Welcome back to another edition of The Wise Exit newsletter.
This week, Managing Partner and CEO Todd Sullivan is sharing a piece of his Build to Exit checklist: how the way you fund your business shapes your exit. We're covering:
Why bootstrapped and VC-funded founders face very different exits
5 questions to pressure-test your capital structure
3 things you can do this week to know what you'd actually walk away with
Let's get to it.
💡 This Week’s Big Idea
How You Fund Your Business Shapes How You Exit It
When founders think about building to exit, they usually think about clean financials, a diverse customer base, and a business that can run without them.
But one of the decisions that shapes your exit the most often gets made long before any of that: how much capital you raise, and who you raise it from.
Neither path is right or wrong. But they lead to very different exits.
If you're bootstrapped:
You own 100% of the business, which means full control over exit timing and terms.
You decide when to sell and who to sell to.
You have more buyer options, whether that's a strategic buyer, private equity, or an individual.
There are no liquidation preferences eating into your proceeds.
A smaller exit, say $10–$25M, can be life-changing.
If you're VC-funded:
Liquidation preferences may mean you get nothing on a moderate exit.
You need board and investor approval to sell.
Your investors' pressure for 10x+ returns narrows your buyer universe.
Dilution across rounds can leave founders owning just 10–20%.
Your fund's lifecycle drives your exit window, not you.
If you've already raised, the goal is to understand exactly how your cap table plays out at exit, long before a term sheet arrives.
Because the number on the term sheet and the number that actually lands in your account can be two very different things.
❓ 5 Key Questions to Ask Yourself This Week
1️⃣ If a term sheet landed tomorrow, could I explain how my cap table would play out, or would I need someone to walk me through it?
2️⃣ If I sold at a moderate price tomorrow, how much would I actually take home after preferences and tax?
3️⃣ Who has to approve a sale, and is my exit timeline mine or my investors' fund lifecycle?
4️⃣ Are the returns my investors need narrowing the buyers who could realistically acquire my business?
5️⃣ If I'm thinking about raising, have I weighed what I'd be giving up at exit, not just what I'd be gaining now?
📋 3 Action Items for This Week
☑️ Model your waterfall: If you've raised at a high valuation with participating preferred, run your numbers at a few different exit prices so you know what you'd actually receive.
☑️ Write down your walk-away number: What's the minimum exit price that works for you and your team after preferences and tax? Get it on paper, then build toward it.
☑️ Flag anything that could complicate a deal: Too many investors, complicated governance, or anti-dilution provisions can all make a deal harder to close. Know where they are before a buyer finds them.
That's all for this week. Remember, the capital decisions you make today follow you all the way to the closing table.
If you have questions about your cap table and what it means at exit, reply to this email or contact us here. We're always happy to walk you through it.
Talk next week,
Brian Dukes, Managing Partner, Exitwise
Todd Sullivan, Managing Partner, Exitwise
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