Three Exits, No Millions: The Brutal Truth About Startup Sales

About this episode

Manuel Hinz struck a nerve with his viral LinkedIn post about a taboo topic in the startup scene: three exits, no millions in the bank. As one of the few founders speaking openly about the reality behind the headlines, he reveals why the dream of quick riches is an illusion for most entrepreneurs.

From DailyDeal to CrossEngage: Three Exits, Three Lessons

Manuel's startup journey began at DailyDeal, which was sold to Google. As an employee, he experienced his first harsh lesson: VSOPs (Virtual Stock Option Programs) and German tax burdens can leave little for participants, even in a successful exit.

As founder of Toroleo, he experienced what's called a "fire sale" – a sale to Delticom where practically nothing reached the founder. The term describes exactly that: when a company must be sold and liquidation preferences and other structures leave founders empty-handed.

At CrossEngage, his third and largest exit after 8.5 years as co-founder, the company went to Spotler. But even here, the big million-dollar payout didn't materialize – a fate Manuel shares with most European founders.

VC Mathematics: Why Million-Dollar Exits Are Irrelevant to Investors

"A 500-million fund needs to return 1.5 billion," Manuel explains the brutal reality of venture capital mathematics. The power law of the VC world means: only absolute home run deals – exits over a billion – are truly relevant for large funds.

This mathematics creates misaligned interests between founders and VCs. While a 50 or 100 million euro exit would be life-changing for a founder, it's portfolio maintenance at best for a VC with a large fund. In a typical European median exit of 25 million euros, early-stage investors and founders often walk away empty-handed after the liquidation waterfall.

Opportunity Costs: The Most Underestimated Risk

Manuel does a calculation that many founders avoid: the opportunity costs over ten years of startup time. "If you could have earned 120,000 euros per year for ten years but only got a 60,000 euro startup salary, that's already 600,000 euros in opportunity costs," he calculates. These seven-figure amounts should be the real baseline for every founder.

Add to that lost pension contributions, career development in established companies, and the risk of total failure. "Few people do this calculation honestly," Manuel notes.

Three Failed Exit Processes and a Wirecard Drama

Manuel also experienced the dark side of the exit business firsthand: three failed exit processes in six months, including a deal with Wirecard that collapsed overnight due to the DAX fraud scandal. Ironically, that Wirecard deal would have been the financially best exit – before the house of cards collapsed.

These experiences taught him important lessons for exit processes: clean IP rights clauses, bilaterally signed contracts, and especially early development of strategic relationships with potential buyers. "Exits rarely emerge from nowhere," Manuel emphasizes.

The Conscious Decision: VC, Bootstrap, or Search Fund?

From his experiences, Manuel draws a clear recommendation: "Consciously decide between VC case, bootstrap, and company acquisition – before the idea comes." The first institutional VC fund is the directional decision where you "get on the rocket" and become subject to power law expectations.

Many experienced founders consciously choose other paths after their first VC exit: bootstrap, search funds, or buying existing companies. These alternatives offer more control and more predictable returns.

No Complaints: Why It's Still Worth It

Despite the sobering balance sheet, Manuel regrets nothing. "15 years of startups are better than five MBAs," he says. The experiences, network, and learnings from three exits have made him what he is today: CEO of a training group in the private equity sector.

His message is clear: the startup world needs more realism and less Instagram glamour. Those who start with realistic expectations and understand VC mathematics can make better decisions – even if millions don't end up in their bank account.