Table 1 Challenges and actions for venture capital syndicates

From: Divining the path to a successful European exit

Keeping consensus on exit strategy often proves difficult because the priorities of the various venture capital funds comprising your syndicate change over time. To head off problems in differing expectations of syndicate members, it may be necessary to take preemptive action. The types of different actions you should consider are listed.

Challenge

Actions

Loss of business momentuma due to disagreements over corporate strategy

Leave owner discussions outside the company board room. Ensure that board and management focus is placed on core business, not investor agenda. Evaluate board composition and replace members to better reflect the new situation of the company.

Financial distress necessitating internal down round with severe dilution of nonparticipating owners

Mitigate pressure from the leaving investor that might force an early exit for all investors. Evaluate if a smaller investor base is sufficient to continue operations and adjust business plan accordingly.

  1. aBusiness momentum is defined as partnering dialog at an advanced stage, sales taking off, proximity to a new external financing round and so on.
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