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Part of the allure of Silicon Valley is the image of a dedicated founder leading their company to a successful IPO. However, the reality is that startups are more likely to be acquired than to go public.
Selling vs. Going Public
In a panel discussion at TechCrunch Disrupt 2024, industry experts Naveen Rao and Kamakshi Sivaramakrishnan shared their experiences of building and selling companies. Both founders emphasized that while they didn’t initially set out to sell their companies, the right deal with the right company made sense when the opportunity arose.
What to Consider Before Selling
Dharmesh Thakker from Battery Ventures outlined a three-point framework to help founders determine whether it’s time to sell their company. Firstly, analyzing the product’s market traction is essential. Secondly, evaluating the sales performance and cycle can provide insights into the company’s health. Lastly, assessing the financial stability and runway is crucial in deciding whether to seek a buyer.
Negotiating the Deal
Thakker also highlighted the importance of negotiating a fair deal that benefits not only the founders and investors but also the employees. By ensuring that employees receive a retention package in the acquisition, it can lead to future success as they may return to start new ventures funded by the original founders.
Ultimately, knowing when to sell a company requires a careful consideration of various factors to maximize value for all stakeholders involved.
