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Ask HN: How much should a bootstrapped startup ask for an acquihire?

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Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#31

Post by lgsilver »

ChuckMcM wrote: post #28
lgsilver wrote: post #25

Earlier quoted context omitted.

Though I think this is a good response, the first part is not correct. The point of an acqui-hire is to acquire talent at an amount that rewards the team for their previous efforts. In a true acqui-hire the acquirer values the product at $0. No investor would accept less than their principle back, and so an venture-funded acqui-hire is always going to take into account previous rounds of investments. All this said, a…

Lets take this apart shall we? > All this said, a $10m acquisition of a vc-funded co > with 10 employees will probably include at least > 25%-30% return to investors depending on preference, > or else they won't accept. > I would expect to see a 1/3 to 1/2 price discount > on a bootstrapped startup, or even more depending > on how short a time you've been working on the product. My understanding here is that the only…

You'll be hard-pressed to find an acquiring company that would be willing to pay $1-1.5m / engineer for a bootstrapped co :). But sure.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#33

Post by nedwin »

chollida1 wrote: post #27

I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons: 1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surpris…

The challenge of not having taken funding as well is that you can't use your last valuation as a bench mark.

ie they offer you $1m, you can't say "Well, that's far below our last valuation of $5m" or "in order to make our investors from our last round whole, at an absolute minimum, we would need to meet our last valuation of $5m".

Depends what you're optimizing for. Price is only one factor.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#34

Post by [deleted] »

jonathanjaeger wrote: post #4

If you have no investors to answer to and very little debt, then there is no number. But here are some factors in play: -Do you still believe in your idea to the extent you want to grind it out and see some serious upside? -If there is serious upside potential and you want to bake that into the price to still see a nice reward then do that. -If you're okay with not pushing through on this startup and realize it's not…

[deleted]

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#35

Post by [deleted] »

chollida1 wrote: post #27

I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons: 1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surpris…

[deleted]

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#36

Post by sublime »

As somebody who was in your shoes (bootstrapped, low revenue) and recently acquihired I can tell you the only thing that drives your value is the perceived (a) time to market acceleration and (b) team potential. Focus on these during negotiation and come to grips that without revenue, customers, or killer tech you are not going to see a huge exit. Our asset purchase + employment contract value was ~$1MM.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#38

Post by jacquesm »

Treat it like you would treat any other deal, you're selling the company. Whether or not it is an acquihire is not up to you but to the acquirer so sell it for what you think it is worth for them if that price is higher than what it is worth to you.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#39

Post by 3pt14159 »

I've started and sold a bootstrapped company. My partner and I sold for $2m, and I ultimately regretted it.

I would focus on how much money you make on deal close. You might think to yourself, "Hey, I'm totally going to vest that 2 year period, why wouldn't I?" But the post acquisition phase can be extremely depressing and stressful. I developed bruxism and ended up leaving in less than a year. My health is more important to me than my bank account balance, but it still stings only vesting 18% of a deal. If it weren't for the cash on close provision, we'd have made much less.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#40

Post by ryandrake »

If they're not buying any product or technology, I don't understand why a company would pay more than zero. If it's common for companies to pay "$X million per engineer" to simply acquire people, then from the employees' point of view, why even job hunt the traditional way? Wouldn't it make more sense to get a few engineering buddies together, form a 2-3 member LLC, and shop around for an acqui-hire? You'd get jobs AND million-dollar "signing bonuss".
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