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.