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Financial Mastery

Investor question 43 of 50 · Valuation, cap table & terms

“What does an exit look like for us?”

Short answer: the investor is really asking can this return the fund? Answer in three steps: (1) show proceeds by holder at several exit values; (2) link exit values to ARR multiples; (3) be realistic about timing.

What they're really asking

Can this return the fund? Investors rarely care about the question on its own. They're testing whether you know your numbers cold, whether your assumptions are honest, and whether you can explain them simply.

How to answer, step by step

  1. Show proceeds by holder at several exit values.
  2. Link exit values to ARR multiples.
  3. Be realistic about timing.

An example answer

At $100M, roughly 7x our year-5 ARR, seed investors receive about $20M on $2.1M invested, including converted SAFEs and the note.

Figures are from Loopdesk, the fictional SaaS company in our sample files. Swap in your own numbers and keep the structure.

The answer that loses trust

Avoid

Promising a billion-dollar exit with no logic.

Where the proof lives

Before the meeting, find the number behind your answer. In our workbooks it lives in: Exit Waterfall. If you can open that tab and point to it, the follow-up question is easy.