Kevin Ryan's Tips on the Best Time to Sell Your Startup

Kevin Ryan, a tech investor known for his roles in building companies like MongoDB and DoubleClick, has a wealth of knowledge when it comes to navigating the question of when to sell a company. His advice, shaped by decades of experience, emphasizes that while every business decision is unique, founders should apply both strategic foresight and personal considerations to make the best call.

Ryan points out that while the allure of growing into a multibillion-dollar success story is strong, it’s a rare outcome. Most companies, he argues, should consider selling earlier, particularly when an offer aligns with their growth trajectory and risk tolerance. “I think more people should sell than do on average,” Ryan remarked, underscoring that the path to building the next Facebook is the exception, not the rule. Founders often get caught up in chasing higher valuations or holding out for an IPO, but Ryan advises caution here: for many, waiting too long can mean missing out on a life-changing financial opportunity.

One of Ryan’s central points is the concept of time in valuation. As a company grows, the market, competitors, and economic conditions can dramatically shift, affecting future profitability and acquisition prospects. He highlights that a company’s value needs to more than double over a few years just to justify the risks and cost of holding out. For instance, if a company is worth $100 million today, it must be worth at least $200 million in a few years simply to break even in real terms due to risk, inflation, and opportunity costs.

Another key aspect of Ryan’s advice is around founder well-being and financial security. Ryan makes a compelling argument that founders should not only weigh potential future growth but also personal fulfillment and financial independence. He draws attention to the fact that the difference between $30 million and $60 million is often negligible when it comes to lifestyle changes, but the difference between $30 million and zero is drastic. Many founders get swept up in the allure of bigger paydays without realizing the personal and professional costs of holding on too long.

Moreover, Ryan emphasizes the emotional aspect of the decision, reminding founders that the journey of scaling a company takes a significant personal toll. Selling at the right moment can provide the freedom to explore other ventures or personal passions, an often-overlooked benefit of exiting early. This philosophy has guided many of Ryan’s own exits, like the sale of DoubleClick to Google for $3.1 billion in 2007.

Ultimately, Ryan’s counsel is clear: founders should take a pragmatic approach, balancing market conditions, personal goals, and realistic growth prospects. Selling at the right time can offer not only financial security but also the chance to pursue new opportunities and live life on one’s own terms.