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Scott Orn

Scott Orn, CFA

Michael Frankel of Trajectory Capital discusses private equity, which can be an alternate route to success for many startups

Posted on: 04/09/2023

Michael Frankel

Michael Frankel

Founder and Managing Partner - Trajectory Capital

Michael Frankel of Trajectory Capital - Podcast Summary

Michael Frankel of Trajectory Capital discusses private equity, which can be an alternate route to success for many startups that may be viable businesses but lack the growth that venture capital funds need.

Michael Frankel of Trajectory Capital - Podcast Transcript

Scott: Welcome to Founders and Friends Podcast. Before we get to our guest, special shout out to Kruze Consulting. We do all your startup accounting, startup taxes, and tons of consulting. We’re whatever comes up like financial models, budget to actuals, maybe some state registration, sales tax, VC due diligence support. Whatever comes up for your company, we’re there for you. Seven hundred and fifty clients strong now, $10 billion in capital raise by our clients, I can’t believe it, $2 billion this year. It’s been a crazy awesome year. So, check us out at and now onto our guest.
Singer: So when your troubles are mounting in tax or accounting, you go to Kruze from Founders and Friends. It’s Kruze Consulting Founders and Friends with your host Scotty Orn.
Scott: Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Michael Frankel of Trajectory Capital. Welcome, Michael.
Michael: Thank you.
Scott: I think this is your second time on the podcast.
Michael: It is.
Scott: You are incredibly knowledgeable. We’ll do your background real fast, but we’re going to talk about something I think is super interesting, which is should VC backed companies that aren’t going to be a unicorn or an IPO, be thinking about private equity as a funding source? And spoiler alert, I think the answer’s yes, that’s why we’re doing the podcast. But maybe give everyone your background so they know where you’re coming from on this and then we’ll get into it.
Michael: Sure, sure. So short version of my background, I’ve sort of done deals from every direction. I was a M and A lawyer, M and A banker, ran corporate development for a bunch of big tech and information services companies, CFO of small tech companies that were taking in venture money and now I’m the founder of an investing firm, Trajectory Capital. And over the course of my career, I’ve done about 110 transactions, mostly though not exclusively in the sort of mid-size range, think purchase price of 20 million to 300 million.
Scott: Which, especially at the high end of that range, that’s a great outcome for pretty much every company.
Michael: Absolutely.
Scott: If you haven’t taken a $100 million of capital, if you sell for 300, you’re in great shape. That’s kind of where we wanted to talk, because we know each other because we worked together when I was at Hambrecht & Quist, you were at Network Solutions, been friends for a long time and you’ve bought so many of these really good companies, but maybe not VC funded in the first place, or maybe they were VC funded for a couple rounds but weren’t really putting up the growth rates that made them the next Uber. And before we turned on the microphones, you had a really good way of thinking about the world, you wanted to kind of repeat it for the audience here.
Michael: Yeah, I guess it’s my way of thinking about the world, but more importantly it’s actually the way the world works based on data. The vast majority of companies end up in the middle of the bell curve. So very few companies are unicorns, very few companies become massive public, very few companies go public. There’s a larger number of companies go bankrupt. But the beefiest part of the world, especially when you get past companies that failed before they even started, once you get past that, companies that actually started to generate revenue, the vast majority sit in the middle. They don’t grow to billions of dollars in revenue, they don’t go bankrupt, they produced a real product that adds real value to real customers, but they’re not going to generate billions of dollars in revenue or value. And frankly, I’ve spent my career buying those companies which have real value to them, but they’re worth 70 million, they’re worth 130 million, they’re worth 210 million. I feel like that’s the part of the market that people aren’t paying as much attention to. A lot of venture backed companies have this initial aspiration to get huge, which is great, but the reality is a lot of them are going to peel off and some of them are going to go bankrupt in that if it was a flawed business model, flawed technology, something changed in the market, that’s fine. But for a lot of them, they built something that’s really valuable, it’s really useful, clients want it, it’s just not going to be massive. And I think people don’t spend enough time thinking about those companies or what they do after… There’s that fork in the road, right? Oh, this was a horrible mistake and it’s a failure, let’s shut it down and move on. This is massive and it’s rocketing like a rocket ship. Okay, if neither of those two things happen, you’re somewhere in the middle.
