By 2017, Buffer co-founder and CEO Joel Gascoigne was facing a painful decision: His social media analytics firm was heading into the red, and he could either cut costs, by laying off employees at his San Francisco startup, or he could try to raise more money.

He chose the former, unwilling to grow at a loss. But Buffer's investors didn't love that decision--and started questioning whether Gascoigne was the right person to lead his company. Those conversations "shocked me to my core," recalls Gascoigne, who eventually decided to buy out his backers.

While few companies manage to raise venture capital, and even fewer have investors who are willing to be cut loose, Buffer joins a handful of other startups--including video-hosting company Wistia, interactive content creator Arkadium, and app-software maker SweetLabs--that have recently bought out their backers. If you're starting to think you might want to follow their lead, here's your playbook. 

1. Redo your math.

First, you'll have to figure out if your investors are willing to sell back their stake to you--and at what price. Good news: You might not have to pay them as much as you think. "You have to stop thinking about venture math" and the headline-grabbing valuations that VCs like to brag about, says Bryce Roberts, founder of alternative-investment fund Indie.vc. Instead, research the financial terms of recent M&A deals in your industry.

Gascoigne had warned prospective Series A investors that he might not want to take his company public or sell it. So one of his investors, Collaborative Fund, asked for a clause to allow it to get its money back at 9 percent annual interest beginning five years after the investment. That became a starting point for negotiations. "I felt comfortable pushing for that, because it had been agreed to as an alternative we'd already set down," says Gascoigne. In the end, the Series A investors got a 40.5 percent return on their three-and-a-half-year investment.

2. Talk to other founders.

Chris Savage, co-founder and CEO of Wistia, which is based in Cambridge, Massachusetts, was inspired to buy back his company when he got calls from acquirers--three of them at once. He says other founders, some of whom had sold their startups, were instrumental in helping him decide to try to regain control of his company. He realized he loved running Wistia--or he had before he and his co-founder had driven it into the red with a growth-at-all-costs mentality.

Now, since they've announced their buybacks, both Gascoigne and Savage say lots of startup founders in similar situations call and ask for advice. The critical factors are often how much money has been raised, in how many rounds, what the rights are on those shares, and what the board structure is. "Based on all those things, you can get an idea of how possible it might be," Gascoigne says. Mostly, he adds, take some time off to think. "Especially if you're in Silicon Valley, get away for a week, go somewhere else," he says. "Just to think. Read about companies that do things differently."

3. Research your VC.

If you're not planning to go public, sell, or raise more money, your investors may consider you a "zombie company," meaning they might be eager to get rid of you, especially if they've profited from other companies in their portfolios. So do your research: Are your VCs still counting on your company to hit it big? Or have they already paid back their own limited partners?

The difference between earning $2 million and $5 million could be huge to an entrepreneur, but it's a rounding error to most funds. "For a $300 million fund or even a $50 million seed fund, no one is paying attention," says Roberts. He bets that if most of these so-called zombie companies could see how their investors assess them, they'd realize that "they are being written down close to zero." So getting your investors out for just two or three times their initial funding--or even less--may be entirely possible.

4. Stay strong.

Buying back your equity isn't easy to do. As Joe Wallin, a Seattle startup lawyer and principal with Carney Badley Spellman, points out, there is no right a founder can claim to do this--it's purely a negotiated transaction. Even when offered a 10x return, some Wistia investors didn't want to budge. Savage stressed that this would be their only chance to get their investment back: "Sell as much or as little as you want," he told them, "but we are not planning for another liquidity event."

Now that Gascoigne has bought out Buffer's Series A shareholders, who had contractual rights to the first repayment round, he's turning his attention to his seed investors. He thinks he can give those parties an 8x or 10x return, partly because they invested earlier, at a lower valuation, and invested a lot less. "The seed investors may be asking about liquidity, but if they can hold off, we can do this through cash flow and solve their issues fully," Gascoigne says. He adds what any founder about to take on this task must acknowledge: "Patience is my focus."

From the Winter 2018/2019 issue of Inc. Magazine