Exit Before Entry. A New Take on the Traditional Venture Capital Model

The metric of success in venture capital is the exit—what every investor and entrepreneur dreams of—and it’s also the name of a new fund focused on climate-oriented investments. "I was surprised that the name was available," said Exit Ventures founder and managing partner Paul Burgon, who launched the fund in 2023 after a 24-year career providing exits for founders. With nearly 100 transactions totaling $3 billion across four companies, Burgon brings extensive experience in corporate venture capital.

In 2023, he set out to create a venture fund with a unique approach, prioritizing climate-related investments and viewing corporate acquirers as the ideal exit for promising companies and technologies. The fund’s appeal lies not only in delivering traditional financial returns but also in catering to “double bottom line” investors who seek both a competitive financial return and measurable environmental impact. Exit Ventures aims to deliver on both fronts, evidenced by its recent investment in a company capable of achieving these dual goals.

In late October, Exit Ventures closed its first investment: a $4 million financing in a company developing alternatives to single-use plastics. An estimated 160 million tons of single-use plastic are produced annually, a significant portion of which ends up in oceans, entering the food chain as microplastics.

"Exit Ventures is unique in that we work on the exit before we make the entrance," says Burgon. His due diligence process involves engaging a potential acquirer early, allowing for a quick assessment of a company's viability. His approach is simple: figure out who would buy the company before investing and then involve that likely acquirer in the due diligence process. This approach not only improves the quality of due diligence but also accelerates it. Corporates welcome the approach, even if competitors are involved. "They all want to see great technologies advance, and whoever has the biggest checkbook can get the deal," says Burgon.

For his first investment, Burgon engaged with large corporate consumers of plastic bags who validated the technology, with one even committing to a multimillion-dollar order and a substantial investment in the firm. Burgon’s extensive network of hundreds of corporate venture capital players makes it easy to secure due diligence support. Educated at Georgetown with a BSBA and MBA, Paul began his career at Coopers & Lybrand, where he worked on acquisition due diligence for 40 clients on transactions valued at approximately $70 billion.

His approach is simple: figure out who would buy the company before investing and then involve that likely acquirer in the due diligence process

He subsequently held operating roles as head of the U.S. division for a European cleantech company, led a recycling startup, served as a senior executive in two public companies, and invested over $3 billion in nearly 100 companies as a strategic and corporate investor.

Exit Ventures lists its priorities as eliminating single-use plastics, improving power grid efficiencies to support global renewable baseload power and storage, facilitating AI's rise without trillions in new grid investments, and commercializing agtech to streamline the global food chain for food equality and availability. "My vision is for Exit Ventures to support these innovators in bringing free-market solutions to bear," says Burgon.

With a $40 million fund and a traditional 2% and 20% structure, Exit Ventures is eager to make an impact quickly. “Big funds are getting rich on the 2%,” says Burgon. “They play defense; we’re hungry to make an impact.”

Burgon’s advice to entrepreneurs is that meaningful transactions take years. "I start before we enter, building relationships before investing," he says, adding, "Many don’t understand—plan for three years to make these relationships pay off."