Scott: And the other thing I’d add to that, which I think you said perfectly, is VC funds are raising a lot of funds rapidly, like one every year, one every two years. It used to be every four or five years. And I’ve been around long enough to see times in the market where the VC funds get tired. Tired meaning they’re a 10-year fund and they’re year eight of that fund and they don’t really have investible capital left or if they do, they have a sliver of money left and they have to use it to protect their number one and number two companies. And so at Lighthouse, when I was at the venture lending firm, we would actually find these companies sometimes and do really, really attractive deals for us with them and attractive to the VCs because they couldn’t write another check and attractive to the management team because their constant battle when you’re in that situation is you’re undercapitalized, you can never get more money. So, we did a bunch of these companies that had 10 or 15 million in revenue, growing at 20% a year or something like that. So not a VC growth rate for the next round, but a very good business with tons of enterprise value and something the founders had spent five or six years of their life on, and we would just hop in there, recapitalize them a little bit. The whole equity stack would stay the same, but the company would have money to grow, and we knew there was very little risk. And so, I’ve seen this, and I think this is going to happen again. I think right now we’re in this still kind of maybe don’t… There are so many people that were new in venture capital over the last three or four years, they don’t maybe even know this pattern’s going to happen. And I think these companies frankly should be thinking about funds like yours that look for that kind of profile and can get the VCs out whole or even make them some money if they buy it. The management shouldn’t really care what their capital stack is as long as it’s functional and allows them to grow and the management team gets to live their life and build their company and build their dream. I feel like it’s a win-win for everybody.
Michael: I think it is and I’d say a couple of things. Number one, I think year eight is a conservative number. I think a lot of funds in any market, but especially in a market like this, make that decision about portfolio companies earlier. Even if they still have capital to deploy, especially in a market like this, they’re making choices. And as I said before, you have the companies that really should shut down, you have the companies that are still massive potential home runs we want to put capital into, but there are these companies in the middle.And I would argue the VCs have a number of problems. The first problem is, they don’t want to put any more money behind this company, but the company needs more capital. The second problem is, they don’t want to write off these companies because there’s still great some intrinsic value-
Scott: Great point. That’s part of it.
Michael: And then the third is, frankly, because I think VCs are humans and they develop personal relationships with these management teams, it’s awfully hard to tell a management team that’s been working their hearts out, doing a good job, but for reasons that really aren’t in their control that have to do with market dynamics, that have to do with the nature of the customer, they’re not going to be a gigantic unicorn. It’s awfully hard to tell those people, Hey, remember we’ve been partners for five years, we’ve been working together, I’m abandoning you now, I’m walking away. Or at the very least, I can’t put any more money into you and I probably want to step down off your board because I can only sit on so many boards, I got to focus my efforts. So for the VC, this is a great outcome because their portfolio company gets another investor who can give the company the time they need, can sit on the board, can be engaged, can provide capital, can do all those things that they’re going to be able to do less of because they have to shift their attention. And for the management team, if you set aside the stages of grief exercise of recognizing the fact that you’re in this situation, and we can talk about that, this is a great outcome because A, you get capital, B, you get an engaged investor and you get an investor who actually has a different skillset that’s more attuned to your situation. If you are a five, $10 million revenue company that’s now growing at more like 30% a year, you no longer need as many of the skill sets that the venture team brought to you, right? Understanding how to start up a business and understanding how to hyper accelerate. Instead, you need more, frankly private equity kind of expertise. How do I fine tune the engine? How do I optimize pricing? How do I hire on management teams, stuff like that. So, you’re actually swapping out for a new investor who sort of focuses on companies that look more like you do right now. And so, everyone is going to be more successful into that scenario. And more importantly, I don’t think this is a choice, in other words, I think that a lot of companies are going to be faced with their VCs saying, we can’t do your next round, so you’re going to have to go somewhere else. And fellow VCs are not going to do the next round for the same reason, which is you’re not a rocket ship and we are a rocket ship factory.
Scott: There’s so many great things you’re saying there, I can’t even recap all of it, but that whole not wanting to write it down is a real thing. Very real. Because if you’re trying to raise another venture capital fund and in a much tougher market, it’s painful to write these companies down because your net asset value that you show prospective LPs and your existing LPs, is lower. Everyone’s sitting on high net asset values right now because the portfolio’s been marked up by following rounds and things like that. There’s also something you said, it’s connected to what I’ve seen, venture capitalists, as you said, are human. They don’t want to write it down. They know they’re not going to be able to get more money from them or someone else. So, they basically starve the company. I’ve seen these many times. They just cut to the bone, cut to the bone, cut to the bone, and it’s very frustrating for a management team and they have an opportunity cost of their career, they’re spending their years working on this. How have you seen a management team help the venture capitalist navigate the stages of grief and how to let go and how to… I actually think that might be the most important thing.
