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Vamshi Yadav
•

SucSEED Ventures • 2m

The Falsehood of Distributions of Founders at Distress Exits: A Lesson for BluSmart Worth ₹850Cr Let's dispel one myth: "Founders make money in acquisitions. Reality Check of BluSmart Raised: ~₹1,300Cr | Last Val: ₹2,700Cr | Exit Val: ~₹850Cr Outstanding Debt: ₹100Cr+ (bonds due soon) Liquidation Stack: 1x pref for investors + venture debt Why Founders Won't See ₹255Cr ⤷ Investors Get Paid First Eg: 1x liquidation preference = Investors reclaim their ₹1,300Cr before anyone else ₹850Cr exit? Not even enough to cover investor capital (let alone debt) ⤷ Debt Eats the Rest Bonds, working capital loans, leases = another ₹100Cr+ Net Result? ZERO for common shareholders (founders/ESOPs) The Hard Truth of Distress Exits They are not mostly "exits" but clean-up operations: ⤷ Investors salvage what they can ⤷ Debtors scrap it out for what little is left ⤷ Founders? Bitter, with often only diluted stakes and lessons Key Takeway: Next time you hear "X startup sold for $Y," ask: What’s the cap table stack? (Prefs, debt, etc.) Is this a win or a wipeout? Because in venture, valuation ≠ payout. #StartupTruths #VentureCapital #FounderMyths

6 Replies

Replies (6)

Anonymous 2

Hey I am on Medial • 2m

Yep. It’s harsh but true: in most distress exits, the founders end up with nothing but LinkedIn experience points and bruised egos. Hard game, harder realities.

1 Reply

Anonymous 1

Hey I am on Medial • 2m

Let’s not act like founders are victims. They also took the highest risks. If the upside is exponential, so is the risk of wipeout. Nobody promised fairness in capitalism.

1 Reply

Anonymous 4

Hey I am on Medial • 2m

Tbh even a distressed exit at ₹850Cr is better than liquidation or total shutdown. Investors taking losses is bad, but jobs being saved still matters somewhat.

Anonymous 3

Hey I am on Medial • 2m

People seriously confuse "exit value" with "founder payday." Most exits under $1B are just dressed-up funerals for founders, not champagne parties.

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