When I was in the domain name business, I heard about a trick the good brokers used.

Say you owned a domain you loved. You’d registered it in the early days of the internet, when the good names were still there for the taking, and it was a short, clean string with a dot com on the end. A genuinely good name. You’d just never done anything with it. No product behind it, no site, and no intention of selling. The broker knew all that. So, they didn’t call you. The sneaky ones found a way to get your spouse on the phone.

And the brokers would tell them what the domain was worth.

Your spouse would repeat the number back with some incredulity, saying the sum out loud as almost anyone would do. That’s a house. That’s a car. That’s the kids’ college paid for. By the time you got the phone back, the argument was already over. It didn’t matter how much you loved the domain. You were going to sell, because the number had been translated out of internet money and into the only currency that moves people: What it buys.

I’ve thought about that trick a lot since I started investing in startups. Because the same mechanism works in a startup exit, and the M&A bankers know it just as well as the domain brokers did.

The band where startup exits cluster

If you look at the point where angel-backed companies are acquired, the good outcomes bunch up in a band. Call it $20–40m. Not every exit lands there, but enough do that you can feel the gravity.

The data backs the direction, if not the exact band. Wiltbank’s work for the Angel Capital Association found something like 87% of US angel exits came in at $50m or less, and the same body of research puts the average angel outcome at about 2.6x over three and a half years. The under-$50m ceiling is the sourced fact. The $20–40m band inside it is my own read, where I see the good exits bunch. To me, the reason is usually personal rather than corporate.

Do the sum the way the broker did on the phone. A founder who has taken some dilution but held a meaningful stake will walk away from a $20–40m sale with something like $5–10m. In anyone’s world, that is a lot of money. It buys the house outright. It funds the kids’ education. It happens to clear what I’ve called the hundred-year sum: the back-of-envelope figure that, invested sensibly, funds the rest of your life. Or at least it comes close enough that a founder starts running the calculation.

That’s not a coincidence of timing. The exit is often the liquidity event that makes a founder run the sum for the first time. I first heard the idea from Kerr Neilsen, BT’s star fund manager, and for all I know he was its source; I’ve just given it a name. It is, to put it plainly, f*** you money. You can go again. You can do nothing. You can start angel investing. The point is that the choice becomes yours.

A good M&A banker senses the gravity and structures the whole conversation around it, because the number that dislodges a founder isn’t the enterprise value. It’s the wire transfer, translated into a house and a school run.

The good bid

Every dealer knows the concept of ‘the good bid’. I learnt it dealing equities at BT, but it applies to any dealing, M&A included. A good bid isn’t just a good price. It’s one you can’t ignore. It sits there and demands to be thought about, no matter what you had planned to do that morning. You can still say no. But you have to actively decide to, and you have to be able to justify the decision. That is a very different thing from simply carrying on.

A bid in the $20–40m band is very often a good bid. And its force doesn’t land only on the founder in the boardroom. It follows them home. This is where the domain broker’s trick plays out again: the founder sits at the kitchen table and does the sum out loud with their spouse. The number stops being a valuation and becomes a house, a school, a life. The bid gets discussed in the one place where it’s hardest to stay disciplined.

It lands on the board, too. Once a good bid is on the table, every director starts to feel the liability of saying no to it. If the company’s outlook is still genuinely risky (and at that stage it usually is) then turning down real money at a real valuation is a decision you may have to answer for later. Directors will tell the founder to think about it seriously. Not because they want out, but because the alternative is a position no director wants to be standing in: waving away a good bid and then watching the company stumble.

This is the point where the gravity pulls on the founder’s personal number, alongside everyone with a fiduciary duty and a memory of how these things can go wrong.

Too early and too late

There are two distinct moments when the gravity is strongest, and they sit at opposite ends of a company’s life.

The early exit is exactly what it says on the box. A founder gets a good bid after only a couple of years of work. The business is up, the momentum is real, and someone offers a number that clears the personal bar in one go. Two years in, that’s an extraordinary thing to turn down, because the alternative is another five or seven years of risk for a payoff that might never come. Plenty of founders take the early bid, and you can’t blame them. The maths of their own life says yes.

