Now That You've Built Your Start, Here's How to Sell It for Lots of Money
Grow Your Business, Not Your Inbox
So you’ve built a startup through sheer will and grit, creating something amazing from nothing. You’ve got everything streamlined, your finances are in order and your analytics are on point. You’d like to exit for some fast cash -- but how?
An M&A is the ticket -- probably 99 percent of exits are M&As (for all you read about IPOs, they are relatively rare considered how many startups exist). I have started and sold several startups into M&As. Here are a few things that you need to know to cash out successfully instead of becoming another failed statistic.
One warning: a great product is just the beginning.
Look for a hot market.
For my most recent venture venture I wanted to create a startup in a space that is booming to give me the best chance of acquisition. I started Chattypeople, my chatbot building tool company, in a hot market that is growing exponentially. The adoption of chatbots into marketing and sales strategies is moving very fast, so I was a confident it would sell if I created a good product with a solid customer base.
If you’re creating a product in a so-so market, your chances of an exit diminish greatly.
Build up credibility in the space.
Possessing your company isn’t enough to exit. You need to build up your credibility in the space by spreading your knowledge to other sources. I wrote blogs and white papers for my website, contributed articles to national magazines and interviewed other chatbot experts. By the time I sold Chattypeople, my expertise in chatbots was well-known so potential buyers took both me and my startup seriously.
Speak at events.
Take your newfound credibility on the circuit. Speaking at tech conferences and conventions has two-fold rewards: you gain even more credibility and you get more eyes on your startup. This gives you more chances to speak with people interested in buying your startup, and more chances to talk about the strength of your product.
Network with other founders.
You don’t know what you don’t know, and other founders have the wisdom you need. But more importantly, other founders have the means and the interest to be potential buyers of your company. They may know someone who has an interest in your product or space, who takes you seriously because a colleague recommended you.
One of the founders of MobileMonkey eventually bought my company to add to his company. It was through meeting and networking with other founders that I found the right buyer for Chattypeople.
Create good PR and build a big sales funnel.
What’s your story? What are your unique selling points? Do you have a strong brand identity? These things matter, more than you think. Strong PR gets and keeps your customers interested, creates brand buzz, and makes customer relationships. Those customer relationships need to be captured and creating a bug sales funnel can do that. Make sure that your funnel is multi-modality and largely automated, so you can free up time to do the work it will take to sell.
Know when to sell.
The biggest mistake that I see founders make is selling when the market is lagging, or when their company isn’t doing very well. You’re only going to get those big numbers when you have a product that is synergistic and beneficial to a potential buyer. Don’t quit working on your growth potential and innovation just because you think you might sell soon.
There’s always going to be a learning curve when you sell your first startup, but hopefully you can learn from my experience. Plan for an M&A from the beginning, and you’ll be in better shape than most when acquirers start calling.