VC:VC The Exit

This is a VC:VC post - comparing venture cycling with venture capital. I am going to talk about "The Exit", which is a focus of attention in the venture capital world, and much less in the venture cycling world.

This week Sigma celebrated with portfolio company EqualLogic, which announced a definitive agreement to be acquired by Dell Computers, for $1.4b. Congratulations to Greg Gretsch who was the Sigma lead on this deal! This transaction is a particularly successful exit for the company and for Sigma, who gets to share in the proceeds. The company has exited its VC stage and moved on to being part of a larger story (assuming all goes well and the regulatory and shareholder approvals follow as planned). Although many startups fail, those tend not to be called exits (yes, we do call them failures). An exit is generally an IPO ("going public") or being acquired. As it happens EqualLogic was fairly close to going public when this acquisition was announced. Other good exits for Sigma over the last year or two included Broadware being purchased by CISCO, Topio by NetApp and M-Qube by Verisign. At the end of the day a venture capital firm is always working towards a successful exit. When this happens, we all do well: the founders and management of the company, the VC investors, and those whose money we invest (charitably and university endowments, and others).

Venture cyclists don't have "exits". I have no plan to trade in my bike for a cash payout (although I suppose it depends on the offer!). Instead, as a venture cyclist, I see the returns from investments show up in my own well-being, and in the impact of the work in which I am involved in the community. Sometimes two non-profits merge with each other, but this is not an exit - just a better position to do the good work. I think in fact that non-profit work is about entrances, not exits. Non-profits like Hazon (or even JCDS where I also serve on the board) are about bringing people in to something that brings benefits. The benefits accrue the more entrances there are, not the more exits.