Exit

The offer

Four years after launching PahadiDirect, Priya got an email that changed everything.

It was from AgriConnect — one of India's largest agri-tech platforms, backed by ₹800 crore in VC funding, operating across 12 states. The subject line was bland: "Partnership Discussion." But the email was anything but.

They wanted to meet. In person. In Delhi.

Two weeks later, Priya was sitting in AgriConnect's gleaming Gurgaon office — 30,000 square feet, 400 employees, a cafeteria with a barista. The contrast with her Haldwani office (two rooms above a sweet shop, 8 employees, chai from Pushpa didi's stall) was stark.

The CEO was direct. "We want to acquire PahadiDirect. Your farmer network in the hills is something we can't build ourselves. We've tried. We sent teams to Uttarakhand twice. They couldn't get farmers to trust them. Your platform does what we can't."

He paused. "We're prepared to offer ₹12 crore."

Priya's heart raced. ₹12 crore. For a company she'd started with ₹8 lakh from her savings. For an app she'd built from a chai shop.

She asked for time to think. She called her investors. She called her mentor. She called her parents.

She didn't sleep for three nights.

What is an exit?

An "exit" in startup language doesn't mean running away. It means the moment when the founders and early investors realize the value they've created — they convert their ownership (equity) into actual money.

Think of it this way: When you own 60% of a company valued at ₹20 crore, you're "worth" ₹12 crore on paper. But you can't buy groceries with paper valuation. An exit is when that paper becomes cash.

Why is it called an "exit"?

Because typically, it involves the founders exiting (partially or fully) from the company — either by selling it, taking it public, or finding another way to convert equity into cash.

Not every business needs an "exit." Pushpa didi's chai shop doesn't need an exit strategy. She runs it, it pays her, she'll run it until she decides to stop. That's perfectly valid.

But for venture-funded startups where investors have put in money expecting returns, an exit is eventually expected. It's how the system works — VCs invest, startups grow, exits happen, investors get returns, and the cycle continues.

Types of exits

Acquisition (most common)

A larger company buys your company. This is what AgriConnect is proposing to Priya.

How it works:

  • The acquirer offers to buy all (or majority) shares from existing shareholders
  • You negotiate the price and terms
  • Employees may be absorbed by the acquiring company
  • Your product may be merged into the acquirer's product, rebranded, or kept separate

Why companies acquire:

  • To get your technology
  • To get your customers/users
  • To get your team (called an "acqui-hire")
  • To eliminate a competitor
  • To enter a new market (AgriConnect wants Priya's hill farmer network)

IPO (Initial Public Offering)

Your company lists its shares on a stock exchange (BSE, NSE in India). The public can buy and sell shares. Founders and investors can sell their shares on the market.

When it makes sense:

  • Company is large (typically ₹500+ crore revenue)
  • Profitable or on a clear path to profitability
  • Needs access to public capital for further growth
  • Wants the prestige and credibility of being a public company

This is the "big" exit. Think Zomato, Nykaa, Freshworks. Most startups never reach this stage.

Secondary sale

Founders or early investors sell their shares to a later-stage investor — not through an acquisition or IPO, but in a private transaction.

Example: Priya owns 50% of PahadiDirect. A growth-stage fund wants to invest. As part of the deal, Priya sells 10% of her shares to the fund. She gets cash, reduces her ownership, but the company keeps going.

This is increasingly common. It lets founders take some money off the table without selling the whole company.

Management buyout (MBO)

The management team buys the company from the investors. Rare in Indian startups, but it happens — usually when investors want to exit but the founders want to keep running the business.

When to consider an exit

An exit is a major life decision, not just a business one. Consider it when:

Financial reasons:

  • The offer is good enough to secure your financial future
  • You need money for something else (family, health, another venture)
  • The company's growth is plateauing and a larger platform could take it further
  • Investors need liquidity (VC funds have a 7-10 year life; they need to return money to LPs)

Strategic reasons:

  • A larger company can do more with your product than you can alone
  • The market is consolidating and being independent is getting harder
  • You've hit a ceiling that requires ₹100+ crore to break through, and you can't raise it

Personal reasons:

  • You're burned out and can't give the company what it needs
  • You want to start something new
  • Your life priorities have changed

When NOT to exit:

  • Just because someone made an offer — flattery is not a reason
  • When you're in the middle of rapid growth — you'd be selling cheap
  • When you haven't explored alternatives — one offer is not a market
  • Out of fear — "what if the company fails later?" is not a good reason to sell now

How acquisitions work

If you do decide to pursue an acquisition, here's the typical process:

Step 1: Letter of Intent (LOI)

The acquiring company sends a non-binding LOI stating their interest and a preliminary offer. Key terms:

  • Proposed price (or price range)
  • Structure (cash, stock, or mix)
  • Timeline
  • Exclusivity period (you agree not to talk to other buyers during this time)

Step 2: Due diligence (4-8 weeks)

The acquirer's team examines everything about your company:

  • Financial: Revenue, expenses, contracts, debts, cap table
  • Legal: IP ownership, pending lawsuits, regulatory compliance
  • Technical: Code quality, architecture, technical debt, security
  • HR: Employee contracts, key person dependencies
  • Commercial: Customer contracts, retention rates, partnerships

This is the most stressful part. They'll find things you forgot about — an old contract you didn't terminate, a tax filing that's late, a code module written by a freelancer who didn't sign an IP assignment.

Tip: Keep your house in order from Day 1. Clean cap table, proper contracts, organized finances. It makes due diligence faster and smoother.

Step 3: Negotiation

Based on due diligence, the acquirer may revise their offer. This is where you negotiate:

  • Final price
  • Payment structure (all cash? Part cash, part stock? Earnout?)
  • Employee retention terms
  • Founder lock-in period (how long you have to stay)
  • Non-compete clauses
  • Product roadmap commitments

Step 4: Definitive agreement

Lawyers on both sides draft the final agreement. This is the binding legal document. It's long, dense, and expensive to produce.

