An exit strategy for solo founders

Josh Mohrer was on the Generative Now podcast recently and floated an exit strategy for solo founders (around 31:00).

While solo ventures that are making money can become profitable quickly, at some point you may want to sell your business.

It might be beacuse you're ready to move on to the next thing. It could also be because you know the project has room to grow, but you don't want to be the person to raise the money, hire the team, build the culture, set up the processes, etc.

So it could make sense to sell your profitable, bootstrapped product to a company whose existing team can take it to the next level.

I think this is a playbook mid- and late-stage startups should heavily consider for a couple reasons:

• Startups are increasingly stalling out at earlier ARR points (as Jason Lemkin has noted). To avoid revenue stall, they'll have to go multi-product sooner. This means being more acquisitive earlier on.
• The widespread availability of code generation tools means that there will be more software competing with your product. This will increase pressure for software businesses to diversify their revenue streams.
• I imagine solo founders will be willing to sell their businesses at valuations lower than historical venture-backed exits, because they don't have investors to answer to, and they'll receive the lion's share if not all of the exit proceeds.

An implication of this is that we may see startups introducing M&A functions earlier and earlier. Maybe that's where all the former VCs will land.

On a related note, I recently discovered They Got Acquired, which has a whole bunch of stories and resources on small internet businesses successfully exiting.