An investor is asking on a prior private exit wherein we sold our consulting services to customers for a fee so we could focus on the product. How do we best represent that exit?

The short answer is is that if an exit was not significant enough for the returns of the venture capital fund — that is if the exit was $100 million or less — it is not something that you want to brag about as a salient selling point to the VC. Because that exit is actually considered a waste for a VC since it will not have meaningful returns to their fund. But you also should be honest if directly asked about prior acquisitions.

Set the context with the VC that this was a strategic acquisition that you chose to do to shore up cash for the product business which is your focus. VC’s love product businesses but they hate consulting businesses. And so I would not lie to the VC if they ask about acquisitions but I would not pretend that you viewed the acquisition as a bragging point and think it’s a good outcome for the current business you are working on.