Michael: It’s really interesting. I think part of this, I mean, let’s separate it two pieces. The first is that the incentives are not aligned. I think most VCs, because they are home run hitters, are not as focused on how I turn a strikeout into a single, they’re really focused on how do I turn a triple into a home run. And so I think part of it is that they’re not focused on that kind of an outcome.But I do think that part of this is management going to the VC and getting them to understand, on the one hand… And this is a hard conversation, because you’ve collectively spent the last X number of years talking about how you can achieve massive success, that’s the premise of the relationship. So now you have to come to them and with a totally straight face say, we’re in the middle, we’re not going to achieve this massive success. We all collectively got that wrong. There’s not as much of an addressable market as we thought, there’s not as much price strength, whatever that reality is. It’s reality, we all have to come to grips with it. But-
Scott: I’m smiling here because it’s like everyone around HEVA wishes they wouldn’t have been wrong, but that’s just how it worked out.
Michael: That’s right, it is what it is. And what I find frustrating is, statistically it is by far the most likely outcome, right? We do not have hundreds of Googles out there, that’s the rare outcome, but it’s the outcome they’re focused on. So step one is, look, we are not going to be that, but we’ve created a lot of value with your money and our blood, sweat and tears, and that value’s not going to zero. That value is there. We have to figure out how do we maximize that value, and that’s important for us because it’s our life’s work and all our wealth is tied up in this. It’s also important for you because, yes, this is not going to be a 100 X or a 500 X or a thousand X outcome, but this could still be a five X outcome for you, three X outcome for you, even a one X outcome for you, which is way better than a zero X. So yes, it’s not what you focus on, but now that we’ve established that we’re not going to have that outcome, how do we optimize this asset? Because it’s still a very valuable asset to you. And we understand, this is the company talking to the VC, we understand that this is not what you focus on. You don’t focus on companies like what we have now determined our company is, but we want your support and your help to maximize your returns and also maximize our lives, and here’s what we need you to do to do that. And frankly, I think a lot of VCs will be happy to hear this because number one, they don’t want to have that conversation with founders. That’s the flip side. Hey, I know I told you that you were the next Larry and Sergey, but you’re not, at least not with this company, and that’s a tough conversation. And, I go back to the VCs are humans thing, they don’t want to walk away from management team. They know the management team has been working hard, this isn’t a question of effort, this is just a question of outcomes. So being in a weird way, let off the hook, we understand that you’re not going to invest in our next round, you’re probably going to step off our board. We totally understand that, and it’s okay. We’re not mad at you, but here’s what you can do to help us.
Scott: How do you go forward with that? Do you get a mandate? Do you get a written mandate? Do you talk to them about the parameters of a deal? Do you shop the market a little bit before you talk to them or do you wait because you don’t want to piss them off? How do you think about that mechanically?
Michael: I think this comes down to interpersonal relationships. I’m not sure there’s a definitive answer because I think it depends on the founder and depends on the VC. My bias is I’m big into transparency, I don’t have the brain power to fake it and so I would just come to a VC and go, look, here’s where we are. Here’s the likely trajectory of our business. Are you interested in funding that? And when they go, no, it’s understood, I expected that. I’m going to go out and find other capital. We all know that capital is going to be heavily dilutive to you. We’re going to have to come down off of valuation, they’re going to want preference, they’re going to want control, they’re probably going to want your board seats. And I just want to make sure that we’re aligned, and if you have a better idea, great. If you think I’m wrong and you want to put more money in the company, fantastic. But if not…So I wouldn’t try to set parameters because the answer is it’s going to be whatever the market bears. And frankly, unless the VC has the relationships, which by the way, as a side note, is a real potential outcome. I think a lot of VCs know growth equity and private equity folks, so I think pre-planning what the terms are going to be is pointless, right? The market will be what it’ll be. So instead, you sort of reach an agreement about the reality of your situation and then you go, okay, let’s collectively go out and see what we can come up with in terms of the best economic terms and also the best partner for the company. Just like we did with our VC. We chose you, Scott, as our VC partner not just because of your money, but because we worked well together and you could be helpful to us. Now we’re going through that exercise again with more of a private equity mindset, and we’d like your help doing that. I think that’s the right way to do it because the reality is, what are you going to set some kind of an arbitrary valuation and then you discover that the private equity guys coming in below it. I think trying to set expectations is bad. I would just say, this is what we are going to do and we want your support in doing.
