True Story: Why We Turned This Deal Down
Posted by Tim Berry on April 30th, 2013
This is about a deal my angel group turned down.
The software looks excellent. I wanted to use it immediately. There’s urgent and widespread market need. It’s obviously proprietary too. It’s a crowded noisy market, but it feels like this one has a real shot at it. Furthermore, the entrepreneur behind it is proven. The software grew out of the needs of a successful professional service business. There’s relatively low risk of failure.
So why did we turn it down? Because this one doesn’t need our investment. It’s quite possibly better off growing on its own bouyed by the resources of that professional service company. The entrepreneur could get it past cash flow break-even and continue growing so it would never look back.
We don’t want to end up with a minority share of a company that has no incentive to exit. Not all good businesses are good investments.
Written by Tim Berry
Tim Berry
Tim is the founder of Palo Alto Software and bplans.com, the co-founder of Borland International, and the official business planning coach at Entrepreneur.com. He has been called the "Obi-wan Kenobe of business planning" and "The Father of Business Planning." He is a serial author of books and software on business planning.
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