a chaotic world where new ways of working and systems are being re-designed, this type of radically simple and open storytelling is much needed. 👏🏼🙌🏼 #hardtruths #entrepreneurship #growthmindset #fromequitytocash #modernfinance #lovethequestions

If you are a new startup founder start early understanding the mechanics of what you'll get left with at exit. If you need help improving retention and turning broken client relationships into award winning partnerships. Drop me a message if you are facing these challenges and have no idea where to start or unsure of what it will take and the cost to start fixing this. Thanks Sharon Gillenwater for sharing your story, agree that we shouldn't be afraid to talk about money. Michael Jackson 🙌 for posting this. #saasfounders #startup #newbies

Information Like this is powerful and can help us to be more successful

Absolutely vital to talk openly about finances. Big deals like these are important to understand what entrepreneurs go through, absolutely, but even in a broader sense - for better financial literacy we all MUST start talking more about money - where it comes from and where it goes. #startups #finance #fundraising

We should be talking about this. There will be more entreprenuers this year than ever before! Let’s also talk about the differences between a complete cash exit and a cash + stock exit! Chime in below 👇

In the world of startups, thoughtful equity management is crucial. Founders often risk selling too much equity or structuring deals that limit their rewards upon exit. Consider Sharon Gillenwater, who founded her company in 2008, led it for 14 years, and walked away with $9 million of the $25 million sale price. While this is an impressive result (netting Sharon about $640k/year on average), let's explore another scenario. If the business had sold for $20 million, and the founder owned 15% (within the average range for SaaS founders), their net annual compensation would be approximately $142k. This is akin to what an average first-year graduate from The University of Chicago Booth School of Business or Harvard Business School earns, but the fresh MBAs likely will work fewer hours, have significantly less stress, and earn substantially more than $142k/year over the course of 14 years. Key takeaways: 1️⃣ Bootstrapping and using less dilutive financing like debt can preserve a founder's ownership. 2️⃣ Exits may not be as glamorous as they seem, so careful equity management is vital. 3️⃣ Positive founder outcomes are less common than we might think since we rarely hear about the failures or smaller exits, so it's essential to plan for various scenarios. 4️⃣ 100% of zero is zero so selling equity usually makes sense to spur growth. 5️⃣ However, very small percentage of something that seems big can actually be quite small. #startups #entrepreneurship #venturecapital #dilution #bootstrapping #venturedebt #founders

Entrepreneurs need to talk about money MORE—Especially when the topic is the financial mechanics of selling their company. Sharon Gillenwater, Thank you for your bravery in sharing this, and congratulations on your sale! 👏 Here's the elephant in the room. It seems your $25 million exit had about the same personal benefit to you as a $75-100 million exit for VC-backed founders. You came out WAY ahead! Why? (1) By avoiding dilution, your exit could occur at a much more attainable number while still netting you what you needed to reach "escape velocity." (2) You didn't face artificial pressure to grow fast, so you could avoid big, fatal mistakes, also increasing your odds. (3) You retained control, so your deep understanding of and personal commitment to the company remained intact, increasing your odds even more. #entrepreneurship #startupstrategies #mergersandacquisitions

POV from a founder who made the right choice of how to grow their business and breaks down what the exit looked like for her and her team and advisors. A really helpful breakdown. This serves as a great reminder that not all founders should take on external capital, esp. capital from VCs (speaking as a VC investor). As a venture investor, I am happy to identify when founders should take alternative paths. Kudos to Sharon Gillenwater on a successful exit. #VC #venturecapital #founder #founders #startup #innovation #exits

this is a real clear breakdown of the big picture of where the dough goes in a sale transaction.

VCs trying to convince themselves and others that a bad portfolio company isn't so bad...buuut it is. 🐖 #vc #venturecapital #startups #entrepreneurs #entrepreneurship #tech #technology #innovation #investing #investment #investors #money #business