Atlanta Startups Have a Higher Exit Bar

In Atlanta there’s an ongoing discussion about the lack of early stage risk capital for startups. One side argues that if more capital is present, more deals will get funded. The other side argues that there aren’t enough talented entrepreneurs yet, and that when the entrepreneurs are here, the money will follow. From my perspective, capital is mobile and entrepreneurs with a good market, team, and idea will be able to get funding, locally or otherwise.

There’s another tightly related topic that needs more discussion as well: startups in Atlanta and other places outside the major startup centers have a higher bar for an exit. Here are a few thoughts on exits in Atlanta:

  • Historically, 4-6 total tech startups get acquired per year for more than $10 million, meaning it’s a rare occurrence
  • Strategic acquirers, in order to have a new remote office, need to have meaningful scale to be worthwhile (e.g. 50+ employees)
  • Press and PR is harder to come by when bootstrapping or raising limited capital, making awareness by potential acquirers less likely
  • Acqui-hires, regardless of being good or bad, almost never happen

For a startup, the best approach is to build a successful, sustainable business and not focus on an exit. As for exits, in Atlanta and most other places, the bar for an exit is much higher than expected.

What else? What are your thoughts on Atlanta startups having a higher exit bar?

One thought on “Atlanta Startups Have a Higher Exit Bar

  1. Companies rich in EBITA. If you’re making millions in EBITDA, you have many liquidity options if you would like them. Entrepreneurship isn’t always about the exit, It’s about making money. Having a business which MAKES you millions a year is a better proposition than a small exit, especially if you have investors with liq prefs, coupons, et cetera.

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