What's the Exit Plan for your startup?

When you go to an investor, one question you need to answer. Whether you like it or not. 'What's your exit plan?'

I don't have any. I didn't start my company Light of Hope with an exit plan in mind. That one day, I will sell my share to the highest bidder, make a lot of money and spent the rest of my life on the beach.

Most great entrepreneurs didn't start their companies with an exit plan in their minds. They start the company with a vision that they believe in and do whatever necessary to achieve that vision.

If you start a business or a startup with an objective to make money, get rich and get fame, you are in the wrong frame of mind, my friend. That's the worst motivation to start a business or startup.

So, when investors ask a startup founder what's your exit plan, I wonder why they are asking the question in the first place? Is it that they want to judge the motivation of the founder to start the initiative? Or they want to know how they are going to get the return on their investment?

I think it's the later. There are 3 ways that investors can get their return on investment: sell their share to the next level investor, acquisition by another company, and company IPO.

If I were an investor and the founder answer that the exit plan is to sell the share and exit the company, for sure I am not going to invest in that company.

But as the founder of a startup, you need to have a clear understanding of the market you are in and all the other players playing in it (your direct competitor, your indirect and your future competitor). Whether you have the motivation to sell your company or not when offered a large amount of money or threat to kill you off with price slash or predatory pricing (google it), you need to know the game you are in.

For example, if Amazon comes to Bangladesh, a lot of large e-commerce players' exit plan might be to sell the company to Amazon. Although Amazon actually doesn't buy the company, it buys the customer data. So that when they enter the market, they already have a good amount of customer information.

Among Bangladeshi people and shoppers, there is unhealthy favoritism for foreign company or brand. If Amazon comes, people who are purchasing online will shift to Amazon. The same thing happened in India. And with the recent withdrawal of Amazon e-commerce from China means that Amazon is going to double-down in India and then naturally in Bangladesh.

I believe that the recent startups that are coming after the Pathao phenomenon in the transport industry will end up being consumed by UPS (Uber, Pathao, Shohoz). ParkingKoi, Zantrik, Truck Lagbe etc. they all might have their eye on this.

If Amazon comes, they will need a strong logistic arm that can deliver product across Bangladesh from Dhaka. Truck Lagbe can be that partner then. So, Amazon's entry could be a blessing for Truck Lagbe.

ParkingKoi's entire operation is to support UPS. Same goes for Zantrik. Besides serving individual clients, Zantrik's biggest B2B clients can be UPS. So, ParkingKoi and Zantrik both can be great partners of UPS or if one of the UPS (Uber, Pathao, Shohoz) think of getting into that space could end up being the biggest rival.

I've given these examples for the readers to have an understanding of how everything can be connected. Amazon, Pathao, Shohoz, Truck Lagbe, Zantrik, ParkingKoi - all of them in a way are connected and can turn into each other or can live peacefully. You never know who is going to start the war.

Merger and acquisition is not a thing in Bangladesh Startup ecosytem yet. But with global players eyeing for the market, we will hope to see some in the future.

Although not a lot of entrepreneurs' exit plan is to sell the company to a bigger competitor, you should be aware of that. You can't fight the giants with unlimited resource and global brand unless you have strong resource backup. Pathao and Shohoz are putting an amazing fight with Uber, because they too have a deep pocket now.

But if you are building a company with potential exit plan of selling it to your competitor, you should be worth it. Amazon will not acquire all 7000+ e-commerce and f-commerce in Bangladesh. They will buy one. Or will not buy any. They will probably invest one or two logistics and delivery player since Amazon cares deeply about fast delivery. So, it's worth asking, am I worth buying?

Over 90% of the startups that I see in Bangladesh will be disrupted by local players or international giants in the coming days. With investment in infrastructure, internet connectivity along with the rise of purchasing power from people, Bangladesh is going to attract all major companies in the world. There is nowhere in the earth that has over 160 million consumers in such a small area.

If you are building a tech startup, ask yourself who in the world can disrupt you and take you out of business today or tomorrow or 5 years from now. It's always risky to develop a startup with the exit plan in mind. But if things get sour, be smart and think about exit before it's too late.

Or build a company that is solving a problem of the future, not the present.

If you do that, you don't need to constantly think of competitor, looking over your shoulder and don't have to think about an exit plan.