Beyond the headlines: What a “good exit” really looks like
Most startup exits look great in headlines, but the reality is more complex. Cash vs stock, preferences, earnouts, and strategic fit determine who really benefits.
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Yesterday, news broke that Flutterwave had acquired Mono to strengthen its payment infrastructure. The deal is rumoured to be between $25 million and $40 million, and Mono’s CEO, Abdulhamid Hassan, has stated the actual figure is significantly higher than the $17 million the startup has raised so far.<br />
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Beyond congratulations, the acquisition has sparked important conversations, including what makes a good exit. For one, the deal value remains undisclosed, a common pattern in the African tech ecosystem. As one investor once noted, when acquisition figures aren’t transparent, someone may not be getting a favourable deal.<br />
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However, without dwelling on whether Mono’s CEO will soon start a football club, it would be helpful to understand what a good exit looks like. <br />
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An acquisition, merger, or IPO — collectively called an exit — is how founders and investors convert their ownership in a startup into real value. A common mistake is to judge an exit solely by the headline figure. Paystack’s $200 million exit made headlines, but the reality of who benefited and by how much can be more nuanced.<br />
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So, what really defines a good exit for investors and founders alike?<br />
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Why exits matter<br />
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Until 2022, exits were rarely discussed by African investors, and one could be forgiven for thinking this wasn’t important. Then the zero-interest rate era came to an end, and investors became more discerning with capital. Limited partners (LPs) began asking the hard questions, and VCs began the search for exits. <br />
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Exits are the moment of truth for any startup investment. It’s the point at which potential becomes realised. For founders, investors, and early employees with stock options, an exit is how the equity they’ve built or invested in actually becomes cash. Without an exit, a company’s valuation is just a nice number on paper. <br />
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For investors, exits are a key measure of fund success. Venture capitalists invest with the expectation of high multiples on their initial capital, typicall...
