You can sell your company for millions and still have to work out how to turn the proceeds into cash.
If the buyer pays in private-company shares, the sale gives you another asset. Access to cash depends on what you can actually do with those shares.
Colin Hodge experienced that with DOWN, the dating app he co-founded. He sold the business in what he describes as a multimillion-dollar equity deal, then discovered that liquidity was harder than he'd expected.
He has since sold some of those shares. At the time of our conversation, he was still holding others.
Years after the acquisition, Colin bought DOWN back. He now runs it with his friend and business partner, without outside investors.
Colin is also the author of Outrageous Startup Growth. I wanted to understand how returning to ownership changed his thinking about income, control, and the next potential exit.
A sale price isn't a cash balance
The original offer wasn't even an acquisition.
Colin says the buyer initially proposed investing $1 million for about 30% of the company. That eventually became an acquisition in which he and his shareholders received equity in the buyer.
He also went to work for the acquiring company. The deal changed what he owned and where he worked, while leaving him with a harder path to cash than he'd anticipated.
The buyback came through a separate transaction. According to Colin, the parent's IPO process led it to sell DOWN to an engineer in Taiwan. Colin knew the buyer through soccer and negotiated over several months to buy it back.
He describes paying a low-six-figure price, matching what that buyer had paid.
Those transactions involved different assets and circumstances. The difference between the original equity deal and the buyback price isn't a measure of cash Colin pocketed.
For an owner considering a sale, the useful questions are what you're receiving, when you can use it, and what still has to happen before it becomes spendable money.
Ownership changes the math
I made the point in our conversation that a larger company sale doesn't necessarily leave the founder with more money.
Dilution, investor preferences, and earlier funding rounds can all affect what the founder receives. The company's sale price and your share of it are separate numbers.
Colin originally wanted to build a unicorn. Now he questions whether he'd trade his business's income for a small piece of a much larger company.
He and his partner don't have an investor-imposed exit horizon or a required exit multiple. That gives them room to make decisions around the business they want to own.
He also describes delegating work and giving his team flexibility. My read is that ownership serves the life you want only if the business is built to operate that way.
Find out what supports the business
Colin wishes he'd started monetizing earlier.
He says the app went from roughly $3,000 to $75,000 in monthly revenue when he turned on iOS monetization. Those figures describe an earlier period, before the first sale. They aren't current profit or owner distributions.
His broader point is that charging gives you information. Do people value the product enough to pay? Are you attracting customers whose needs match what you're building?
That focus on a sustainable business also shapes how he thinks about another sale. He wants an operation that doesn't need the owners in every small decision.
He acknowledges that there may be few suitable buyers at its current size. Growing the business could broaden that group, but a future sale isn't assured.
In the meantime, he can keep improving a company that produces income and gives him more control over his time.
Watch the full conversation with Colin Hodge for the equity exit, the buyback, and how he approaches another sale.
Also on Mechanics of Money
What keeps your sponsor working when the deal struggles?
A lower fee can improve the terms of a deal. The sponsor still needs a business that can keep operating if the investment disappoints.
I explored that with Aleksey Chernobelskiy of GP-LP Match. We discussed a difficult combination: no fees, no sponsor co-investment, and a deal that no longer looks likely to generate the sponsor's performance-based share of profits.
Ethics still matter, and that structure doesn't mean someone will abandon investors. It does give an LP a reason to ask how the sponsor covers expenses and stays engaged through a difficult outcome.
Watch my conversation with Aleksey for the business behind those terms.
- Sam Silverman
Silverman Capital
