10KC Co-Founder Details Strategy to Avoid 'Fake' Exit Offers

Toronto-based enterprise mentorship software startup 10KC experienced a near-total collapse of an exit deal two years prior to its eventual 2022 investment, as first reported by BetaKit.

Co-founder and former CEO David Wilkin told TechExit attendees that 10KC spent six months and $150,000 pursuing a sale to an unnamed, publicly traded strategic acquirer. The deal fell apart with less than two weeks remaining before closing. Wilkin noted that while the company's lawyer had flagged the risk, the startup followed advisor guidance instead.

To optimize valuation leverage for subsequent rounds, Wilkin utilized a detailed spreadsheet of 200 potential buyers and investors, tracking decision-makers, mandates, and contact details. By executing a series of "sprints"—starting with the least desirable prospects to refine their pitch—the company eventually attracted eight term sheets from family offices, private equity firms, and strategics. These offers ranged from $75 million to $90 million at nine-figure valuations.

This process culminated in a late 2022 deal with US-based Five Elms Capital, which provided a $75-million CAD majority growth equity investment. Wilkin stated this result was five times greater than the failed deal.

To vet buyer intent and avoid "fake term sheets," Wilkin suggests founders request a detailed workback schedule including specific steps and dates to reach closing. According to Wilkin, serious buyers provide these schedules, while "pretenders" offer vague answers or claim the process is proprietary.