Playbook MediaLet’s talk
Playbook Media · Compare buyers2 / 8
Compare buyers

Raise venture capital or sell?

Venture capital is money to grow, in exchange for part of the company. A sale is money for the company. For a profitable software business, they lead to very different lives.

Email a short overviewHow the process works
Contents2.1Should a profitable founder raise or sell?1 / 4

§ 2.1

Should a profitable founder raise or sell?It depends on the goal.

Fig. 2.1Short answer

Raise venture capital if you want to grow much faster and accept the risk and dilution that come with it. Sell if you want liquidity or a new owner. Keep the business if it still gives you what you want. A profitable business has all three choices.

  • Venture funds look for a few very large outcomes.
  • A sale turns the business into money now.
  • Keeping a profitable business is a valid choice.

§ 2.2

Three paths.For a profitable software business.

Fig. 2.2aRaise, sell or keep: what you receive on each path
Fig. 2.2bRaise, sell or keep
Raise venture capitalSell to a long-term ownerKeep running it
You receiveMoney for the company, not for you.Money for your ownership.The profit, year by year.
You give upPart of the company and some control.Ownership of the business.Nothing, except your time.
The business mustAim for very fast growth.Keep serving its customers.Keep paying for itself.
Fits whenThe market is large and speed decides who wins.You want liquidity or a next chapter for the product.You still enjoy the work and the business is healthy.

§ 2.3

When venture capital is right.An honest list.

Raise when

  • Growth is limited by capital, not by demand.
  • The market could support a much larger company.
  • You want to build that company for many more years.

Think twice when

  • The business is profitable and you want a calmer life.
  • The market is a narrow niche.
  • You want money for yourself, not for the company.

§ 2.4

Questions founders ask.Short answers.

Can I sell a business that raised venture capital?

Yes, if the sale works for every shareholder. Investors’ preferences can take a large share of the price, so check them early.

Does Playbook Media invest in startups?

No. We build and acquire software businesses. We do not make venture investments.

Is a small, profitable business a failure?

No. A business that serves its customers and pays for itself is a success. We wrote an essay about it.

  1. 1Patterns vary between firms. This page describes common practice in general terms. It is not legal, tax or financial advice. ↩

End of comparison

Next comparisonStrategic acquirersHow a sale to a company in your market differs from a sale to a long-term owner, and when a strategic buyer is the better choice.