Step 5: Closing

Documents are signed. Money is transferred. The company officially changes hands.

Total timeline: 3-6 months from LOI to close. Sometimes longer if there are regulatory approvals needed.

What happens to everyone

Founders

Depending on the deal:

  • Full exit: You sell all your shares, get paid, and leave (after a transition period)
  • Partial exit: You sell some shares, stay on to run the company within the acquiring organization
  • Lock-in period: Most acquisitions require founders to stay for 1-3 years to ensure a smooth transition
  • Earnout: Part of your payout depends on hitting future milestones (risky — the goals might be set by someone else now)

Investors

Investors get paid based on the terms in the investment agreement:

  • Liquidation preference first — investors with liquidation preferences get their money back first
  • Remaining amount split according to ownership percentages
  • If the acquisition price is high enough, everyone wins. If it's low, investors might get paid while founders get little (this is what liquidation preference does).

Employees

This is the part founders worry about most:

  • Some employees may be offered jobs at the acquiring company
  • Some may be laid off (especially if there's role overlap)
  • Employees with ESOPs see their options either cashed out or converted
  • The culture will change — your team joined a small startup, now they're part of a corporation

"My biggest concern wasn't the money," Priya said later. "It was Deepak, my ops manager. And Sunita, my field agent in Almora. They believed in PahadiDirect. If AgriConnect laid them off and replaced them with people from Gurgaon, I'd have failed them."

Most startups don't have a glamorous exit

Let's be honest about the numbers.

Of all startups that receive seed funding:

  • About 90% fail or stagnate
  • About 7-8% get acquired (often at modest valuations)
  • About 1-2% grow into large companies
  • Less than 0.5% reach an IPO

The media covers the IPOs and the billion-dollar acquisitions. They don't cover the thousands of startups that:

  • Shut down quietly after running out of money
  • Get acqui-hired for just enough to pay back investors
  • Merge with competitors out of necessity
  • Keep running as small, lifestyle businesses

And that's okay.

A startup that runs for 5 years, employs 20 people, serves thousands of customers, and then shuts down isn't a failure. It created jobs, solved problems, and gave the founder experience that's worth more than any MBA.

A startup that gets acquired for ₹3 crore — not exactly life-changing for the founder after investor payouts — still represents a journey, a product, and years of learning.

Running a profitable business IS an exit strategy

Here's the option nobody talks about at startup events:

Don't exit. Just build a profitable company and run it.

If PahadiDirect generates ₹2 crore in annual profit and Priya owns 50%, she's earning ₹1 crore per year. She doesn't need to sell the company. She doesn't need an IPO. She has income, impact, and autonomy.

This is called a "lifestyle business" in VC circles, and they often say it dismissively. But think about it:

  • ₹1 crore per year in personal income
  • Doing work she loves
  • Living where she wants to live (Haldwani, not Gurgaon)
  • Controlling her own schedule
  • No board meetings, no investor pressure, no exit clock

For many founders, this is a better outcome than a ₹12 crore acquisition where you work under someone else for three years.

The catch: This option doesn't work if you've taken large VC funding. VCs need exits to return their fund. If you raise ₹10 crore from a VC, you've implicitly agreed to aim for a large outcome. "I'll just run a profitable business" isn't what they signed up for.

This is why the decision to raise VC money is so important. Once you're on that train, the exit question is inevitable.

Bhandari uncle has been running his hardware shop for 25 years. He pulls in ₹8-10 lakh net profit per year. No investors, no board, no exit strategy. He'll run it until he retires, then hand it to his son. Nobody will write a TechCrunch article about him. But he's built more lasting wealth than most startup founders.

Priya's decision

Priya thought about the offer for two weeks.

₹12 crore sounded like a lot. But after investor payouts (her angels and seed fund owned 22%), her share would be about ₹9.4 crore. After tax, closer to ₹7 crore.

₹7 crore is life-changing money. She could buy a house for her parents, secure her future, and start something new.

But then she thought about what she'd lose. The farmers who trusted her. The team she'd built. The vision of a platform that could transform hill agriculture across India. She wasn't done yet.

She went back to AgriConnect with a counter-proposal.

"I don't want to sell PahadiDirect. But I'll partner with you. You invest in our next round. We integrate your logistics network. Our farmers get access to your buyer base. Your platform gets access to our hill region network. Both companies win."

The AgriConnect CEO thought about it for a week. Then he agreed.

PahadiDirect raised its Series A — ₹8 crore — with AgriConnect as the lead investor and strategic partner.

Priya kept her company, her team, and her mission. She also got something she didn't have before: national-scale infrastructure.

"I'll exit someday," she told her mentor. "But not today. Today, I'm just getting started."

Key takeaways

  1. An exit is how equity becomes cash. It's the endgame for venture-funded startups.
  2. Acquisitions are the most common exit. IPOs are rare. Plan for realistic outcomes.
  3. The process takes 3-6 months and involves LOI, due diligence, negotiation, and legal documentation.
  4. Consider what happens to your team. An exit affects everyone, not just founders and investors.
  5. Most startups don't have glamorous exits. That's normal.
  6. A profitable business is a valid exit strategy — unless you've raised large VC funding.
  7. Don't sell just because someone offers. Understand your alternatives and your personal goals.
  8. The decision is personal. There's no formula. It depends on your finances, your energy, your vision, and your life.

Priya's story continues. But the startup chapters are behind us. In the final chapter of this book, we zoom out. We look at all seven of our characters — where are they three years later? What did they learn? And what mindset separates the entrepreneurs who survive from the ones who don't? Let's close this journey together.