A late exit is staged later in the business cycle, and it’s sadder. A founder has been at it for years. The business has survived, maybe even started to find its feet, but the founder is exhausted. And that is exactly when a buyer picks them off, often just as the business is about to accelerate. The bid arrives not because the company is finished, but because the founder is. The tiredness does the work the M&A banker would otherwise have to do.

Both are good exits in the technical sense. Both can land in the band. And neither has much to do with the company’s actual prospects, which is the whole problem with trying to forecast them.

A weekend waiting for a bid

I watched this happen once, up close.

I was a director of an early-stage company I won’t name. We had a better product than the natural acquirer, while they had a better sales force. It was a genuine sliding-doors situation: put the two together and it worked, though keep them apart and it was a race we might lose.

We spent an entire weekend waiting for a bid, somewhere in the $20m range.

It never came.

It turned out that everyone in the acquiring company wanted to buy us except their CEO. Three months later that CEO was gone. However, by then the window had closed.

What happened next is the part I think about most. The company that wanted to buy us was itself sold to a private equity firm at a knock-down price. The PE firm looked at the logic, saw the same fit everyone had seen that weekend, and tried to re-engage. However, time had moved, the company had climbed, and its founder had decided to play the long game. On that original weekend, we were so certain he would sell, we were planning for it. A year or two on, with the business worth a multiple of that stalled bid, he wasn’t interested at any price the PE firm was going to name. The sliding door had swung shut on the buyer, not the seller.

That’s what makes the timing so brutal. The deal didn’t die because our side hesitated. We were ready. It died on the other side of the table, on the strength of one person’s reluctance, and by the time two different buyers had worked out what they wanted, the founder had stopped wanting to sell. My mental model, and I’ll flag it as a model rather than anything I can source, is that even when everyone involved says they want a transaction, closing the final deal is a coin flip at best. A growth company at the bottom end of middle-market M&A is no better than 50/50 to get a deal done. Timing is everything, and timing turns on the state of mind of specific people on specific weekends, which is not a thing you can put in a spreadsheet.

The old-school bet on the band

There’s a school of angel investing that takes all of this and leans into it. If exits cluster at $20–40m, as they say, then play for that. Back companies that can reach the band. Stay hands-on, help them get acquired, and deliberately steer them away from taking VC money that would put a bigger, riskier game in the founder’s head.

There’s nothing intrinsically wrong with it. It stays capital-light and aims at the fattest part of the exit distribution. But making the maths work depends on two things that both have to go right.

The first is discipline on the entry. The whole model rests on negotiating hard on the entry price, because if you’re underwriting to a $20–40m exit, the only way to get to 10x for yourself is to have bought in cheaply enough. There’s no big outcome to bail out a lazy entry price. The non-VC angel must be the disciplined buyer, every time, and that’s harder than it sounds when you like the founder and want the deal.

The second is the capital plan, which is deliberately kept very light to avoid diluting the founder toward that 10x. But light capital plans have no margin. It only takes a small bump, like a slow quarter, a delayed contract, or a round that has to happen at a bad moment. A single slip and the follow-on funding falls to the angels, who have to stump up themselves. That funding is unreliable, because it depends on the same small group all having conviction and liquidity at once. Every forced raise chips the maths back down from 10x toward the 2–4x you were trying to beat.

There’s a bargaining-power cost too. When you sit across from an acquirer, they can see your cap table. They know a capital-light company doesn’t have the war chest to walk away and fund the next leg alone. That weakens your hand in exactly the negotiation the whole strategy was built around. The buyer anchors low, because they know you can’t credibly threaten to go it alone.

Which is gravity again, wearing a different coat. The strategy that organises itself around the good exit ends up more exposed to the good exit’s pull, not less.

The clone that stopped being capped

Here’s a deal shape that looks exactly like a $20–40m exit waiting to happen; at least at the moment you invest.

