Andrew Gazdecki breaks down why some startups sell in 60 days while others stall in due diligence. Fast exits need strong churn management, 12+ month customer LTV, clean finances, and a founder who isn't irreplaceable. Red flags that kill deals: one customer over 30% of revenue, monthly churn above 8%, and a founder who is the product.
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When we see deals that close in 60 days, we generally see startups with really good churn operations. The founder has removed themselves or they've documented or have a plan to bring in someone else if that is what they're looking to do. 12+ month customer average LTV. So customers are using the product and they're staying, they're buying the product on a repeated basis. It's a very predictable business. Clean books. They've spent the time, they prepared before they go to market and they usually have a single niche with deep penetration. It's usually a customer base in a market where they have deep, deep, deep knowledge and customers are reliant on their product or service on a daily basis. And with AI, it's generally a cost savings narrative rather than a massive disruption narrative. And then what stalls a due diligence? The founder is the product. This is always a tough one, tough sell. Messy mix, personal and business expenses, churn more than 8% monthly. Just basic stuff that makes a good business. If the founder's involved in everything, just the data of the business is a mess. Churn is really high. Customers are canceling. Customer concentration is more than 30%. That means they have one large customer that takes up more than 40% of the revenue, no documentation of anything, meaning everything kind of just lives in the founder's head. These are really hard businesses to sell, but luckily a lot of these items are easily addressable, but things to think through before going to market.
