You Can Build a $100 Million Startup and Still Walk Away With Nothing. Here’s How to Protect Yourself.

A Sobering Lesson on Startup Exits

I’ve seen too many founders pour their hearts into building something remarkable, only to face the harsh reality that a big valuation doesn’t guarantee a big payout. This piece hits hard with a personal story from a founder who built a thriving app valued at $120 million, yet realized the exit waterfall could leave her and her team empty-handed due to how debts and investor preferences stack up.

The Waterfall Explained

At its core, the article breaks down this payout hierarchy: lenders first, then preferred investors, with common shareholders—like you, the founder—last in line. It’s a stark reminder that paper value can evaporate if the sale price doesn’t cover those top tiers. What stands out is the practical wisdom here; it’s not just theory but drawn from real market turmoil, like the Silicon Valley Bank fallout.

Empowering Steps for Founders

The real gold is in the actionable advice: model exits early, negotiate fair liquidation prefs, steer clear of risky debt, keep your cap table clean, hire solid legal help, hold onto leverage, and protect control rights. These aren’t abstract tips—they’re tools to ensure your sweat equity actually translates to wealth. As someone who’s guided many through funding mazes, I appreciate how this empowers founders to level the playing field without needing a finance PhD.

Don’t let structure undermine your success. Dive into the original article for the full scoop and start safeguarding your venture today.