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September 25, 2023

Planning and Executing Your Exit as an Investor

While most investors have a passive role in their portfolio company, some investors are active in shaping and contributing to its success. For venture capitalists, one of the best scenarios is for the portfolio company to be acquired to maximize investment returns. In this article, Dr. Irit Yaniv, Founding Partner and CEO at Almeda Ventures discusses what investors can do when planning and executing the exit. 

"Never plan your exit. Always think about how to bring a successful product to the market. If you build up the right company, the exit will come." – Irit Yaniv

When it comes to the medical device industry, taking a product to market requires a massive change in a small company. Sometimes, it doesn't make sense to build large structures just for one product. Instead, selling the business to a strategic buyer who already has the capability to launch the product is a more viable option. As an investor, Dr. Irit chooses to step in and help the company exit during these times. 

Preparing for an Exit

Dr. Irit waits for two stages before preparing for an exit. When the company hits these milestones, she reaches out to strategic buyers potentially interested in the business and starts negotiations, whether it leads to partnerships or M&A. 

  1. Regulatory Approvals

For disruptive products that have undergone rigorous clinical trials, regulatory approval is everything. It bears a lot of risks, but once it has received regulatory approval, it becomes extremely attractive to strategic buyers.

  1. Gaining Market Traction

If the product is an improved version of an existing device, it's important to demonstrate market success for a period of time, proving its value to physicians and establishing a solid sales record.

Role as an Investor

Dr. Irit works closely with the CEO and the management of the company. Getting their buy-in is crucial to driving meaningful partnerships and a successful exit process. For CEOs looking to exit, they act as a matchmaker, opening doors and facilitating direct engagement between the CEO and strategic partners. 

During these engagements, actively listening to the strategic partners is essential. They may provide valuable insights or suggest alternative directions that could enhance the appeal of the product and company. While it's important to have a clear vision, being open to adapting and aligning with market demands is vital to avoid missed opportunities or limited options.

Best Advice on Exits

Regardless of how the conversations go, building a strong company focused on bringing a successful product to market should be the sole focus of any business owner or CEO. Never think about the exit process, says Dr. Irit. When the business and product are good, the exit will eventually happen regardless of the timeline. 

CEOs should utilize capital efficiently and prioritize bringing their product to the market, powered by a strong manufacturing side. It's equally important to consider how the product will be sold and the customer journey, addressing all aspects that are relevant to potential strategic partners during due diligence.

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