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Before My Startup Launched a Single Product, I Spent Every Dollar We Had Acquiring a Competitor When my company was just six months old, I made an unlikely play to buy another company. That bet is still paying off today.

By Lauren Schulte Wang Edited by Frances Dodds

This story appears in the January 2022 issue of Entrepreneur. Subscribe »

I bought a competitor.

Image Credit: Zohar Lazar

That isn't unique, of course, but here's what is: At the time, my company was 6 months old and had failed to manufacture anything. The acquisition would cost us almost every dollar we had.

You don't see this move in the traditional startup playbook. It sounded insane; I was at risk of losing both businesses. But it became exactly the jump-start my company needed. That taught me something: Throw away the playbook! Sometimes a small company needs to act like a big one.

To be clear, I did not come from a fancy M&A or finance background. I previously worked in marketing.

Related: 4 Models for Building Value Through Acquisitions

So how did all of this happen? For years I've researched period products from all over the world looking for something that wouldn't cause the infections I'd gotten from tampon use. When I encountered a little-known disposable menstrual disc called Instead, developed by a female triathlete and a team of doctors, I offered to work for them. They weren't interested, so I designed a product that competed with theirs, improved the materials, and started my company, called The Flex Company, in 2016.

I tried to raise money, but as you can imagine, this was a hard sell to male VCs. They said they wanted to see traction before investing, but I couldn't manufacture anything without funding. Even when I managed to cobble together nearly $1 million, which felt like a big accomplishment, it wasn't enough to build my own line. Then when I did finally find a manufacturer, they backed out for a bigger contract.

That's when I realized I needed to think creatively. I went back to Instead and offered a deal. I said I'd pay the full asking price for their company (which I definitely did not have in the bank) if they'd take a down payment and allow me to make annual payments with interest. They agreed. I had my acquisition.

I also gained real assets to work with. I used Instead's manufacturing line to make our product, called Flex Disc, using newer materials. But I also continued to produce Instead's product, which we rebranded as Softdisc, and made it profitable in three months. That cash flow funded Flex's business operations and paid for the full acquisition price in the years that followed.

This unconventional strategy also attracted investors who were impressed by our strategic, operational, and financial competence. We went on to raise an additional $20 million, and today we're a global leader in sustainable period products with national distribution in all Target, CVS, Walgreens, and Rite Aid stores along with more than 10,000 other retail locations.

Related: When Acquiring a Company, Don't Forget About the People

One thing I've learned is not to feel threatened by competition. On the contrary, I try to deeply understand my competition, find common ground, and look for opportunities. After my first acquisition, I kept an eye out for more like-minded people trying to solve the same problem. That led me to find a Kickstarter for a reusable menstrual cup with a unique pull-tab design to make it easy to remove. I reached out to the cofounders to offer my support. Over the next year, we met frequently and eventually agreed that we'd all be better off if we joined forces. Six months after that acquisition, our joint new product was on shelves at Target.

This nontraditional model of M&A while being an early-stage company is often overlooked by founders, but it shouldn't be. I recently started advising a young fintech company and, based on my experience, they decided to acquire a competitor to accelerate their own growth and leverage that outcome to raise venture capital. The lesson here is that M&A and inorganic growth isn't just for unicorns and public companies. With a little creativity, even those just starting out can make big-vision deals that propel their company forward.

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