How to get Exit Ready with $0 revenue?
Learn how Investors Assess Startup Exit Path on Day 1 - This guide will help you align better during 'Exit Talks' on your pitches
Hey founders,
Welcome to another edition of My Unicorn Club - The Startup Newsletter - It’s a biweekly FREE newsletter written by those on this side of the table (VCs & Investors) for those on that side (Founders & Startup Enthusiasts).
Today, we're tackling something that might sound premature but isn't: thinking about how your startup story could end.
Wait, before you roll your eyes - we're not asking you to plan your exit strategy on day one. But understanding what makes companies "exit-ready" will help you make better decisions right now, especially around fundraising, equity, and growth metrics.
Before we start_
🎊Announcement 🎊
Grab any item in Fundraising Kit at a Flat 50% Discount
Use Code: MUC 50 to avail - Offer Valid Till 30th July
Why Think About Exits Now?
Every investment ends one way or another. For venture investors, the question isn’t if a startup will exit. It’s how, when, and at what multiple.
Over the past two years, capital has tightened. IPOs are rare, and acquirers are selective; assessing exit potential early has become an important investment discipline. They want to know when and how a company will exit and what that means for fund returns. That pressure travels upstream fast.
The goal is to understand the mechanics that make a startup exit-ready and spot the red flags before they stall the deal. The sooner you start asking the right questions, the better your chances of backing a company that exits well, and returns capital when it counts.
How Do Startups Exit?
A decade ago, you could assume an ambitious founder would ride into a growth round, go public, and everyone would win. Today, that playbook has more conditions than guarantees.
Let's start with some basic facts about how startup stories typically end:
Most exits happen through acquisitions, not IPOs
About 90% of successful exits are acquisitions by bigger companies
IPOs are rare and usually happen to very large, profitable companies
The average acquisition happens between years 5-8
Different exit sizes happen at different stages:
Small exits ($10-50M): Often happen early, sometimes as "acqui-hires"
Medium exits ($50-200M): Usually after finding product-market fit
Large exits ($200M+): Require significant scale and growth
Your industry matters a lot:
SaaS companies exit regularly through acquisitions
Healthcare and fintech have active buyer markets
Some sectors (like climate tech) take longer but can be very rewarding
Are Exits Happening in This Sector?
This bit might not seem too relevant for Founders, but hey, this newsletter is about giving investors’ POV to founders - and hence, it is important to understand how Investors determine your exit at a glance.
Exit potential isn’t just a company-level question. It’s a sector-level pattern
Some industries have clear exit momentum - regular acquisitions, consistent IPOs, predictable multiples. Others are tougher.
There’s nothing wrong with backing a bold bet in a slower-moving category, but investors need to price that reality in early.
Hence, you might have seen Investors saying, “We don’t invest in this sector, or this industry is not our focus,” etc. Because if the market isn’t buying companies like this one, you need to ask why you think this time will be different.
Sector trends shape everything - buyer appetite, exit multiples, and timing. Sectors like fintech, SaaS, healthtech, and e-commerce continue to see the most deal flow.
They attract both strategic and financial acquirers, and they tend to generate exits at every stage, from sub-$50M acquihires to public listings. In contrast, sectors like edtech, mobility, or clean energy often see longer holding periods and more sporadic M&A. The exit paths exist, but they’re narrower, slower, and often tied to policy cycles or infrastructure developments.
This doesn’t mean you avoid underdeveloped categories. It just means you go in with your eyes open. If you're investing in climate tech, for example, you may be underwriting for a 10-year outcome. That might still work for your fund, but only if the rest of your portfolio isn't tied up in similar long bets.
The best way to ground your assumptions is to study comparables. Tools like PitchBook, CB Insights, and Crunchbase make this easier than ever. You can screen for startups in the same category, filter by funding stage or geography, and look at who acquired them, or if they exited at all. It’s a fast way to see if the market is rewarding similar businesses, and what it took for them to get there.
