Built for Distributions, Not Just Valuations

From first check to final wire: a venture model built for real returns

“Wax on. Wax off.” — Mr. Miyagi, The Karate Kid (1984)

There’s an old joke about boat ownership: the two best days are when you buy it and when you sell it. The same truth applies to startups. The first day, writing the seed check, is pure optimism and possibility. The last day, executing the exit, is pure validation and wire transfers. Everything in between is navigation: some days calm, some stormy, all requiring an experienced captain who knows these waters.

At Sugar Capital, we’re built to excel at both days. We brought Will Hawthorne, an investment banker with two decades of deal-making expertise, into the founding partnership. His expertise extends well beyond exits, he helps architect every financial milestone from seed to sale.

The Reality Nobody Talks About

In the first half of 2025, only 4% of venture exits were IPOs, according to PitchBook/NVCA data. Yet the ecosystem still behaves as if every startup is pre-IPO. This costs founders billions in lost value.

IPO windows have narrowed as compliance costs rose, private capital surged, and markets grew volatile. The result: M&A isn’t just common, it’s effectively the default. Yet many VCs still run playbooks that assume it’s 1999 and every startup is six months from ringing the bell.

The mythology says exits happen organically, meritocratically, inevitably. This is nonsense. Exits are engineered, not destined. The funds that deliver real returns will be those that build exit planning into their DNA from the start.

Learning the Hard Way

When Lisa and I began exploring strategic options for POPSUGAR in 2015, Will sat across the table as our banker. What struck me wasn’t his models, it was his recognition that our options had been shaped years earlier: Series B terms that looked benign but weren’t, and strategic partnerships that created conflicts.

By the time POPSUGAR was acquired in 2019, I understood that exits aren’t events, they’re the culmination of hundreds of decisions that either preserve or destroy optionality. The best time to bring in M&A expertise isn’t when you’re selling. It’s when you’re building.

That’s why, when we launched Sugar Capital in 2020, Will wasn’t a future advisor. He was a founding partner. Forty-plus transactions at Code Advisors, eleven years leading JPMorgan’s Internet and Digital Media practice: Will had seen every kind of deal, and knew how the middle determines the ending.

The Deal Discipline Difference

Having Will as a founding partner changes our entire operating system. When a company raises its Series A, scenarios are already modeled, toxic terms flagged, and investor behaviors mapped. We know which VCs support M&A and which pressure companies to chase unsustainable growth at any cost.

Most VCs coach companies toward venture metrics like ARR growth. Acquirers care about different scorecards: strategic positioning, intellectual property, integration readiness. With capital markets expertise at the table, our founders build toward both. They grow revenue while cultivating acquirer relationships, raise capital while preserving flexibility, and hit milestones while creating moats that command premium valuations.

The Alignment That Works

To institutionalize this advantage, Sugar Capital invested in and partnered with Will to launch Avid Capital Advisors, where he now serves as CEO leading a team of seasoned bankers. The alignment is simple: we only win when our companies win. Portfolio founders get institutional-quality banking at founder-friendly rates, long before traditional banks would engage.

The results prove the model. In March 2024, Avid advised Resident Home on its nearly $1 billion acquisition by Ashley. Previously, the team also advised Everlane on a strategic capital raise. They were the product of years of relationship building and positioning.

Why Everyone Isn’t Doing This

If the advantage is so clear, why don’t all seed funds embed this discipline? Three reasons.

First, talent. Most bankers won’t trade billion-dollar fees for patient equity. Will is the rare exception, a top-tier banker who thinks like a venture investor.

Second, culture. Venture tends to treat bankers as mercenaries hired at the end, not partners at the start. There’s a belief that talking about exits too early is taboo. We believe the opposite. Nothing is more founder-friendly than helping maximize outcomes.

Third, commitment. We didn’t just hire Will. We invested capital to build Avid. Few funds make that leap. It’s easier to celebrate paper markups while LPs wait for distributions that never arrive.

The LP Reality Check

Limited Partners have grown weary. According to Preqin, the median U.S. seed fund still struggles to return even 1x DPI after a decade. LPs don’t need more IRR storytelling. They need liquidity.

Paper markups have their place, but they aren’t the same as money back. DPI, distributions to paid-in capital, is the true measure of success. Achieving it requires three things: companies that grow, companies that raise capital on the right terms, and companies that exit well. Most funds manage the first. Some the second. Very few excel at all three.

At Sugar, every investment includes forward planning from the start. Not because we want to rush to an outcome, but because companies that keep their options open achieve better ones. Each financing is structured to preserve flexibility. Each strategic conversation is informed by transaction experience, not just optimism.

The Beautiful Truth

The moment that matters isn’t the TechCrunch headline or the unicorn valuation. The moment that matters is when the wire hits the bank. Everything else is theater.

The mythology says great companies attract great exits. The reality says great exits are built, transaction by transaction, term sheet by term sheet, from the first day. Having Will as a founding partner transforms Sugar Capital from a seed fund into something more complete, a financial architect for the entire company journey.

Remember that boat joke? At Sugar Capital, we built the fund to excel at both days. The first day is our seed investment. The last day is the exit the team helps engineer. And unlike most boat owners, we know exactly where we’re going: toward real distributions.

Because in the end, DPI isn’t a metric, it’s the truth.