Ask HN: Selling a Startup?

https://news.ycombinator.com/item?id=684510

by rrival • 17 years ago

19 15 17 years ago

news.ycombinator.com

We've been working on a site as a side project for ~2 years now. It's had great media attention, good growth. It's profitable, there are clear models for greater profitability, but we've hit an inflection point; we either need to dedicate a large amount of time to building it out or sell it, and we're leaning toward a sale.

We've seen flippa (sitepoint), ebay and digitalpoint's marketplace - it doesn't look like the liquidity/volume is there to support acquisitions in the price range we think we're worth.

So, how/where do you sell yourself in the ~100k range?

michael_dorfman• 17 years ago

Step 1: figure out who the potential buyers are. Competitors? Other's in the same industry who could find a network effect? Who would be uniquely able to extract more value out of the site than you were?

Step 2: approach them.

jimmyrr• 17 years ago

imho, selling for $100k is harder than selling for a few million. Ask yourself why a company would buy you:

- are you accretive to existing biz models?

- are you disruptive to existing biz models?

- do you have amazing technology? <-- i hope not for you, this is always the hardest to sell.

In short, I think selling a startup for 100k is like selling a vintage, pristine '71 Ford Pinto. To the exact right buyer, somehere, it might be worth 100k - but to the general population it's worth about the same as a tall latte.

Best of luck!

rrival2• 17 years ago

Thanks - that's probably why there seems to be such a dip in prices on the aforementioned "site markets."

We're definitely not opposed to shifting the decimal point if it'd make things easier ;)

vaksel2• 17 years ago

Well it really depends on your space:

Competitors: as long as you have more than one, and one of them is bigger than you(to afford the $100K).

Customers: if some of your customers are big in the industry you serve, one of them might pick you up.

Media Companies: look around to see if there is one that lacks a website in your space.

Or you can setup a webpage for users to throw together a bunch of money, and then help them register a corporation, which will then take the pooled money and buy your company.

newacc2• 17 years ago

i kind of liked the last option - i would say motivated crowdsourcing!!!

the other option (which has become preferred option recently) is to sell 25%-50% to the new owner who will run and/or control the operations (and see how it goes) and u be there to provide training and support - this will gain the confidence of the buyer community that your business is real business and you're transparent about revenue and growth potential... once the new owner sees that there is real revenue and growth, he/she start taking more ownership on monthly basis or give you lumpsum amount that was agreed upon.

rrival2• 17 years ago

#2 is interesting - hadn't thought of that approach - are you aware of examples of where this has happened?

falsestprophet• 17 years ago

Don't get too excited. The last option is not legal.

apowell• 17 years ago

The last option is creative, but would it run afoul of securities regulations?

http://www.sec.gov/answers/accred.htm

vaksel2• 17 years ago

not sure, but it might avoid it. I mean you as a company are just selling your company to another company.

The other company just happens to have 400 co-founders, who each threw in $250

bsaunder• 17 years ago

A horrible rule.

cjlars• 17 years ago

Bizbuysell.com is another good listing service (the biggest I think), and while they specialize in more traditional businesses, there's plenty of websites for sale there.

dunk010• 17 years ago

If you're not profitable then given the current state of the economy you're probably barking up the wrong tree. Most of the buying of startups happens in a bull market, so unless you have undeniable potential then there's a large chance that you'll be disappointed. Think of it like this: if you, the founders, want to dump it then why do you think any company would have enough faith to buy you?

agotterer• 17 years ago

I'm a partner in this company. We are profitable and have very little expenses. To really take the product to the next level requires a larger dedication of time and/or resources then we are currently able to commit. A potential acquirer would be able to make that investment. We have essential put the product on the right path and taken it as far as we think we are capable, now it needs attention from someone who can take it a step further.

scumola• 17 years ago

You come up with a price (value of your company). The buyer comes up with a value. If you can't decide on one or the other, get a third party, and the one that is closest to the third party wins. Works well, it's in the best interest of both parties to not under or over-value the company. Negotiators are a good thing to have.

Ask HN: Selling a Startup?

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