As a founder, optimism is your greatest strength. It gives you the courage to start a company, rally a team, and keep going when the odds are stacked against you. But the same optimism can also cause you to miss the best moment to sell.
Dave Sifry knows the cost of waiting too long. In his early thirties, his stake in Linuxcare was worth more than $100 million on paper as the company prepared to IPO. Months later, it was worth nothing. Later, he raised $70 million for Technorati, only to see it sold for pennies on the dollar.
Despite those scars, Sifry has built an extraordinary career. He has founded nine companies and today is founder and CEO of Warmstart, a platform that helps entrepreneurs turn old contacts into new business.
In this episode of Built to Sell Radio, you’ll learn how to:
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Recognize when optimism is clouding your judgment about selling.
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Spot the warning signs you may be drifting past your company’s “best before” date.
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Avoid the ego trap of moving the goalposts as your valuation rises.
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Understand how venture terms like veto rights and preferences can stop you from selling.
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Protect yourself from being wiped out as a common shareholder.
Dave’s story is a reminder that the timing of your exit can be just as important as the size of it. For more on how to get timing right, check out It’s About Time: A Business Owner’s Guide for Deciding When to Sell — a free resource that will help you avoid selling past your peak.
Listen now to hear how one of Silicon Valley’s most prolific founders learned this lesson the hard way.
Quote of the Week
We were getting ready to go out at a $2 billion valuation. And at that time, I still owned 6% of the company… The common never made a penny back.
Deals
Gordon Archer, a financial advisor at Bellwether Investment Management, sold his book of business — $40M in assets under management (AUM) — to his own firm. Archer will stay on as an employee to continue serving clients.
Bellwether (a subsidiary of Lorne Park Capital Partners, TSXV: LPC) paid $1.3M: $520K upfront, with $195K installments each January through 2029, adjusted for trailing-12 revenue. Bellwether was valued at roughly 3.25% of AUM.
