Ask HN: Selling a Startup?

#1

Post by rrival » Thu, Jul 02, 2009, 3:11 PM UTC

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?

Re: Ask HN: Selling a Startup?

#2

Post by michael_dorfman » Thu, Jul 02, 2009, 3:25 PM UTC

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.

Re: Ask HN: Selling a Startup?

#3

Post by vaksel » Thu, Jul 02, 2009, 3:27 PM UTC

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.

Re: Ask HN: Selling a Startup?

#4

Post by newacc » Thu, Jul 02, 2009, 3:36 PM UTC

vaksel wrote: post #3

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…

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.

Re: Ask HN: Selling a Startup?

#5

Post by rrival » Thu, Jul 02, 2009, 4:10 PM UTC

newacc wrote: post #4

vaksel wrote: post #3

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…

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 growt…

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

Re: Ask HN: Selling a Startup?

#6

Post by apowell » Thu, Jul 02, 2009, 4:22 PM UTC

vaksel wrote: post #3

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…

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

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

Re: Ask HN: Selling a Startup?

#7

Post by vaksel » Thu, Jul 02, 2009, 4:26 PM UTC

apowell wrote: post #6

vaksel wrote: post #3

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…

The last option is creative, but would it run afoul of securities regulations? http://www.sec.gov/answers/accred.htm

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

Re: Ask HN: Selling a Startup?

#8

Post by jimmyrr » Thu, Jul 02, 2009, 4:31 PM UTC

michael_dorfman wrote: post #2

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.

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? 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!

Re: Ask HN: Selling a Startup?

#9

Post by cjlars » Thu, Jul 02, 2009, 4:42 PM UTC

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.

Re: Ask HN: Selling a Startup?

#10

Post by rrival » Thu, Jul 02, 2009, 4:43 PM UTC

jimmyrr wrote: post #8

michael_dorfman wrote: post #2

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.

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? 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 i…

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 ;)