Scott: Like a license to hunt, basically.
Michael: Yeah, exactly. Also, the other big thing is it depends on who owns what, right? If the VC owns 80% of the company, it’s a different conversation than the VC owns 20% of the company.
Scott: That’s very true.It’s Scott Orn of Kruze Consulting, taking a quick pit stop to give some of the groups at Kruze a big shout-out. First up is our tax team, amazing. They can do your federal and state income tax returns, R&D tax credits, sales tax help. Anything you need for state registrations, they do it all. We’re so grateful for all their awesome work. Also, our finance team is doing amazing work now. They build financial models, budget actuals, and help your company navigate the VC due diligence process. I guess our tax team does that too on the tax side, but the finance team is doing great work. Then I think everyone knows our accounting team is pretty awesome but want to give them a shout-out too. Thanks, and back to the guest. In these types of deals, do you see the VCs rolling some of their equity value over and writing a small check if there’s a credible PE lead? Or do they usually just want to get out or does the private equity want the other investors out? How’s that usually work?
Michael: So I don’t think the private equity investor will want any investors out, unless they’re vying for control. So, if they want control, then yeah, they’ll probably want to take out the non-managers and the non-founders, but if they’re just coming in for additional capital, speaking, I want the VC to continue to be in. They have a long history with the company, they can still be helpful. So, I think that, yes, I think you don’t see sort of liquidity. On the other hand, I think it’s probably unusual for the VC to put in any money because the whole premise of this is that the company is now off strategy for the VC. So, in a way, I would find it strange if I came to a company that was VC backed and they were doing… Making something up, they’re doing a $4 million round, and the VC goes, well, I’ll put in 1 million. If it’s a big VC my question is, wait a second, if 1 million is on strategy, why am I even at this table?
Scott: I was just thinking maybe it’s like a signal that they care, but they really tight on cash because they’re at their… But yeah, I think you’re right. I think you’re right.
Michael: Sure, if they’re willing to do that, that’s fantastic. My guess is if the VC has bucketed this as a, we’re not going to invest anymore in it, they’re probably holding to that.
Scott: Yeah. That makes sense. And I’m also thinking, how do you as a private equity firm or folks like you, navigate the venture capitalist who does have money, but tells the founder to go out there and find out what this company’s worth, and then they kind of turn around and if you give them a term sheet, they turn around, just do it themselves. Is that just part of doing business? That’s just the cost of doing business?
Michael: I mean, I’d say A, the cost of doing business, right? Deals don’t always turn out. There’s no guarantee. I’d also say that’s an awfully weird behavior, especially in the world of lower growth businesses, especially in the world of lower growth profitable technology businesses, you don’t need to find some random private equity firm to provide an offer. You were a banker, there’s enough market data that I can probably price the company, right? So, if I’m a VC and I have a portfolio company that is now a 30% growth SaaS business in a certain sector, I don’t need some private equity firm to tell me what that’s worth, I can probably figure out what it’s worth. So, if my only goal is to reset valuation expectations with the management team, but I’m still going in, I think I can do that in other ways, unless the management team is in total denial.
Scott: Where I’ve seen it is there’s different opinions at the VC level, multiple VCs in a company and they can’t agree, almost break the tie kind of thing. You’ve got to be pretty good at detecting that kind of stuff, like your spider senses go off probably a little bit and you’re like, well, these guys aren’t really actually looking to sell or looking to recapitalize the company, they’re just kind of farting around here.
Michael: So I think number one, yeah, your spider sense goes off because it’s rare that someone will lie directly to your face. So if I go talk to a VC who’s an investor, and I go, so why are you not investing going forward? And they go, well, we haven’t made that decision but we’re thinking… If they don’t go, here’s my reason and I’m not investing, okay, now I know that you’re still on the fence.The other thing, it’s not necessarily a bad outcome for this reason. They may still want me to come in. So maybe the answer is, we’re raising $8 million and the original investors are going to take 4 million, but we want you to come in for another four, A, because they want to diversify their risk, but B, I go back to the same thing I was saying at the beginning, which is, this is now a different company, a 30% fast company. The VCs are not going to be able to be quite as helpful operationally and so maybe you want me involved, you want me at the table, even if you’re not leaving the table, even if you’re going to continue to invest, you want me at the table because you want me to bring that skillset that I have to help what I’d call medium growth technology businesses. And that’s worth you letting me into the captain.
