How One Entrepreneur Decided on an Early Exit Instead of Raising Equity Capital

Over the past couple of weeks I've been discussing early exits for high growth scalable entreprenurial ventures - that is selling earlier with a lower overall acquisition price, but a high likelihood of a good outcome.  Last week I discussed a method for properly assessing entrepreneurial risk.

This week I received my October issue of Entrepreneur Magazine.  The "Money" column (which won't be available online until September 29) combines the two topics to show a real life example of how one entrepreneur decided to sell his company for $500,000 rather than take $500K in equity capital investment to continue to grow the business.

In making this evaluation, the entrepreneur applied the risk assessment method discussed last week by multiplying the successful exist rate of venture financed businesses (20% according to the column) by the likely exit value based on his plan ($2.5MM) to arrive at a risk adjusted value of his company of $500K.

When he was offered $500K for the company or the opportunity to continue to build the company, the risk analysis showed that selling earlier was his best alternative. 

I'll update this post with a link to the column once it becomes available online.