How This Techstars Startup Got Acquired Before It Officially Started Up
From Tumblr to Instagram, a startup landing a well-heeled buyer seems almost commonplace these days, as the media loves to pounce on these sort of deals. But how about getting acquired by a big name before you even really start up?
That's what happened last week to Techstars Boulder participant GoodApril, a San Francisco tax software startup, before the company even had an opportunity to present its product during the incubator's demo days. The managing director of the Techstars Boulder program Luke Beatty noted that this was the first time in the history of Techstars that a company got acquired before demo days.
GoodApril's initial product, known as Tax Checkup, allowed users to upload their tax information and get insight on where they can receive credits and deductions. During demo days, the company was looking to present a pivoted product -- a subscription service focusing on investments and loans. Unfortunately, we may never see that service, as GoodApril has suspended their product after it got acquired and has yet to decide if they will relaunch.
While the price wasn't disclosed, it is less than $20 million, since if it exceeded that amount, Intuit would have been required to publicly report the price. The co-founders 30-year-old Mitch Fox and 33-year-old Benny Joseph will join Intuit as the director of product management and director of product development under the company's TurboTax brand.
For this historical event, we chatted with co-founder Fox and asked what factors he believed played a role in the quick acquisition:
1.Â Disrupting a stagnant market.
Tax is a market that hasn't changed fundamentally in over 20 years. The biggest change in the last 10 years is to take tax software used on the desktop and make it online. This is valuable for consumers, but isn't a huge difference in the way people deal with taxes. I think in a market where there are two big companies that are competitive and a large number of smaller competitors, Intuit had a lot of interest in a company that was pursing a way toÂ fix a problem.
2.Â Developed an in-demand niche product
We saw tax planning, the type of analysis we were doing on people's returns and how people can improve their overall tax picture, as the biggest unmet need in the market.Â We were solving a problem that they [Intuit] had not made major investments in but had interest. We were good match for each other.
3.Â Being part of a top-notch accelerator.
We had already met with Intuit before we got into Techstars. When we were accepted into such a prestigious program, it helped show momentum and credibility that we wouldn't have had being on our own.
Going through the process while we had access to mentorship was extremely valuable. I don't think we could have gotten to as good of an outcome without that kind of support.
If offered the opportunity to be acquired, would you stay on board with the company? Let us know with a comment.