A good friend of mine just exited the business he founded for $25mm. Since he built the business on so little outside investment, he owned 52% at exit and took home $13mm. This type of exit brings up an important point: too many founders take a typical venture approach which is to focus on the size of their business/size of their exit, whereas what they should really focus on is how much they will take home at exit. Focusing on take-home makes a founder consider level of ownership, and the more ownership you have, the smaller an exit needed to achieve the same take-home.
Put another way, because my friend owned 52% of the business, he was able to take home $13mm on an exit of only $25mm. If he owned 15% of the business, which is the median for founders that IPO, a similar take-home would have required an exit of $87mm. He would have needed to build a business that is 3x larger for the same take-home. Building a big business takes time, capital, execution, and luck so the larger the business you need to build prior to exit, the more risk you’re taking.
The traditional venture model is to raise lots of money and build the biggest business you can. In our view that’s wrong. As a founder, think about what it will take to maxime your take-home, not just the size of the exit. Those are not the same thing and require different approaches.