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Startups Need To Think About An Exit Strategy In The Early Days

Photo: Cameron Spencer / Getty Images.

Not having a clear exit strategy as an early stage startup is something which catches many founders off guard.

They’re usually focussed on growing a scalable, successful company and aren’t thinking about how they might go about selling out or bringing in new investors.

Envato founder Collis Ta’eed said in the company’s early days he met with a law firm and one of the first questions he was asked was what was his exit strategies.

“It was pretty weird for a new starter to be thinking years down the track and to this day we don’t really have an exit strategy,” he told Business Insider. “I think you’re traditionally supposed to know whether you want to be acquired. I don’t know – I just want to make stuff.”

Together with his co-founders which include his wife, brother and best friend, Ta’eed has grown some significant online marketplaces including ThemeForest and to this day he has “no plans” of exiting or going public.

“Obviously with Freelancer last year going public it was an interesting thing to watch,” he said. “It kind of intimidates me. I think there are still benefits to opening it up to the public, but it’s just not on the cards at the moment.”

Since launching in 2006 Envato hasn’t followed the typical startup path. It’s still entirely privately owned, has most of its employees based in Australia and has grown without venture capital injections.

“Without venture capital it’s harder to get attention, we didn’t give out revenue figures so it was a bit harder to tell our story,” he said. “I think when you raise capital one of the benefits is that attention it brings.”

“The story of money going in kind of legitimises you,” he explained. Without that his management team, which includes his dad as chairman (who he describes as the responsible, Yoda-type figure in the company) means they’ve had to be “very stingy with money and careful to reinvest it”.

Ta’eed said running an IPO or investor rounds would sap his attention and it’s not something he’s all that interested in.

“I don’t really understand it all that well – I try to stick to what I know,” he said

“I’m pretty young, I’ve got a few miles left in me.”

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