Horseplay Ventures Founder Nick Telson: How to Design a Successful Exit Strategy

Written by Tom Fairey

10 March, 2022

Businesses get started for all sorts of reasons, but a chief reason for many entrepreneurs is the exit — in other words, having someone write you a check.

Nick Telson, the co-founder of DesignMyNight, had his exit planned quite strategically and now he has made the transition from founder to full-time angel investor.

“It was really an interesting journey,” Telson told me for a recent episode of my podcast, Back Yourself.

The Back Story: How Telson Rose in the World of Business

Nick Telson is a University of Nottingham graduate who earned a BA joint honours degree in Spanish and Portuguese. His first real job out of school was working as a senior product marketing manager for L’Oreal. But even while he was at L’Oreal, he was busy building DesignMyNight.

Launched in September 2010, DesignMyNight became the U.K.’s fastest-growing nightlife website. With more than 6.5 million monthly views, the site lets visitors discover and book sports in bars, restaurants, pubs, and venues. While the website is well known as a B2C product, the technology is attractive to B2B customers.

The exit journey was “a bit nuts,” Telson said, and lasted for a year.

He and his co-founder, Andrew, had a clear idea on how much they wanted to sell the company for, and had modeled that out. They understood clearly how they had to build the company to get the price they wanted.

The golden egg was the software, he said. Bars could use the software for sending vouchers while venues could use it for booking acts. The pair based their valuation on EBIT — earnings before interest and taxes — not revenue. Normally, software sales are based on revenue.

“We wanted to be realistic when we lined up to exit,” Telson said.

Going to Market:  How Telson Sold His Business

Some industrial buyers would want the company but not look at revenue or EBIT, while some prime equity buyers would look at the numbers alone. But, as Telson and his co-founder figured, there would also be some more realistic players who would give multiples of EBIT because not only were they buying the business but they were buying the profit as well.

“And so that is why we wanted to be profitable from the early days,” he said. “If we can build something that is very profitable, we can definitely be able to sell it, versus let’s just build revenue, revenue, revenue, and hope that industry player desperately want to buy us. I think we were always quite conservative in our approach as a business.”

The obvious acquirers were those on the edges of his business space, he said, such as OpenTable, TripAdvisor, and Book A Table.

While it is every founder’s dream to create a product that is so competitive that its bigger rivals have no choice but to gobble it up, Telson and his partner did more than just that: They were active participants in the sales process.

The team hired a broker, went through a formal sales process, and engaged with different potential acquirers. Revenue models were based on a year out in order to help meet their target. The result? Financial freedom.

Post-DesignMyNight: Podcasting and Angel Investing

Since selling DesignMyNight, Telson has had time and space to do more on his own. He’s been a mentor for All Together and Virgin Startup, and a business mentor for London & Partners. He was an advisor for EMW Global and an ambassador for Home Grown Club. In July 2020, Telson launched Pitch Deck, a podcast devoted to investors, founders, and pitches. It was named as a top 10 global business podcast and a leading U.K. career and entrepreneur podcast.

On the podcast, guests get three minutes to pitch their business, then engage in a live question and answer period with Telson and an experienced angel. Telson and the angel then discuss the pitch and what they like and don’t like about the business.

“It is sort of lifting the bonnet for founders of how an angel investor would critique the pitch and what we look for,” he said. It’s so successful it has a copycat, so make sure you see Telson’s name on the intro if you want to download it.

He also co-founded Horseplay Ventures, a “startup playground for the new generation of startup founders.” Horseplay incorporates the podcast as well as a free investor syndicate and an incubator studio, along with a host of other free tools for founders.

The Takeaway

Telson went into entrepreneurship with a solid idea of what he wanted to do and how he would do it. He and his partner worked toward a single tangible goal and reached it right on schedule. That is not to say there were no hiccups along the way or even after — Telson confesses to major FOMO after exiting and that he wanted to continue working. But the highly successful exit earned him the financial freedom he was craving — now, he can truly do what he wants.

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