Exit Stories: Know Your Value, But Don’t Be Held Back By It

This week’s episode of Exit Stories features Richard Holcomb, a Triangle entrepreneurial veteran who currently serves as a General Partner at the North Carolina Venture Capital Fund (NCVCF) and a Vice President at the Corum Group, based in Bothell, Wash.

Holcomb is no stranger to exits: he led Q+E Software to one of the Triangle’s earliest large exits in 1994 (before most of GrepBeat’s staff was even born) and again at data software firm StrikeIron, which was acquired by Informatica for $55 million in 2014. Holcomb went on to found NCVCF in 2019. 

Here are three key takeaways from Holcomb’s sage wisdom: 

  • When it comes to deals, sometimes what seems like the most lucrative dollar sign is not the right choice, and it is important to consider all of your options and to not succumb to pressure. When Holcomb and the Q+E Software team refused a $1 million Microsoft acquisition offer and instead chose to do a $1-per-Excel-copy deal, the Microsoft execs thought the “country boys from North Carolina” were making a mistake—but they were very wrong. “They actually told us we were stupid, they make references to Mayberry when we turn down the million dollar cash offer for $1 per copy,” Holcomb recalled. “They said ‘You’re turning down a million dollars for just a few hundred thousand dollars at $1 a copy, you know, okay Opie and Andy.’ Five years later, at well over half a million copies a month for Excel, it turned out that the country boys from North Carolina were actually not as dumb.” While doing $10-12 million in sales, the Q+E founders exited for $40 million in 1994. (2:29)
  • Holcomb’s career hasn’t been all sunshine and $40 million exits. In fact, Holcomb has a word of caution for today’s software entrepreneurs looking to be the next unicorn: monitor your balance between growth and profits, be prepared to fail, and don’t depend too much on potential. “You can do that and if it works, then you’re a unicorn and you’re just brilliant and pretty and your hair is shiny and, yeah, that’s great,” he said. “But the chances of it working are very slim and if it doesn’t work, it can get ugly.”  (9:35)
  • When approaching a deal, know the intrinsic value of your company, but know that what you perceive as your company’s intrinsic value will always be biased by how much work you have put into it. “It’s really worth all that other people are willing to pay,” Holcomb said. “The value of the company could be less than you think it is because, you know, they want it but they’re not desperate for it. There’s other things they can buy.” Holcomb reminds listeners of an important lesson: that it is crucial to consider where buyers are coming from and their unique economies of scale, and to not take “under-appraisals” personally.

Thank you again to Vaco for sponsoring this season of Exit Stories. You can listen to this week’s episode (and subscribe!) below: