By Dave Berkus, Chairman Emeritus, Tech Coast Angels

First, there are at least three types of exits

I’ve been involved with well over twenty successful exits and four initial public offerings over the years, some of them with monstrous gains, some more modest.  Then in addition, there are the exits that returned some portion of capital, but nothing more.  And finally, there are the thirty-plus sad exits that were complete write-offs for the investors, sometimes regaining some portion of note-holder or creditor money in the process.

The great exit and celebration

I can tell you with great enthusiasm that the high gain exits are by far the most enjoyable in every way.  There’s almost always a closing party where the board, prime investors, attorneys and investment bankers all get together to celebrate the victory.  It is an exhilarating ending to a great journey.  The entrepreneur, whether remaining to the end as CEO or not, is celebrated for his or her prescient timing, great vision and excellent execution of the plan. We even themed one such exit party as “We stuck the pig!” – the overly enthusiastic celebration of an outcome larger than expected.

But the silence…

I cannot recall ever attending a closing dinner for a sale in which we returned only a portion of the investor group’s money. In fact, I don’t recall any formal post-sale meeting at all; even to digest the lessons learned from the entire experience, a missed opportunity for all.

Sometimes, there is embarrassment or shame

There is that sad truth that the large percentage of early stage investments die an unceremonious death, often with the entrepreneur-founder left with a bitter feeling that “if only” there had been more cash invested, more co-operation from board members, more time to get to market, more of something, then the outcome would have been much better for all.

Failure, or learning opportunity?

Sometimes the entrepreneur who believes s/he has failed the investors apologizes. And sometimes s/he lashes out at the inequity of it all.  That’s a shame, and a missed opportunity for a learning experience for the entrepreneur and investors.  Every failure creates a story with a lesson to learn.  That story should be told, lessons evaluated, and added to the experience base for all who participated.  Because, many of us investors will give a bonus instead of a pass when considering a second startup from the ashes of a failed team.  It is not likely that they’ll make the same mistake twice.  And usually, such an entrepreneur is more careful with the use of cash and time the next time around.

The benefits of a good exit

Of course, a “big hit” successful outcome is preferable for all.  But more importantly, a good exit marks a passing of a successful journey by a team first formed by a visionary entrepreneur, usually attracting smart money from good investors, who together effectively planned growth and finally a great exit.

Whenever those forces come together, celebrate them and the team that brought them all together.