Feb. 21, 2024

184. Three Ways To Shut Down & The Terminal Plan

184. Three Ways To Shut Down & The Terminal Plan
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Season 4 Shutdown

Text your thoughts directly to Rich.

There are ways to shut down: The Ghost, The Bonfire, The Refund. But there's also a great way to sell your startup. That advice is not mine to share, so go read this presentation by Geoff Lewis: The Terminal Plan

https://www.slideshare.net/justGlew/the-terminal-plan-how-to-sell-a-startup-geoff-lewis-presentation-sxsw-2013

About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast - get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.     

WEBVTT

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I've been debating what this episode should be about.

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At first, I was going to talk about the trope that VCs like to drag out when startups go under.

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"It's better for the economy when bad startups fail.

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Those founders can put their energy towards something more productive." I hate that I'm about to affirm that, but I have seen founders shut down their startups and go on to have incredible careers elsewhere.

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Sometimes making boatloads of money.

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But I would never be so presumptuous as to suggest that shutting down a startup was the best thing for someone.

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Next, I was thinking about talking about the three ways to shut down.

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The Ghost, The Bonfire, and The Refund.

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The Ghost.

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Well, you can guess what happens there.

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Website's down, emails bounce, calls and texts are not returned.

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The Bonfire, on the other hand, is the founder that burns the cash all the way down to zero.

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Only to realize that running a shutdown process requires lawyers.

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And lawyers, cost money.

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Oops.

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As for The Refund.

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We had one founder who knew after about a year that what they were building, wasn't going to work.

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They stopped.

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Let everyone, go cut their burn down to near zero, and explored a number of pivots.

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When they realized there was no path forward, they ran a shutdown process and returned what was left to their investors.

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And look, it was dimes on the dollar; it's not going to make a difference for us.

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But man, it was classy as hell.

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And we appreciated that.

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Now that I've managed to talk about the two topics that I decided to not talk about.

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I've barely left any time for the thing that I really wanted to share with you.

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But you know what, it's not my story to tell anyway, and it's something that you need to go and read.

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Regardless of where you are in your startup, I want you to search for Geoff Lewis, his presentation,"The Terminal Plan: How To Sell A Startup." Link in the show notes, of course.

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It's a fantastic read and a step-by-step guide about running a process to sell your business.

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Here's slide 11: Decide To Sell.

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1.

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Things are not going according to plan.

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2.

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You've run out of alternate plans.

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3.

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Both one and two are well kept secrets.

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And 4.

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You have time.

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And I'll give you a hint: having time means at least six months of cash and team runway.

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And he goes into why both of those are needed.

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So hit up the show notes, find the link to The Terminal Plan, and go read through that.

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Regardless of where you are in your startup journey I think this is an excellent piece to digest and just having the back of your brain'cause you never know.

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I'm sure you will not need it, dear listener, because you listened to the VC minute, but somebody else might benefit from it.

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Tune in tomorrow to hear from my good friend, Eric Marcoullier.

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I can't wait to share these next two episodes with you.