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Comment by zupreme | Hacker News Reader

Learn from my mistake. Unless you're already financially secure (meaning you could stop working and live your current lifestyle for several years) then my advice is to take the money while you can OR to leverage that valuation to pocket a few million $ (by selling equity).

I'm doing great with my current startups now but several years ago I founded a very promising startup which almost immediately got many acquisition offers in the high six figures and low seven figures. I, of course, took all of this to mean that we were onto something and were sure to get very wealthy in short order.

That didn't happen. What our app did got simply duplicated as a feature by an industry leader in software for our target vertical and that startup rapidly went from extremely profitable to bust.

TL;DR: Unless you're financially secure take the money.

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There is a lot of advice on the thread saying: take the money. Given your personal situation etc. this may very well be the right choice.

But you need to realize that just because you've been approached for acquisition and even if somebody tells you straight up "we want to acquire you", it sounds like you are far away from actually getting acquired. The road from casual interest to money in the bank is long and bumpy.

Unless you actually have a term-sheet in your inbox, you aren't in the position to make this decision right now.

The right tactical approach is for you to push hard on both fronts - push as hard as possible on fundraising as if you have no other option. And if you do want to consider an acquisition, start approach these companies and ask for term sheet.

If both go well, then you have a decision to make.. (and more leverage..)

> Unless you actually have a term-sheet in your inbox, you aren't in the position to make this decision right now.

even then, its not over till the cash is in your account.

that's after you make the decision oy

Even then, it's not over completely if part of the cash is attached to milestones or subject to a new vesting schedule.

I've seen friends' companies acquired without them ever seeing the full "acquisition price".

If the cash is attached to milestones or vesting, it won't be in your account...

Definitely. I've been at startups who got signed letters stating the acquisition will go through from the other company, the other company spends months in due diligence learning every secret we had, then they just stop working on it and leave the deal dead.

Do you add a break up clause to prevent this?

You absolutely should.

You should* also be working with a banker who sells companies for a living. They will take some % (10%? Who knows) of the deal, but in my limited experience it seems worth it, since they will also help you make introductions and give advice - maybe not perfect advice but it will be advice that will either raise the price of your sale, make it happen faster, or promote some corrupt agenda the banker has (i.e. work with a banker who comes to you from someone who can vouch for them)

There are obviously some things to be very careful in terms of shopping for a deal, but that's also how higher valuations occur. And, if the acquiring company doesn't want to deal with it they can give you a "no-shop" offer that is higher, in addition to the breakup/no-deal fee.

*This "should" in addition to everything else above is just an opinion. I've only been in a company once that was acquired successfully and heard stories about other situations, so take it for what it's worth which might be nothing :-)

I could be wrong, and if I am I'd appreciate informed corrections, but I don't think it's the norm for low-8-figure transactions to use bankers.

Business brokers also exist and they're very similar to investment bankers for small, simple transactions.

I've been involved in a few deals of that size (acquiree and acquirer) and to my knowledge, no acquirer ever had an IB. If funded, acquiree could lean on angel or VC who's seen a lot of deals.

I could be wrong also, my remembered banker stories were about larger transactions, it's true.

(PS, why can't I reply to the comment to my comment? I guess I don't comment enough to understand HN :-)

> why can't I reply to the comment to my comment?

There's sometimes a timeout, to discourage rapid back-and-forth arguing.

This +100

One day I'll write my story. A few acquisition offers, some investment offers. Foolishly we rejected them.

Company when bust with the help of a bank last year.

Same rules as in baseball. Don't swing for the fences. Many singles and doubles win you the game.

Homers and grand slams are infrequent and elusive.

Had the same sort of capital issues. Same problem with VCs... I'll write my thoughts on them some day as well.

Take the money and run. Rinse and repeat.

Love the baseball analogy and absolutely true. I slightly modified and posted to my twitter:

> Startups like nearly everything in life can be equated to baseball. Don't swing for the fences. Many singles and doubles over the long haul.

Without any relevant startup experience to back it up my opinion, I concur. It's a hard pill to swallow, but unless you are working at the top of your software area with mostly theoretical bits that you've worked out, it's not really all that hard to copy most things in software (unless you have contracts in that give you an advantage, sort of like a mini monopoly).

It's bad enough that a few years ago here people were complaining that they would do a Show HN submission, and find a few weeks after that someone had taken their mostly completed idea, assigned a whole team of cheap developers to it and executed on it not only faster, but better. The question here is whether the business he's got running has aspects that can't be easily copied (and assessing this realistically might be hard), and if it can be copied, can it be done so without taking too long or taking more than the ~10 million plus the submitter thinks someone will offer?

> It's bad enough that a few years ago here people were complaining that they would do a Show HN submission, and find a few weeks after that someone had taken their mostly completed idea, assigned a whole team of cheap developers to it and executed on it not only faster, but better.

Is this still a problem? Don’t PG and others say not to be afraid of others stealing ideas, and that ideas are worth little, and that it’s all about the execution? Makes me wary of sharing my almost complete idea.

Yeah, I used to be really afraid of sharing my ideas until I finally started my own company.

Ideas are cheap. Building a company is hard work. It takes a good idea and a passionate team to create something great. Sure you run a chance of someone taking your idea. But are they more dedicated and passionate about it than you? If so, you're in the wrong business. Better to find out sooner, tbh.

If you have an idea that someone can read a blog post and then replicate, the idea isn't sophisticated enough or you probably just shouldn't write that blog post.

The idea may be somewhat novel, but not necessarily hard. That doesn't mean it's not worthwhile, but if you are working hard in your spare time to get a MVP ready, and someone else already has a business with the employees and developers in place to run with an idea, it can be hard to compete if they decide to put resources towards that idea. Normally you might actually have a small but happy customer base before you get real competition if your idea is novel enough.

That is't exactly the point I was trying to make originally though. The point I was trying to make is that I doubt most small businesses are special snowflakes that can't be replicated. There are of course details that are specific to that company, but I doubt most of those are required for successful function of the company were someone to try to copy the model.

Doing research on up-and-coming startups is every M&A department's core competency. If you are to believe the rumors - some big players are very sophisticated in figuring out what to copy.

Nobody is going to put up with hyper-stealth NDA paranoias nowadays. But I do think the jury is still out on radical transparency. I don't think Snapchat would still be around without its secrecy.

Wow, hijacking the top comment since this blew up. If you want to contact me, email thisanonguy1@gmail.com with the details.

This is why I love HN - it's an amazing community when you are willing to put your heart on your sleeve.

Indeed, never having to work again in order to provide yourself with the basics (home, food, car, education for your kids, etc) is already a huge thing to achieve in life. Don't let multi-billion dollar acquisitions you read about here cloud your appreciation of something as big as this.

Besides, several million bucks can be turned into much more with with relatively little effort.

This is the reason why people who receive sizable inheritances get several steps ahead of others.

I'll ditto the take the money message. Great pain and suffering awaits those who don't whose company then becomes less valuable. But, life is pain. Take the money because the next idea, the one you really wanted to do, that can happen. Once you've sold a company fundraising is 10X easier.

It's a gamble and it's easier to manage the risk of gambling if you're rich already.

Is this the chance of a lifetime? Or is it just a good idea that may make a lot of money?

Can you give more details about your startup? Were you a single founder bootstrapping?

Out of curiousity, what was that first startup?

Common. Why do you thing he didn't say in the first place.

come on

Curiosity question: why didn't you patent some key element of your value proposition to protect against someone copying it?

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