This is just my opinion, but ...

I don't think this is a compelling exit strategy because it lacks three things that are essential for a VC -- (1) a sense of the timing of the exit, (2) a sense of scale of the payout on exit and (3) a rationale for why the payout occurs. VCs invest in companies with the knowledge that a majority of their investments will result in a loss, a few will make a small gain and a very small number will return a high multiple. Its those 10 or 20 baggers that give a fund the returns it needs to make the partners rich from carry. In addition, because funds have limited lives, they need to time their investments so the exits occur prior to the distribution period.

In looking at your paragraph, it seems that you are simply saying that a couple years from now, YOU will buy them out. Well, how do you have that money -- from your salary? they will be controlling your salary and they certainly won't allow you to pay yourself so much that you can buy them out? from the value of the retained earnings? well, if that's the case, they own a certain percentage of that already so if its growing that much, its hard for me to see how that math works out -- you'd need to go take out a leveraged loan to get the multiples needed. When will you have that money? Why will you have that money?

If what you are looking for is someone to give you money that you promise to give back in a couple of years plus a small amount of appreciation -- aren't you really looking for a loan and not VC investment? Have you thought about a small business loan?

James,

I am not an expert but I think that what you have is going towards the right direction.

Here you have an interesting article you can read about what is Crafting a Simple Business Plan all about.

I recommend you check out this article. I think it will help you figure out the best way to write your exit strategy. Have a good write!

im surprised a vc will let you buy out

I agree with Corpraider here-- this is not really an appropriate exit strategy if you are aiming the business plan for VCs. At the risk of sounding harsh, it would probably raise red flags as a "rookie mistake"-- this is simply not how venture capital works. Your paragraph is more analogous to what you might include if taking out a loan (lenders, after all, definitely want to understand how you plan to repay the principle).

As Corpraider points out, VCs are looking for big exits, which typically means IPO or an acquisition. A better exit strategy paragraph would talk about who the likely acquirers are in your space, why they would want to buy your company (strategic fit from a product line perspective, market share gain, etc.) and also provide some detail on recent, comparable exits (including the price paid).

Hope this helps! Nathan