Scott: Yeah, I totally agree. And maybe it frees them up from a board seat and they only have so much time in the day, but they still have a fiduciary looking after the company they trust and things like that.
Michael: That’s right, yeah. Well, and even more so, somebody who’s sitting at the board having the right conversations, they’re used to having conversations about hyper growth, that’s where they can add value in the board meeting. Now the conversation is about margin levels and channel partners and more modest growth kind of strategies. Maybe that’s something that, above and beyond the fact that they don’t want to spend the time sitting on the board, I’d be better sitting on the board than they would because that happens to be where I’m a little stronger.
Scott: I totally agree. Let’s switch gears a little bit, which is, maybe conceptually how founders explore this. How do they look at the market? Who they talk to. Because I also think a lot of founders don’t know how big private equity is. I just heard a stat yesterday actually that a trillion dollars of private equity was deployed last year, which guess what, was a down year. That was a down year, a trillion dollars. Because we in the venture ecosystem tend to think venture capital, it’s humongous, da da da da, and at the peak maybe, I don’t even know, maybe there’s 80 billion last year went in, but I bet you it’ll be like 40 this year. Compare that to a trillion, it’s like mind-numbingly huge. There’re tons of different strategies, there’s tons of people looking for different markets, looking for different kinds of companies. I mean, people are out there who will want to look at your company. How should the founders navigate this and try to find folks like you?
Michael: Yeah, so I think it’s a big challenge, and it’s a bigger challenge than in venture because it’s a more heterogeneous population. Private equity plays in a bunch of industry sectors that venture doesn’t play in, and private equity plays across a size range that is even wider than venture. This is in a world where venture’s writing a hundred million dollar checks.So step one is you have to find PEs that are both size appropriate, industry sector appropriate and stage appropriate for your company. That’ll narrow the population radically. So, if you’re a SaaS business, the first thing you can do is wipe out all the PEs that focus on consumer-packaged goods and pharma and oil and gas and real estate. And then size, because there are private equity funds that are writing $3 billion checks. And it’s not even just that they’re not interested in your company, they’d be physically incapable of doing a deal of your size. It’s a totally different operation. So, once you’ve narrowed it down… And then the last one is sort of core strategy, which is you have private equity funds that are focused on everything from fairly high growth companies that sort of bounce up against venture levels of growth on one end of the spectrum, all the way to companies that are in bankruptcy or about to be in bankruptcy. So, you have to match up the private equity fund strategy with your strategy. If you’re growing 20, 30% a year and you’re doing well and you’re marginally profitable, you don’t want a private equity fund whose whole model is, first we fire 30% of the workforce, then we renegotiate all the contracts with all the outside vendors. We call up Scott at Kruze Consulting and go, you got to cut 40% off your bill, or we’re going to walk away. That’s a strategy that’s appropriate when a company is about to hit zero. For your company, that would actually be incredibly damaging. So, industry sector size and sort of stage or nature of company is how you find those folks. And then honestly, it’s the same exercises finding a VC. It’s networking, it’s talking to people in the industry, venture lenders, regular lenders-
Scott: Banks know a lot of people because sometimes they’re trying to sell a company that they’ve had to put in default. That’s a really good source.
Michael: Yeah. Now the good news is… Well, here’s the last one, industry sector people. Because just like you want a VC, probably even more so than you want a VC who understands your particular business, you definitely want a private equity fund that understands your particular business. So, the center of the bullseye, if you are a supply chain technology company, is to find a fund that’s in your size range that has done some stuff in supply chain. They’ve bought-
Scott: You usually can find that out too by just talking to your competitors or analogous businesses or software vendors, tool vendors, bankers, they kind of know… They’ll tell you who’s buying companies.
Michael: Yeah, exactly. Or you’ll have seen your competitors. If you’re not the first player in the space to not become a rocket ship, you may have seen other examples of this. One of the challenges is that there’s sort of a size issue because private equity, just as venture has written bigger and bigger and bigger checks, private equity is writing bigger and bigger and bigger checks. So, if you are a one to 20 million revenue technology business and you’re looking for 3, 5, 10, $15 million of capital, you are off strategy for a whole bunch of private equity funds because they just don’t write checks that small, right? And actually, here’s a great shorthand filter test. Generally speaking for any one fund in the private equity world, they’re probably making, not including follow on investments, they’re probably making, I don’t know, 10, 15, 20 investments. So ,if you are looking for a $10 million cheque, you probably can’t go to a private equity fund that’s much above a hundred, $200 million in that particular fund, right? Fund three, fund four, or whatever-
