The Resilient Entrepreneur, Edition #118
Hi there
I hope you had a great week!
Here are the topics in today's edition:
- You Took Investor Funding. How Do You Get Out Again?
- Your Business Doesn’t Matter. The Universe Said So
Please reach out with comments, questions, or suggestions for articles!
Talk soon,
Tom
TACTICS FOR RESILIENT ENTREPRENEURS
You Took Investor Funding. How Do You Get Out Again?
Two co-founders asked me an important question over a beer: “How do we ever get out of investor funding again?” Here are some of my answers.
Those who read my articles regularly know that besides being the Founder & CEO of Yonder, a B2B SaaS company, I am also an active reserve officer in the Swiss Armed Forces. Currently, I command a battalion, which is possibly the most rewarding leadership function I have ever held in my entire career. Why? Because it’s the perfect mix between commanding missions and leading people.
One example illustrating this happened a few weeks ago, when my company commanders and I enjoyed a perfect spring weekend on the slopes of Zermatt, talking about our battalion, but also strengthening personal ties.
We sat on a sun-lit terrace after skiing, enjoying some live music and an ice-cold beer, when one of my company commanders asked me for advice on whether he and his co-founder should find investors for their young company or bootstrap it.
Given the trust between the two of us, I offered to discuss the pros and cons of fundraising and bootstrapping with him and his co-founder (who also happens to serve in our battalion). I promised to share all the relevant numbers and some stories that you normally don’t hear about.
And that’s what we did some weeks later. The two guys came to our office, gave me a pitch of their company, and asked a very direct question:
“Given we would take on investors and external funding, can you tell us how we’d ever get out of it again?”
What a great question to start a lively discussion. The discussion took several hours, and here is the essence of an inspiring evening.
What Everybody Tells You
When you ask experienced entrepreneurs about fundraising, advice usually revolves around two topics: First, warm intros to investors. And second, technical fundraising lingo. Valuations. Liq prefs. Drag-along. Tag-along. And so on.
I have given such advice when I was asked for it. Until the other two guys walked into my office and asked me how they’d ever get out of it again if you decided to take on external funding.
I decided to tell them what nobody tells you when dealing with investors. This isn’t a rant on investors; it’s just an honest account about what can happen when you take investors on board.
What Nobody Tells You
1. Your investors will sit on your board
When you sign the investment agreement with your first investors, they will ask for a board seat. Nothing wrong with that.
A few years later, when you are floating your Series A, joining investors might ask for another board seat. Nothing wrong with that, either.
But here is the catch: Investment directors will reserve a few important decisions for themselves, even if you and your co-founders retain the majority of the shares. Those important decisions are usually described in an appendix to the Shareholders’ Agreement, titled “Important Board Matters.” For example, one important decision that is often mentioned in this appendix is the sale of your company. It means you cannot sell your company unless at least one of your investment directors consents, which can potentially generate a deadlock between the investors and the founders.
Why do your investors want board seats? Because they want to protect their interests. There is nothing wrong with that, but always keep in mind that investors’ interests can diverge from founders’ interests.
2. Your investors can block the accession of new investors
Let’s assume you gained initial traction and started to internationalize your business. To continue the growth journey in Asia and the Americas, you propose to raise an internationalization round to hire people and open offices in those two geographies. Your existing investors don’t want to back your ask on their own, so you start reaching out to new investors. You come back with some interested investors, but their views on valuation, board composition, and a few other terms differ from those of your existing investors.
Depending on the important board matters, the existing investors can block the accession of new investors.
Because of the differing interests between existing and new investors, you have to bootstrap your internationalization, soldiering along. Things start to go wrong because of significant cultural differences in the new markets you are trying to conquer, and because you do not have enough people understanding both your tech and the local culture of your new customers. One of your new international customers churns, and your investors ask you why growth has slowed and churn has increased.
By the way, that’s not a fictional story.
3. Your investors can block an exit
Change of scene. You’re soldiering on, mastering whatever difficulty the universe throws at you with your team. At some point, you receive an offer for an exit from a strategic investor. Not an awesome exit, but an OK exit. Everyone on the cap table makes money, albeit not a 3x or even a 10x. One of your co-founders is nervous about recovering his investment. So you and your co-founders suggest to your board to proceed with the exit and sign the letter of intent.
Discussions in your board take longer than the expiry date of that letter of intent. Because you need the consent of at least one of the investment directors on your board to proceed with the sale of the company, the discussions stall. You’re back to soldiering on, with the founders’ savings locked in your company.
Why do investors block an exit? Not because they want to screw the founders. But because they pursue their own interests, which might be different from the founders’ interests. That’s a fact of life, but nobody tells you about it before you close your first financing round.
4. The new investors have their own metrics
Let’s assume the discussion about that OK exit to a strategic buyer described above would have taken a different turn. Your investors have agreed to proceed with the exit, and you have signed a letter of intent.
A private equity investor backs the strategic buyer. They start a due diligence process, asking hundreds of questions. Sometimes, you leave those DD calls not knowing whether they went well or not. Sometimes, you are not sure whether you answered the investors’ questions or added new ones.
At some point, the investors will invite you to a call titled “project update”, “founder transition”, or any other meaningless title. In those calls, the investors will tell you that they can’t make your case work with their standard model, or that they would only proceed if you furloughed your entire team.
Again, this is not a fictional story. I’ve seen both cases in real life. And I found myself again on the path of soldiering on, with my savings still locked in my company.
