Wayne Barz, the Manager of Entreprenuerial Services at Ben Franklin Technology Partners in Northeastern, Pennsylvania thinks that question; "What is your exit strategy?" is hurting business and that the early days are not the time to ask such a question.
Perhaps the only aspect of your business’s future that is less certain than your 3rd year EBITDA, is the financial exit that you and your investors will experience. But that doesn’t prevent nearly every funding application summary from asking the question “What is your exit strategy”? I’ve come to the conclusion that this is quite possibly the most useless early due diligence question that is routinely asked. And yet, I continue to hear the question at venture fairs, in online investor solicitation forms and in private investor meetings. I believe I audibly sighed the last time I heard it. Which was rude, but heartfelt.
He recommends telling it like it is when the question arises. I’d go one step further than he does (though he knows far better than I) and say the response, so early on in process, should be something a little more succinct. Something like: "We have none. We want to build a business first."
