Strategising An Exit From Day 1 As An LGBTQ+ Founder

Nick Telson
October 4, 2023

Since entrepreneur Nick Telson sold the nightlife discovery business DesignMyNight in 2017 for around $30m, he’s been busy building B2B sales startup trumpet and angel investing in more than 50 start-ups. Nick discusses how to strategise an exit from day one, covering practical steps to achieve this, including what metrics should be tracked, the role of setting goals with co-founders, how to build up revenue levers and the experiences of LGBT founders.

Setting Common Goals

Founders typically have very different goals when starting their businesses. Some people want to set up a lifestyle business and maybe take £100,000s a year from it and love the process of running their own business. Others might want a much smaller exit in a couple of years or try an IPO.

For us, exit was our goal.

You'll hear a lot of commentators who say don't think about an exit when you're starting, just get your head down and build a business. This is true to a certain extent, but being on the same wavelength as your co-founders is important.

If Andrew Webster, my co-founder, wanted to grow DesignMyNight as a lifestyle business and take a big salary every year, we would have gone down a very different path. You need to have an open discussion with co-founders about what you want from the business. Many founders don't even think about this.

Goal setting was always super important to us and we both agreed that we wanted to be financially free by exit.

Figuring out how much money we needed to run our lives let us create an exit model.

If we both want to take out a certain amount of money each by the end of DesignMyNight, where does the company need to get to in terms of revenue and profit, and how much equity do we need to have to be able to get to that number. This gave us a good idea of where we needed to get to in the business.

Building revenue levers

Before I invest, it’s good to know what the revenue levers are for a business. There are a lot of decks that say when a start-up has 100,000 users, then they will look at revenue options. It’s important to understand, now, how are they thinking about revenue, rather than how we think about revenue in two years from now.

Whether it is Monthly Recurring Revenue or Annual Recurring Revenue, or considering what costs are looking like and how much do you need to spend to acquire customers, these conversations are vital.

The other health check to look at is sales velocity. It may be possible for you to grow 20% to 30% month on month for the first year - it’s quite easy to get your early adopters and get that early revenue. But then again, I see a lot of founders hit a barrier, then the growth starts to plateau. These are the things I'm always looking at in investor updates.

The worst thing I can hear from a founder is “When we build this feature of the product, revenue is suddenly going to take off.”

Level playing field

The next day after fully exiting I woke up and thought what the hell am I going to do with my life? What brings me joy and what purpose do I want for myself?

Andrew and I both came to the conclusion that we love building startups - it’s in our DNA. We wanted to get closer to the action again. We thought to ourselves, let’s go again, but on slightly different terms to DesignMyNight, which is why we brought in a third co-founder, Rory Sadler, to trumpet.

No two founders are the same and will have the same experiences but the sort of LGBT+ founders that I invested in, and when I think about myself, we come with a certain set of skills based on the life and the challenges that we've probably already faced.

A lot of the time, it gives you an inner resolve and a different sensitivity to look at things.

There's not an obvious tangible benefit or negative - that's what we're trying to show to investors and VCs, it’s to open their minds and look at everyone as humans that have great ideas and the means to be able to grow an amazing business.

It’s all about allowing people to be comfortable in themselves. When you're raising money, if you might consider yourself camp or effeminate, don’t try and change that when you're a looking for venture capital.

You can only be a great founder if you're being your authentic self every day, there's enough to deal with being a founder without also having to hide your identity.

To learn more, check out Trumpet or follow Nick on Linkedin where he shares more useful insights.

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