IPO or M&A? How Venture Capital Shapes a Startup’s Future.


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When entrepreneurs raise seed capital early in their journey, deciding which funds to invest in and which investors to partner with is crucial. Entrepreneurs are faced with a number of decisions these days. In general, the most important criteria when selecting a partner are the financial conditions in the term sheet and the reputation of the VC investors. However, there is another equally important thing to consider that many entrepreneurs ignore: prior joint ventures. That is, to what extent the investors in the round have cooperated in the past.

An initial public offering (IPO) can often provide a powerful incentive for private companies looking to pursue an acquisition-driven growth strategy. Based on a comprehensive analysis of U.I IPOs, the authors show that newly listed companies are prolific buyers. More than 30% of IPO companies  make at least one acquisition in their IPO year, and a typical IPO company makes about four acquisitions in its first five years as a public company

IPOs facilitate M&A not only by providing capital injections but also by providing ongoing access to the equity and debt capital markets for cash-funded transactions. In addition, IPOs create a buying currency that can prove valuable in equity-financed transactions when stock prices are attractive.

However, going public is often a case-by-case question. There are times when private markets are ahead of public markets and vice versa. Companies are better placed there on their value, then acquisitions make more sense. In the end, it’s more about maximizing value

Previous research on the level of collaboration between investors offers mixed messages. On the one hand, investors who have worked together can pool resources, create more connections within an industry, and know-how to lead a company to a promising opportunity. On the other hand, a diversified pool of investors could give founders more decision-making leeway.

Either way, founders need to understand the ins and outs of each scenario and where they want to take their business before committing to venture capital funds.

What is more important than that is the relationship structure of your most valuable consultants who are in many ways the VCs

Whether you’re signing this deal with the intention of making a big IPO, looking for a quick sale, or through a niche opportunity, anything can happen along the way. More important than that is your relationship structure with valuable advisors who are in many ways the venture capitalists are. But in the cases where investors make the decisions, it’s because institutional investors are investing the money of others who are limited partners (LP) and are looking for returns at the right time, not when the entrepreneurs are looking to return. We inform and document even at the time of the investment we want. to leave in x  years and we can’t stay longer whether we like it or not. Entrepreneurs should therefore not be too surprised when inv

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