Are You Ready for Growth Equity?
Since the Great Recession, it is taking longer to build companies to a stage where they can achieve a productive exit. Yes, there are exceptions to the rule where large strategic buyers pay outrageous multiples for technologies or teams that fit well into their strategic product road-maps. These high-profile, high-multiple exits are outliers. Entrepreneurs seeking to create value shouldn’t build their plans around such outcomes. Rather, this is a market in which entrepreneurs must perform the hard blocking and tackling of company building in order to create value.
Unfortunately, in a market where venture firms have generally downsized, private equity firms have gone up-market, and the IPO window is closed for earlier stage businesses, there is a financing gap for growth-stage businesses that can’t (or shouldn’t) yet exit but can’t yet raise debt. The gap is being filled by growth equity firms.