How I Decided Who Should Buy My Startup
Startup founders usually have a lot of misconceptions about getting acquired. And most of the time, the strategies they follow result in a an unmitigated and unnecessary loss.
One camp of these misguided founders builds their business just to sell that business. There’s nothing inherently wrong with that — I’m not going to go all startup purist on you. The other camp will do everything to keep acquisition off the table until selling out becomes a necessity to save their business. Again, this isn’t the problem.
The problem is that both camps usually ignore a fundamental step: Selecting their acquirer.
Despite what you might think, the only scenario that leads to not being able to choose your acquirer is the one where you never think about who that acquirer should be. This is true whether you’re building just to sell or building to never sell. Or anywhere in between.
I don’t have a failsafe strategy to determine when and how your startup is going to get acquired and by whom, so I’ll just tell you what I did.
A Tale of Two Startups
I’ve been working within the startup universe for over 20 years. To solve a thorny problem that I had tons of experience with, I founded ExitEvent to connect startups to better information and resources.
Among the many features I built into ExitEvent was one of the first Expert Two-Sided Marketplaces. Three of them, in fact. One marketplace connected startups and service providers, a second connected startups and support organizations, and a third connected startups and investors.
This was 2010, so no one really knew what an Expert Two-Sided Marketplace was, but what I was doing was exploiting an artificial market inefficiency around startup, one that I had become intimately familiar with.
Service providers, support organizations, and investors all wanted to work with startups, and startups needed to work with them as well. Because startups are usually broke, service providers would readily offer a discount in the hopes that some of these folks would start making money and become a full-paying customer…