An Australian company copies the business model and the go-to-market of an international business that hasn’t arrived here yet. It runs the incumbent’s own new-market entry playbook locally, ahead of the incumbent, before they turn up. The bet is simple. When the international business eventually decides to enter Australia, it discovers that playbook has already been run by someone else on its behalf. The channel is taken. The local customers are signed. The brand association is forming around the wrong name. And the cleanest, fastest path into the market is no longer to build. It’s to buy the clone.

That’s a real strategy, and it produces real exits that tend to land in exactly the band we’ve been talking about. Which is why a lot of investors, VCs especially, don’t like these deals. The upside looks capped. You can see the exit from the entry. Best case, the incumbent arrives, shrugs, and writes a $20–40m cheque to skip the queue. There’s no hundredfold outcome in that story, so the money that’s hunting for hundredfold outcomes walks past it.

But look at what the cap is actually resting on. It assumes the international business executes well. It assumes the incumbent shows up, on time, competent, and closes the obvious deal. And those are assumptions about somebody else’s behaviour, made years in advance.

I have a portfolio company in this exact position. The deal was underwritten as one of these capped, buy-the-clone stories. Except the international business dropped the ball. Slow, distracted, executing badly in its home market, and nowhere near arriving here. And in that gap, the Australian company is now executing. The playbook it borrowed is turning into a business the incumbent may never be in a position to buy, because by the time it looks up, the clone won’t be a shortcut into the market; it’ll be the market. This is my own read on a live situation rather than a forecast, but the upside that everyone had modelled as capped is starting to look like it has no ceiling at all.

The cap didn’t come from the deal in front of them. It came from watching a competitor pull it off, and assuming the same number would hold here too. Which is the thread running under all of this.

Why this breaks the forecast

Now put it together, because every beat so far has been a human one.

The founder at the kitchen table doing the sum with their spouse. The exhausted founder picked off just before the acceleration. The two-years-in founder taking the fast, clean win. The one holdout CEO on the other side of the table who killed a deal everyone else wanted. The competitor who dropped the ball and turned a capped outcome into an open one. None of these are facts about a business model. They are facts about people, and they land on both sides of every table.

A startup exit valuation in the $20–40m band typically delivers something like 2–4x on an angel’s entry. Respectable, not spectacular. If exits reliably clustered there, angel investing would be a modest, predictable business. But they don’t reliably cluster there, because the human overlay — temperament, tiredness, ambition, timing, the state of mind of specific people on specific weekends — pushes every 10x-plus scenario into the unforecastable range. Human nature overrides the business model, and you are now underwriting a set of temperaments, and temperament. Which is exactly the thing you can’t diligence.

This is why I keep landing on the same conclusion I reached in Roll the Die. If the big outcomes are unforecastable by their nature, then trying to forecast them is the wrong game. The right response to something you can’t predict is width, not precision. You build a portfolio broad enough that you don’t need to know which founder says no at the sliding door, because you’re holding enough of them that some will. It’s the same reason you underwrite to 10x and hope for 30x: the number you need is not the number you can plan for.

What the spouse on the phone knew

The domain broker understood something the rest of us take too long to learn. A number only moves you once it’s translated into a life. A house. A car. The kids’ college. F*** you money.

For a founder at $20–40m, that translation is the most powerful force in the room, and everyone on the other side of the table is counting on it. As an angel, you can’t fight it and you can’t predict which founders will resist it. What you can do is stop pretending the big outcomes are forecastable and build a book wide enough that you don’t need them to be.

You can’t pick the founders who hold out, play the big game, and turn a good exit into a great company. Those who say no are real, but you can’t pick them in advance. Hold enough of them that you don’t have to.

Richard Moore — MooCoo Ventures

Richard Moore is co-founder of MooCoo Ventures, an angel syndicate that co-invests alongside Brisbane Angels, one of Australia’s most active angel groups. He has made over ninety personal angel investments since 2013.

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