When “home run” wins for founders are just “base hit” losses for big investors

Three founders and two investors used the term “base hits” in the last week when talking with me about founders selling companies for $10M-$50M.

Here’s why using “base hits” vs “home runs” baseball analogies doesn’t work when talking about selling a software company:

1) You don’t score a run for a base hit (single or double) in baseball, but founders do score when they sell their software companies for under $50M.

  • A $10M or $20M or $50M exit for a self-funded company is a home run for the founders and their team.
  • A $20M exit for a founding team that took no outside investment wins the same founder prize as a $100M exit when they sold 80% of their company to venture capital investors.

2) The venture investment model doesn’t work with base hits (small exits), only home runs (big exits).

  • They don’t talk about the VC-funded founders who struck out (no exit) or were tagged out at 2nd base (zombie startups).
  • True, a $20M exit is a lot less than a $2B exit. But exits are rare, especially big ones, so getting “on base” with any exit is a win. Most startups don’t get to an exit.

3) The startup/exit game is very global now so baseball analogies are silly.

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