Saying Goodbye: What Happens When Your Startup Exits the Game?

"First of all, exit might not necessarily means cashing out on a business venture. It mostly means departing from a business venture, and the ending could be good (success) or bad (failure)"

Starting a startup is a dream for many entrepreneurs. The process of creating a company from scratch and watching it grow can be a fulfilling and exciting experience. However, the reality is that not all startups make it to the end. In fact, most startups fail. According to a report by Statista, around 90% of startups fail within the first five years of operation. Currently in Africa there has been few prominent exits, such as Paystack which got acquired by Stripe for $200m and InstaDeep Ltd which was bought by BioNTech SE for $684 million in Africa's biggest acquisition to date.

Even if your startup does make it past the initial years, there is no guarantee of success. There are many factors that can lead to a startup's failure, such as poor management, lack of funding, or even an unfavorable market. However, what happens when a startup does succeed? What happens when a startup finally exits the game? Saying goodbye to a startup can be an emotional and challenging experience for many entrepreneurs. Here's a look at what happens when your startup exits the game.

The Emotional Rollercoaster

For many entrepreneurs, their startup is like their child. They have invested countless hours, money, and energy into building the company. When the time comes to say goodbye, it can feel like a significant loss. It's normal to experience a range of emotions when exiting a startup. Some of the emotions you might feel include:

• Relief: Running a startup can be incredibly stressful. When the company is sold, it can feel like a weight has been lifted off your shoulders.
• Sadness: Even if you're ready to move on, saying goodbye to something you've built can be tough.
• Regret: You might wonder if you could have done things differently to keep the company going.
• Excitement: Exiting a startup can also be a time for new beginnings. You might be excited about what's next.
• Uncertainty: When you've been focused on one thing for so long, it can be challenging to figure out what comes next.

It's essential to acknowledge and process these emotions, both for your mental health and for the success of any future endeavors.

Instagram One real-life example of a startup that exited the game successfully is Instagram. Kevin Systrom and Mike Krieger founded Instagram in 2010 as a photo-sharing app. The app quickly gained popularity and became one of the most successful startups of the decade. In 2012, Facebook acquired Instagram for $1 billion. The acquisition was a significant financial gain for the founders and investors. However, the acquisition was also an emotional experience for Systrom and Krieger. In an interview with The New York Times, Systrom said, "We built something that touched people's lives in a really meaningful way, and now it's going to be taken on by another company. It's a bittersweet moment." The impact of Instagram's exit was not just felt by the founders but also by the employees. However, Facebook did absorb the entire Instagram team, which provided a sense of job security and stability for the employees.

Financial Gains (or Losses)

One of the most significant factors in a startup's exit is the financial gain (or loss) for the entrepreneurs involved. Depending on the exit strategy, you could walk away with a significant financial windfall, or you could end up losing money. There are several exit strategies for startups, including:

• Initial public offering (IPO): This is when a company goes public, and shares are available for purchase on the stock market.
• Merger or acquisition: This is when another company buys the startup.
• Management buyout: This is when the management team buys the company from the original owners.
• Liquidation: This is when a company sells off its assets to pay its debts.

Each of these exit strategies has its pros and cons, and the financial gain or loss will depend on the specific circumstances of the startup.

Impact on the Team

When a startup exits, it's not just the entrepreneurs who are affected. The team that helped build the company will also be impacted. Depending on the exit strategy, the team might be laid off, offered a severance package, or absorbed into the acquiring company. It's essential to consider the impact on the team and to do what you can to support them through the transition. This might include providing career counseling, offering networking opportunities, or writing recommendations.

What Do Founders Do After Exiting?

1. Become Investors: Some founders become angel investors, venture capitalists, or startup advisors after they exit their own startup. They use their experience and expertise to invest in and support other entrepreneurs. For example, PayPal co-founder Peter Thiel has invested in numerous successful startups, including Airbnb, Stripe, and Palantir.
2. Start Another Company: Many founders use their experience and network to start another company. Some may even start multiple companies over the course of their careers. For example, Elon Musk co-founded PayPal, Tesla, SpaceX, and Neuralink.
3. Pursue Other Interests: Some founders may choose to pursue other interests after exiting their startup. They may become involved in philanthropy, politics, or social causes. For example, Mark Zuckerberg has pledged to donate the majority of his wealth to charity through the Chan Zuckerberg Initiative.
4. Take Time Off: After the stress and intensity of building a startup, some founders may choose to take some time off to recharge and spend time with family and friends. For example, Drew Houston, co-founder of Dropbox, took some time off after the company went public before starting his next venture, a password manager called "HelloSign".
5. Join Established Companies: Some founders may choose to join established companies after exiting their own startup. They may take on leadership roles, become advisors, or work in a different capacity. For example, Evan Spiegel, co-founder of Snapchat, has remained with the company as CEO even after it went public in 2017.

Lessons Learned

Even if your startup ultimately failed, there are always lessons to be learned. It's essential to take the time to reflect on what went well and what didn't. Some questions to ask yourself include:

• What did we do right?
• What did we do wrong?
• What could we have done differently?
• What did we learn from this experience? Taking the time to reflect on these questions can help you avoid making the same mistakes in future endeavors.