Build Your Company Backwards: How to Align With Angel and VC Expectations

If you can’t explain why someone will pay 10x to buy your company, you’re not ready to raise a dime.

When you’re raising outside capital — especially from angels or venture funds — you’re not just pitching your company. You’re implicitly making a promise: that their investment will turn into a significant return, typically a 10x outcome over five to seven years.

If you raise $2 million at a $10 million (post-money) valuation, you’re telling investors: “We’re going to build this into a $100 million company.” Whether or not you say those words, that’s the math. (And you are going to get to $100 million without any more capital.)

But here’s the part that often gets skipped: If you’re expecting someone to pay $100 million to acquire this company, you need to start thinking about what they are getting for that price. You can’t justify a exit without understanding what the acquiring company finds valuable — and how they plan to grow it after the acquisition. This article on how patents help sell your company gives an excellent overview of what buyers actually value when making an acquisition.

What Is the Buyer Actually Buying?

Buyers don’t acquire companies for your cap table, your investor deck, or your hope for a unicorn. They’re acquiring something specific they believe they can grow, monetize, or defend.

In most cases, the acquirer is buying one of three things:

• Customers they don’t already have. A new vertical, a younger demographic, a more loyal base. You’ve cracked something they haven’t. They are buying a customer list.
• A revenue stream they don’t already have. Maybe it’s small today, but they believe it can scale rapidly once integrated into their distribution machine. They are buying profitability/revenue growth.
• Technology they don’t already have. They may want to integrate it into their existing platform, or eliminate the risk of competing against it. They are adding technology that they do not have.

Whatever it is, they’re not just buying the asset as-is. They’re buying the potential to grow it — ideally using their own infrastructure, salesforce, or customer base. This IP due diligence checklist is a useful guide for understanding what types of assets acquirers inspect and value during M&A transactions.

So ask yourself: Why would a rational company pay a 10x multiple to acquire this? What are they going to do with it the day after they buy it?

The Investor Math Isn’t Yours — It’s Theirs

Let’s say you’re raising $2 million at a $10 million pre-money valuation. That means the company needs to sell for $120 million.

From there, ask:

• Who would buy this company for $120 million?
• Which companies actually have the capacity to buy your startup for $120 million, but where that acquisition is meaningful and not just a rounding error?
• What compels them to pay that price?
• What multiple are they paying — and for what?

Use Real Comparables and Rational Multiples

Too many founders talk about exits in a vacuum, like it is some dream far far away. Instead, you should ground your expectations in actual deals.

If you’re saying your company will be worth $100 million at exit, show who else sold for that — and why.

Examples of relevant comparables:

• Per-customer acquisition costs: e.g., “Company X was acquired for $500 per paying customer.”
• Revenue multiples: e.g., “Company Y sold for 8x trailing 12-month revenue.”
• Profit multiples: e.g., “Company Z sold for 12x EBITDA.”
• Strategic premiums: e.g., “Company A was acquired at 4x market value due to access to a niche demographic.”

This isn’t just to prove valuation — it’s to make sure you’re building toward something that actually happens in your industry.

If no company in your space has ever been acquired at 10x revenue, don’t plan your entire strategy around it. If acquisitions are typically based on profitability, and you’re losing money every month, you have a disconnect.

This post on inventions BlueIron refuses to finance offers a great example of the kind of businesses that don’t align with real-world investor or acquirer expectations.

Think Like an Acquirer — Now

Startups that succeed in raising money and exiting well are the ones that can bridge both perspectives: they understand how to build a compelling product, and they understand how to make that product valuable to someone else.

That means designing your roadmap, your customer base, your IP, and even your org chart with the exit in mind. Not in a short-sighted way — but in a strategic way.

Ask:

• What kind of assets would make us irresistible to the top three acquirers in our space?
• How do we make those assets real, defensible, and hard to replicate?
• What metrics will prove that we’ve done it?

Once you know the metrics used for acquisition, optimize the company for that metric. Acquisitions based on customer base means focusing on reaching customers. Acquisitions based on revenue means focusing on lifetime value of the existing customers.

Final Thought: Build to Be Bought, Not Just Funded

A lot of founders build to raise — pitching, posturing, and burning cash to hit the next fundraising milestone. But very few build to be acquired.

And the ones who do? They get the exits. They return capital. And they earn the trust of the investors who will back them again on the next round — or the next company.

So next time you pitch: don’t just sell the dream. Show how the math works, why the buyer pays, and what they get for their money.

That’s the pitch that closes.