Lessons from Inside Six Startup Exits

  1. Tech is king: in both the slam dunks and the saves, one of the most important factors is the quality of the team — especially the technology team. Acquirers are looking for technology talent and products that they can’t recruit or build on their own. Having an amazing team of the best engineers who have worked together for a while can be a tremendous asset to the right purchaser. At a minimum, it’s an incredibly valuable backup plan in the event you don’t reach massive success.
  2. Start partnership conversations early: many of the relationships between our portfolio companies and eventual acquirers started as partnership discussions. Think about who would be interested in your tech team, product, data, or other assets as a partner/ customer/ investor. If you start those conversations early, you will be in a stronger position to build them into acquisition talks when the time is right.
  3. Financing matters: founders should always be hyper-aware of their burn rate, runway, and upcoming funding needs. A company with a year of capital and a number of funding prospects is in a much stronger position in acquisition talks than a company eking out its last three months of cash.
  4. Know when it’s not working: it’s ok for startups to fail. We know most of them do because seed-stage investments are very risky bets. Sometimes the market opportunity you envision doesn’t develop, a competitor takes a much stronger position that you anticipated, the timing is just too early, or a myriad of other company-killing reasons. If founders recognize this early and take action, it’s more likely they’ll find a good home for themselves and their team.
  5. Create momentum: in some ways, acquisition talks mirror fundraising efforts. In the final hours, create momentum to encourage the deal makers to move forward. This might mean engaging with more than one potential acquirer when you’re not in a period of exclusivity. Your investors and advisors can help, so leverage your network. They might have just the right corporate development contact, strategic investor intro, or new idea for a company to target. Another strategy to build momentum is getting senior leaders at the acquiring company involved and excited — once you have support from the top, the deal can often move more quickly.

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Consumer tech investor and startup supporter @mavenvc.

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Sara Deshpande

Sara Deshpande

Consumer tech investor and startup supporter @mavenvc.

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