1/ When it comes to your startup’s valuation, revenue is only one piece of the puzzle.
Here are the most important factors affecting your company’s price tag. 🧵
Here are the most important factors affecting your company’s price tag. 🧵
2/ Category expansion
If an acquirer aims to further category reach, do you represent that mobility?
Snack brands might gain an edge by expanding into frozen food. Web3 startups may be cheaper to acquire than to build. Gen Z brands could bring life to aging holdco portfolios.
If an acquirer aims to further category reach, do you represent that mobility?
Snack brands might gain an edge by expanding into frozen food. Web3 startups may be cheaper to acquire than to build. Gen Z brands could bring life to aging holdco portfolios.
3/ You’ve “stolen” a potential acquirer’s sales
Taking market share brings urgency to any deal. Highlight examples of how you’ve outsold competitors and disrupted placements they used to own—from search results to marketplaces.
Demonstrate reliable, incremental revenue.
Taking market share brings urgency to any deal. Highlight examples of how you’ve outsold competitors and disrupted placements they used to own—from search results to marketplaces.
Demonstrate reliable, incremental revenue.
4/ Competitive landscape
A recent exit in the space can benchmark your own valuation, and spur potential acquirers to throw their hat in the ring.
The cost of buying your co may be peanuts compared to the revenue an acquirer would lose by allowing their competitor to dominate.
A recent exit in the space can benchmark your own valuation, and spur potential acquirers to throw their hat in the ring.
The cost of buying your co may be peanuts compared to the revenue an acquirer would lose by allowing their competitor to dominate.
5/ Untapped revenue
Sometimes, it’s what you haven’t sold yet that matters.
If you’ve hit a revenue ceiling and aren’t innovating, acquirers can safely ignore you. But if there are untapped markets to enter, they'll factor that potential into their decision-making process.
Sometimes, it’s what you haven’t sold yet that matters.
If you’ve hit a revenue ceiling and aren’t innovating, acquirers can safely ignore you. But if there are untapped markets to enter, they'll factor that potential into their decision-making process.
6/ Integration headaches
Are you running lean, or is your org bloated? Profitable, or burning $$$? Are the cultures compatible?
Be sure to represent efficiency, not a year-long integration project. Also: point out potential cost savings from sharing each other's networks.
Are you running lean, or is your org bloated? Profitable, or burning $$$? Are the cultures compatible?
Be sure to represent efficiency, not a year-long integration project. Also: point out potential cost savings from sharing each other's networks.
7/ Momentum + relationships
Deals are a thing of pure energy. One disastrous finding in diligence can take a term sheet off the table.
Here’s what smoothes a rocky road: building a trusted relationship based on the mutual opportunity to better each other’s organizations.
Deals are a thing of pure energy. One disastrous finding in diligence can take a term sheet off the table.
Here’s what smoothes a rocky road: building a trusted relationship based on the mutual opportunity to better each other’s organizations.
8/ Your valuation isn't guaranteed to skyrocket if you nail the above factors. But, these fundamentals also drive yes/no decisions—and it's critical to consider the value created by our businesses that exists outside of revenue and profitability.
Now go get it.
Now go get it.
9/ If you liked this thread, follow along @chriscantino to learn more about growing startups and community.
Thx for reading.
Thx for reading.
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