“Worst case scenario we’ll sell to a larger startup or public company for about ~$1.5m per engineer.” Yes, this was the ‘fallback plan’ for many team in the web2 era and they weren’t wrong. Especially in the early days of mobile/iOS engineering, if you hired strong technical talent into your early-stage company, you basically created an acquisition outcome floor. I was on both sides of these transactions – buying startups for Google/YouTube and angel investing in high quality technical founders. Sometimes you’d even get lucky and receive stock in the acquirer, which was how I gained pre-IPO equity in high growth stars like Pinterest and Facebook.

Starting our venture fund Homebrew professionalized and scaled my insights into soft landings. Acquihire potential absolutely isn’t enough in and of itself to justify venture funding (we play to win!), but in certain situations investors do talk about these things as positive optionality. And during our first few years we leaned in to help teams find the right home when it didn’t work out for them as an independent company. This produced two successful intra-portfolio acquisitions where one team joined a larger startup we previously seeded (Chime and Bowery Farming were the buyers) and a whole bunch of other transactions. The proverbial win-win-win: founders got to land their company often with some retention premium; employees got job offers; and we got capital back, that even if it wasn’t a power law return, allowed us to recycle into new investments or the existing portfolio. I’d say that for a small, two person fund we got pretty good at this motion when needed!