If the only exits in a space are distressed fire sales or one-off outliers, that’s not a pattern. It’s a caution sign. On the other hand, if you're seeing consistent transactions across Series B, C, and late-stage, there’s a roadmap forming. That roadmap helps you evaluate not only if a company can exit, but also how it stacks up against others who have already done so.
The key is not to bet in a vacuum. Historical exit data won’t tell you the future, but it will tell you what kind of past the future is likely to rhyme with.
What Makes a Startup "Exit-Ready"?
(The Beginner Version)
Structure plays a quiet but decisive role. A startup can have solid fundamentals and still struggle to exit if it’s carrying the weight of multiple liquidation preferences, a crowded cap table, or an inflated last-round valuation. These things don’t just affect payout; they can scare off buyers altogether.
Exit Readiness is better analysed on a case-by-case basis. But here are a few general things to keep in mind.
1. Keep your paperwork clean
This sounds boring, but it's crucial. When someone wants to buy your company, they'll want to see:
Clear records of who owns what percentage
Proper legal documents for employees and investors
Clean financial records
2. Focus on metrics that matter
Disclaimer: It is better assessed case by case, but here is a thumb rule:
These tell a clear story of scalability and sustainability.
▫️ Gross Margin: >70% for SaaS is strong
▫️ Net Dollar Retention (NDR): >120% shows expansion
▫️ LTV: CAC Ratio: 3:1 or better
▫️ CAC Payback Period: Under 12 months
▫️ Burn Multiple: Below 1.5 preferred
▫️ Capital Efficiency: ARR/$ raised of 1.0+ is healthy
3. Build relationships in your industry
The best acquisitions often come from companies you already know. This might be:
Companies you partner with
Customers who love your product
Competitors who respect what you're building
Tip: Attend industry events, join founder communities, and be genuinely helpful to others in your space.
4. Keep your team motivated
Acquirers don't just buy products - they buy teams. If your key employees don't have meaningful equity, they might leave after an acquisition.
What to do now: Set aside 15-20% of your company for an employee stock option pool (ESOP). Your lawyer can help you set this up properly.
Common Early-Stage Mistakes That Hurt Later
A chaotic cap table leads to delayed deals—or no deal at all.
▫️ Multiple stacked SAFEs with unclear conversion
▫️ Overly complex liquidation preferences
▫️ Tiny equity slices for early investors or the team
▫️ Missing ESOP or under-motivated employees
▫️ Supermajority or veto provisions that stall consensus
The Types of Exits (Simplified)
Acqui-hire ($5-20M): A bigger company buys you mainly for your team. Common for very early-stage companies with great people but early products.
Strategic acquisition ($20-200M): A company buys you because your product fits into their strategy. This is the most common type of "good" exit.
Large acquisition ($200M+): Usually happens to companies with significant revenue and market share.
IPO: Going public. Very rare, usually requires $100M+ in revenue and strong growth.
What Should You Do Right Now?
If you're pre-seed or seed stage, here's your simple action plan:
Get organized: Set up proper cap table management and keep clean records
Focus on the right metrics: Track MRR, customer retention, and unit economics
Build relationships: Network in your industry and be helpful to potential partners
Plan your equity: Set aside stock options for employees and don't give away too much too early
Stay informed: Learn about companies that have exited in your space
The Bottom Line
Strategizing your exit will help you make better decisions as you grow. The companies that exit well are usually the ones that kept their options open and built strong foundations from the beginning.
Building a great business and building an "exit-ready" business aren't different things. They're the same thing done thoughtfully.
One more thing: If you found this helpful, please share it with another early-stage founder. These conversations get better when more people are having them.
Until next time, keep building!
Sayanee Bhowmik
P.S. Forward this to any founder friends who might be fundraising—they'll appreciate the clarity.
Resources:
Startup Valuation Calculator Use - MUC50 for 50% OFF
Pre-Money ↔ Post-Money Calculator Use - MUC50 for 50% OFF
If you like reading My Unicorn Club - The Startup Newsletter - spread the word and share it with someone who might need it :)
Very informative articles ..thanks ..please keep writing ..we are looking for investors now
A lot of thoughts and research have gone into it it. I would appreciate if I can get some feedback on it. Thanks