Scott: Yeah, yeah.
Michael: Because your cheque will be too small. They’ll often put on their websites what their cheque size is, but-
Scott: Yeah, that’s a good point.
Michael: If they have a $4 billion fund, they physically can’t write your $10 million cheque no matter how much they like your company. So that’s another way of filtering.
Scott: The other thing I was going to, and we should probably wrap up here, this is a great conversation, is maybe you can explain this to people. A lot of private equity funds will buy what they call platform company, which is maybe the mothership in an industry or service provider or something like that. And then they do what’s called tuck-in acquisitions. Can you explain that to the audience?
Michael: Sure. So, it’s pretty straightforward, right? And you’ve seen this in the real world. Venture companies just often are moving so fast and growing so fast that M and A is, it’s too much of a distraction. But in non-venture world, companies do build by partner as an analysis for how they’re going to expand. Whether it’s I need new features, I need new technology, I need to enter new geographies, I need new brands, whatever that thing I need is, they always think to themselves, I could acquire it, I could build it myself, or I could partner for it if I don’t need to control it. And buy is often an option. So you’ll often see private equity funds, and private equity funds want to deploy more capital and they want to accelerate the growth of their companies, so the strategy is often, let me buy a core business that’s well run, a management team I trust, has the potential to be much bigger and then arm them with the capital to do organic growth, but also give them the capital and usually get very actively involved because I’m a private equity guy, so I do deals for a living, in doing additional deals. Now, there’s two kinds of these. One is just a roll up, where I’m buying just a whole bunch of the same thing. Dry cleaners, right? I bought a company that has 50 dry cleaners, and then I’m buying a bunch of other family-owned dry cleaning chains and gobbling it up. And the more complex one is tuck-ins, which is what you refer to, which is, this new technology will add on features. This gives me a European operation, stuff like that.
Scott: Yeah. And also, the mothership acquisition, the platform company, the management team there usually knows exactly who they want to buy to fill whatever void. It’s like having the scout team come in and they already have a really good idea, and they know how this could open up a region or a product or a service or a customer base. So, it’s really synergistic. It’s a great way of approaching things.
Michael: Oh, absolutely. I would say, to be fair, they know a lot, they often don’t know everything, but they’re maybe 70% of the way there the day you acquire them, and then you help them get the other 30% of the way.
Scott: And also, like you said, the private equity firm has professional deal making strategies, professionals who know how to do stuff, they know how to do due diligence, they know how to market size stuff and things like that, they can talk to a lot of people. So, it’s very helpful. It’s a really good strategy. Let’s wrap it up, but this is, I really think, and I’m excited to send this out to the Kruze client base too, because there’s so many great companies that we work with that have built something very substantial, and maybe they’re not going to IPO, but they’ve built something of value, and the investors through this pathway have a way of making money, the management team certainly has a way of making money and building their business. And the private equity funds are there for a reason, this is a real opportunity.
Michael: That’s one thing I’d say to your audience. This is a very tough time, and if you started out thinking that you were just going to stay with your VC forever and you were going to IPO on the Nasdaq, it can be jarring to consider another path. But as somebody who’s spent his career paying really good money, life changing money, hundreds of millions of dollars on a cheque for these businesses, the failure to IPO is not a failure, it’s just a different path. And frankly, it’s the most common path. Being acquired by much larger companies after taking private equity money is the most common liquidity path. The IPO is much rarer, so take a breath, but just view this as a fork in the road.
Scott: Totally agree. If you’ve built something of value, you’re still going to get value from it. You just need a different kind of partner. All right, man. Tell everyone where they can find Trajectory and we’ll wrap it up. And thank you so much, Mike. I really appreciate it.
Michael: Yeah, absolutely. So, Trajectory Capital, you can find me on LinkedIn, you can also find me on And keep heart, every down market is followed by an up market.
Scott: I believe that to my bone. I know that stroke, I’ve seen three huge down markets in my career and always bounces back. All right, man. Great talking to you, thanks so much.
Michael: Good to see you, man.
Scott: Thanks, buddy.
Singer: So when your troubles are mounting in tax or accounting, you go to Kruze from Founders and Friends. It’s Kruze Consulting Founders and Friends with your host Scotty Orn.

Find out why Kruze Consulting is an experienced finance and accounting firm for startups in San Francisco, Silicon Valley, and the US. Our clients have raised over $15 billion in venture and seed financing, and our team knows how to navigate the VC diligence process. Get in touch with Kruze experts now!

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