[Editorial notes: Pushkar Gaikwad sold his startup earlier and shares practical insights with the founders, who are in the process of selling your startup (or have plans to).]
I had started InBoundio in Jan 2013. After doing lot of freelancing, services and building casual hobby products, this was my first serious attempt in building a web product and business. This also made me took a dive into core technology as earlier I only had surface knowledge of technology. It did well and got reasonable success. We did plenty of iterations with product feature and pricing and we did got good number of inquiries about white label marketing software.
Since I am building AeroLeads too, it was difficult to focus on 2 products hence after 6 months of talks with many businesses, I have sold my startup InBoundio to an Australian Media company c9.
The last 2 years were fun in terms of learning and experience and now I have both as well as some cash, so now I will be using all this to grow current product much faster.
Learning and Experience
1. It was little tiring since I did all the work of talking and communicating with people. Though it was rewarding too since now I understand complete business cycle as well as understand complete technology and marketing stack of a business. I was also able to understand what are the metrics which a buyer look for. Saying this, I am very sure I am done selling businesses for a long time since it don’t excite me. Building businesses to sell it is also not a good business model.
2. It is not easy to sell your startup sitting in India to someone in other countries. Trust is a major problem as no one know each other. This also means you will only appeal to buyers who are looking to buy in certain price range to minimize risk for them.
3. I have seen many Indian businesses who go under the radar getting sold in 1M USD range through business brokers. If you think you can sell your business in this range, you should look to engage with brokers who have the right network. Do note that you will get valuation in multipliers of 2x-5x range which is the industry standard for web businesses. It can be 10x if the buyer sees real growth potential but don’t expect 20x or such valuation which rarely happens. Being realistic is important.
4. You can get much higher valuation if you are willing to work with the new buyer for few years, do partnerships or take some money now and rest later. At the end of the day, everyone wants to mitigate risk.
I had few such proposals but for me, it wasn’t about money, I knew it could get messy as it is not easy to partner someone in different country so went with outright sale.
5. The whole process is time consuming and can take 3-6 months. Make sure you don’t rush and covers legal aspect of transferring ownership and assets.
6. Prospective buyers will always look for these 3 parameters. If your startup have them, you should be fine, if not, you will find it difficult to make the calls.
i. Growth Potential
ii. Minimum liability
iii. Existing revenue
Where to find buyers for your Startups and Businesses
1. LinkedIn – I contacted lot of businesses founders on linkedIn using inmail and got good response. Few of them showed interest but it was also the issue of “not having enough paying customers”. If you want businesses in similar vertical to acquire you, remember that most of them only look for paying customers and not for technology.
2. Business Brokers – There are plenty of business brokers and firms who help you selling businesses in 500k to 10M range. They take about 10-15% fees and for someone in India, if you think you have the above 3 (growth, minimum liability and revenue), you should talk to them as this reduces risk, cut down your time/effort and speeds up communication.
Feel free to message me If you need some advice or if you think I can help you. I can be reached at “pushkar.gaikwad at gmail dot com” or through linkedIn.