Go long or go short? A VC reveals when it’s time to sell and how to maximize buyer interest

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Silicon Valley desires of unicorns. Considering huge fuels the whole startup ecosystem, and general, it’s an excellent factor.

However product-market match is tough to get proper. When it’s not fairly there, everyone knows what to do: pivot. Nonetheless, not each startup is destined to go all the way in which, particularly proper now.

So what if “going long” isn’t on the playing cards, irrespective of how a lot you pivot? Promising younger firms that want financing however can’t command good market worth are caught between the satan and the deep blue sea: On one hand, you possibly can take a down spherical, which hurts everybody; on the opposite, you possibly can defend your valuation, however you danger sinking with the ship.

Residing by 4 main downturns has taught me that “successful” and “dropping” will not be the one potential outcomes. When you possibly can’t fairly make it to product-market match, there’s a 3rd alternative that too many entrepreneurs, and their traders, overlook: promoting out.

You may consider it as taking part in “the brief recreation,” and it ought to all the time be an possibility.

How can founders determine whether or not to go long or brief?

Founders usually really feel they’ve to grow to be a unicorn to do proper by their constituents. In actuality, generally taking part in the brief recreation delivers extra worth to founders, traders, staff and the buying firm than the long recreation ever might.

How will you select? Whereas it isn’t a trivial resolution, it’s additionally not as onerous as you may assume. The reply has been hiding in plain sight ever since Steve Clean and Eric Ries first outlined in “The Lean Startup” the idea that Andy Rachliff later canonized as “product-market match.” There are solely two gates: worth and development.

You may’t wait till you want to elevate cash to begin desirous about getting acquired. M&A offers don’t “simply occur”; they’ve to be engineered.


First, you want to validate your “proof of worth.” Does your answer remedy a “hair on fireplace” drawback that clients can’t reside with out? Are there replicable use circumstances a big variety of clients have? To ascertain proof of worth, founders want to be on the market, confirming that their answer is one thing clients actually need and pays for.

In case you don’t have clear, constructive market suggestions by the time you attain Collection A, take it as an indication. Pivot huge or begin on the lookout for the exit.


Subsequent, handle your development speculation, the “proof of market”: Do you might have a gross sales mannequin that enables you to economically purchase clients at a tempo and quantity excessive sufficient to broaden your small business?

Whereas proof of worth is a job for the founders, gross sales groups needs to be skilled to construct proof of market successfully in an effort to scale. If each the time and value of buying your subsequent buyer is asymptotically reducing by the time you’re approaching your Collection B spherical, it’s robust proof that you’ve established proof of market.

If not, it may very well be time to go brief.

Picture Credit: Neotribe Ventures

If the chart above helped you establish that going brief is sensible, you’re most likely asking your self: The place do I begin? How do I determine which patrons to go after? What can I do to entice their consideration with out scaring off clients and potential traders? How can I negotiate from a place of energy and get good worth? What ought to I do if none of that works?

Listed below are my ideas:

Make your self engaging to patrons

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