[michaelochurch]

If you're thinking about exits at all at the SEED FUNDING STAGE of your company, that offer is never going to come.

If the maximum potential is $20 million, and we're talking about the VC-style go-big-or-go-home sort of business, I agree. A business that will be worth $20 million if everything goes right is likely to end up near zero. The distribution is non-normal and most companies don't reach 50 or even 25 percent of their maximum potential, but less than 1 percent. If the IPO option isn't at least open, try again.

On the other hand, I think people should be honest about all the possibilities. Choosing a path based on what happens for the winningest of the winners is a terrible idea (even though it's what a lot of people do, and why companies overpay their CEOs; overpaying executives is actually cheap when you consider how much harder the chumps work for the slim chance of reaching that level). Which is better, a 60% shot at a $20 million exit, or a 1% shot at $10 billion? Expected value (which VCs care about) says one thing and common sense says another.