Startups are often misunderstood to mean small businesses looking to expand into bigger businesses. That’s not the whole picture. Startups are entrepreneurial ventures at their early stage of growth and deeply rooted in innovation to create solutions to existing life problems. Startups are often regarded as innovative disruptors because they are geared towards pointing out the inadequacies in existing products or services or creating new lines of products capable of displacing the already existing ones.
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These companies or business ventures typically start with an idea that quickly translates to a plan to fill a gap in the business market. As a result of the innovative nature of startups, investors are usually attracted, and this leads to growth in business opportunities.
The sole difference between a startup and a normal business lies in the fact that while normal businesses seek to build on already existing structures, startups seek to create a new structure. Yet another difference is in the speed at which startups translate ideas into plans, thus, leading to greater growth opportunities. Startups build ideas through iteration, which entails improving products through usage data and feedback.
There are various reasons why entrepreneurs build startups, and one of such reasons is the excitement of making profits. Founders of a startup can successfully exit through a merger or acquisition. A whole lot of things go to play behind the scenes before any startup can be successfully started or even sold.
Building an acquisition foundation is crucial and tantamount to selling your startup. Now let’s look at how startups are funded:
This is the preliminary stage where the founders, their family members and friends invest in the business.
This is the stage where Angel investors who are high net worth individuals invest in the early stage of companies.
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A, B, C, and D Funding Rounds
This stage is led by Venture Capital Firms which invest hugely into companies.
Finally, a startup can decide to remain closed or open itself up to outsourcing, by becoming a public company through an acquisition, direct listing on the stock exchange market, or an initial public offering.
Now, straight to what we are here for; how can you start and sell your startup?
Direct or indirect acquirers are usually potential buyers of a startup. Therefore, the first thing to do is to research existing key players, what interests them, their long and short-term goals, achievements, challenges, and even market trends. Competitive and market analyses are best carried out before the launch of the startup.
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Identify your Unique Selling Point
Find out what will make you stand out from competitors in the same industry. How can you deliver your product or service differently? The analysis made from the first stage would help you identify opportunities that you can capitalize on. This will help you prevent the mistake of investing in areas where your competitors are not interested.
The essence of this is to come up with a unique selling proposition that would be enticing enough for your competitors to acquire your startup. Your startup can be built on a solution to a problem that has cost your competitors both money and time. Private Equity Firms are also willing to guide you towards finding out what interest potential buyers, and would increase your chances of selling your startup.
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Define your Acquisition Standard
Create an acquisition plan, comparable exits, competitive advantage, sales and growth metric, etc. Have a goal, then add passion and patience, so you can last till the end of your journey.
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Link up with Potential Buyers
Having discovered a list of potential buyers or competitors who might be interested in acquiring your startup, make a move to connect or partner with them to smoothen your plan.
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Explore Acquisition Marketplaces
There are many marketplaces where you can find a buyer at quite an affordable rate, so long as you ensure that your business stays healthy and growing. Flippa is an example of such a market.
Finally, always remember that the key to a successful exit is timing.
Featured Image Source: Technext
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