5. The current times can screw you
In the software business, company valuations are often measured in terms of multiples of your recurring revenues. A private equity investor values companies in terms of multiples of EBITDA. Although many investors claim to be “strategic”, there is little fantasy beyond those two standard valuation models. The fantasy is just in the multiple — it’s high in good times (such as 2021/2022), and it’s low in dire times (such as 2025/2026).
So if you took on investor money in 2021/2022, you most probably surfed on high multiples, commanding a high valuation and low dilution of your own shares at the time of investment. But if you’re looking to sell your company in 2025/2026, any buyer will apply the low multiples of today’s times, irrespective of the multiple that was applied when your existing investors came on board.
Both investors and founders struggle with this because it means two things: Either you can’t sell your company now due to the market situation, or you can sell your company, but you’re not making as much money on the sale as your original plan said. In the worst case, you can sell your company, but get only part of your money back.
Conclusion
Does this sound sceptical of taking on investor money? Not necessarily. There are pros and cons to having investors on board, but the cons are often less talked about. That’s why the two co-founders asked me specifically about them, and why I wrote down some of my experience.
Whatever you decide to do, bootstrapping or fundraising, remember always to have an escape plan. If my examples above help you draft your escape plan for your very specific situation, my mission is accomplished.
STRATEGIES FOR RESILIENT ENTREPRENEURS
Your Business Doesn’t Matter. The Universe Said So
In cosmic terms, your startup is invisible. That’s not depressing — it’s the most liberating thing an entrepreneur can hear.
On September 5th, 1977, Voyager 1 was launched. It was part of NASA’s Voyager program, aiming to explore the outer solar system and interstellar space beyond the sun’s heliosphere.
In March 2026, at a distance of 25.8 billion km from Earth, it was the most distant human-made object from Earth. It is scheduled to reach a distance of one light-day from Earth in November 2026.
That’s the distance light travels within a day, and it took Voyager 1 almost 50 years to travel this distance.
Voyager 1 will continue its flight through interstellar space, probably running out of power sometime in the 2030s. Provided it will not collide with anything, it will continue flying away from Earth and our solar system. The closest solar system to our own is Alpha Centauri, some 4 light-years away. Given the fact that Voyager 1 covered 1 light day in 50 years, it would reach Alpha Centauri in roughly 75,000 years from now.
Why does this matter? It just shows how small we are. We’re not even sure if the closest solar system contains life, yet it would take us 75,000 years to reach it.
And what do we do here on Earth? We behave as if we’re the kings of the universe. Let’s ground ourselves and get humble again.
Our World Is So Small
Let’s start with our planet. We hear from astronauts who have left Earth that seeing our planet from above showed them how fragile it is.
Yet we’ve been living beyond our resources for decades, consuming the substance of our Earth, with no plan B available. Remember that the next solar system is some 4 light-years or 75,000 years of space travel away. Whatever might come our way, we’re stuck on Earth, and we have to make do with what we have.
Your Business Is So Much Smaller
Then there are very successful entrepreneurs on our small Earth, such as Elon Musk. One of his businesses, Starlink, aims to build rockets for reaching Mars. As impressive as this might be in terms of engineering, let me share a secret with you, Elon: Your business doesn’t matter in cosmic terms. Your planned biggest-ever IPO is not even noticed in every corner of our planet, yet beyond our solar system or even our galaxy. And even if you ever reach Mars with your rockets, remember that the next solar system is some 4 light-years or 75,000 years of space travel away, will you?
You see, not even very large and very successful businesses on Earth matter in cosmic terms. So what about all those small startups, such as Yonder, the B2B SaaS company I co-founded? Here is the naked truth: If they disappear, the universe will not even notice. No wiggle in gravity, no abnormal observations in spectral images. Just nothing.
So why do you take your business so seriously all the time? Why do you worry day and night about success and failure?
As A Person, You’re Not Even Tiny, You’re Stardust
Now, assume that despite (or because of) all the worrying about your business, you’ve made it. Your company is profitable, and you could sell it at a handsome price.
You might feel like a king, thinking you’re superior to others because hey, you made it. You sold your company at a handsome price when most others failed. But you know what will happen after you die? The world keeps turning, and the universe keeps expanding.
And even long before you can sell your company, many entrepreneurs think they are indispensable to their companies. Here is one more secret: Nobody is indispensable. The world will keep turning when you’re suddenly hit by a bus, and most probably, your company will keep running, too. And if it doesn’t because you failed to organize it properly before your death, it will follow you to the dark side shortly after your funeral.
In both cases, the universe doesn’t care.
Conclusion
Even if you’re a titan on Earth, you’re just a piece of dust in the universe. Similarly, our Earth is just a piece of dust in the universe. If we screw up our home planet, it’s fatal for us, but the universe will not notice.
But for us humans, there is no Plan B for our Earth. Although we know that we don’t matter to the universe, we have the privilege of living on a beautiful planet. Shouldn’t that keep us humble rather than megalomaniac?
About Me
I’m a tech entrepreneur, active reserve officer, and father of three — writing about entrepreneurship, leadership, and crisis management from hard-won experience. No AI, no fluff, no promos. Just plain-text insights for people building and leading under pressure.
When I’m not solving problems, I find clarity in the mountains around Zermatt.
If this was useful, here’s how to get more:
📌 All my articles, no paywall — read everything in one place. Visit the blog.
📌 Buy me a coffee—it keeps the writing going. Thank you.
