7 Tips from My First Startup Acquired - #75

Networking made me wealthy

January 2012 text to my wife at an investment conference. Networking changed my life.

My first startup was acquired in early 2014. I became a multi-millionaire and financially free after my acquisition. Then I built my first venture fund and re-enslaved myself to powerful people that same year. gg -_-

Anyhoo.

Here are 7 tips for those who want to get their startup acquired:

1. It’s always relationships - Startups don't get sold. They get bought. Read that again.

Be a relevant acquisition target and network like hell all the time. This could be channel partners or companies with whom your product can integrate. As you’re crossing $0.5MM in revenue, you’ll want to ping your network to let them know your growth. Focus on building, never selling. Your network will bring you a buyer.

2. Sell when you don't want to sell - You can negotiate a higher price when you’re focused on building. Go for the ‘price of least regrets.’ - Quote a price so high that if they don’t take it, you’re good. If they do, you’re golden.

3. Clinical record keeping - I pride myself in books that are clinically clean and ordered. No mixing personal and professional spending or accounting. Reconciling your bank to your spend is not something you want to get flagged on. Who can trust someone who can’t keep good financial books?

4. Big fish in a small pond - Deliver a great product time in and time again. Who cares if there are competitors. Acquisition targets are fire-starters in mature industries. Do 1 thing better than your competitors… and frankly that may be good enough to demand a higher valuation.

5. Crack the $1-5MM - Less than this and your product-market-fit may not be solid. If you’re making more than this then you may be too expensive on a multiple. Let’s hope you’ve been networking like crazy as you crack the $1M. I’m helping 3 startups get into this window (right now)!!! Super exciting…

6. Cash is king - You deserve a pay-day. Negotiate enough cash such that even if you have to write off the stock component, it doesn't make you salty and bitter. Shares are vaporware. If you’re going to hold shares, make sure you hold your own shares > shares of the acquiring company.

7. Speed is a must - This is why Agile/Scrum is the greatest weapon for startups. Grow fast, premium price and numba go up. 30% year-on-year is good. Above 50% is great. Check for valuation multiples of other similar companies in the market to get a benchmark. Build faster than them.

Did I say relationships? - You may notice on my X feed I’m all over the world all the time. More relationships mean more opportunities mean more doors opening means more warm introductions means more more more. It doesn’t matter if they’re not going to give you money. Networking with investors at all times must happen.

My first startup was acquired because I began to network 2 years prior into the investment world. I knew I had something worthy, but I didn’t know what I didn’t know! So, I networked. Hard.

The reason I wrote this blog is because these past weeks all I’ve been doing is meeting with investors, private equity, family offices, etc… EVEN IF THEY DON’T INVEST. I’m so sick that I ensure vacations to destinations always include meeting investors in that area from my larger network.

• They know people.

• Those people can help you.

• Build fast. Network more.

All the best,
ps

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One of my portfolio investments are helping business builders increase their network so they can win bigger. Check out their next networking event here in 6 weeks!