The great exit plan: Building your startup toward an acquisition

For most startup owners, the entrepreneurial journey begins with the ending in mind. Some entrepreneurs are tempted to grow their startups into empires by going public, while others are driven to constantly forge new businesses, sell them off, and move on to the next project.

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As a serial entrepreneur based in Asia for the past six years, I am still learning things about myself and the kind of entrepreneur I am with each passing day. Over the past few years, I have found myself on both sides of the table – as an investor in up-and-coming startups and as a founder who has sold my own businesses after building them from the ground up.

Most recently, I sold a 70% stake in Ovvy, my first startup in Singapore, to real estate agency PropNex for a seven-figure sum.

Here are some of my key takeaways from the journey to exit.

Understand the role your business plays in the ecosystem

Every startup must exist to fulfill a need. If your products and services are easily replaced or substituted by offerings from a larger business, you are unlikely to be successful. As an entrepreneur, the most important first step is to put your finger on the exact role that your business plays in your industry and the wider ecosystem.

At Ovvy, we identified a niche opportunity to offer business-to-business (B2B) software services catering to agents in the real estate industry. My co-founder and I spoke to the top 20 real estate companies in Singapore to gather feedback and understand the industry’s needs, which eventually led to the sale of Ovvy to PropNex.

A similar train of thought drove Canada-listed WeCommerce to shell out US$110 million earlier this year to buy Stamped, a Singapore-based marketing platform. Stamped had created software that could successfully help online merchants manage their customer reviews and loyalty programs, and WeCommerce took note of how the product could benefit the ecommerce space.

Consider the evolution of your business

Another important factor to consider before making the decision to sell your business is what the five- to 10-year roadmap looks like for your startup. Most entrepreneurs have a vision of what they hope their company could eventually become. But here’s the key question: Does a potential acquisition align with the vision you have for your company?

It is common for startup owners to have several acquisition offers throughout their business’ lifespan. Don’t feel the need to take up the first offer that comes along if you feel you’re not ready. When the PropNex offer came along, my co-founder and I had already been working on Ovvy for five years. At that point, we felt the company and the product had reached a level that needed more manpower and expertise.

We had always intended to scale in a direction that called for a strong strategic partner who understood our business and the vision that drove it. And when the right buyer came calling, we were able to place this baby of ours in their hands and were secure in the knowledge that we would be able to witness our vision grow regardless of our direct involvement in the company’s future.

A good example of this can be found in one of the most high-profile acquisitions last year: Salesforce’s US$27.7 billion takeover of Slack.

Faced with heated competition from Microsoft Teams, Slack needed more quality resources to stay competitive. With Salesforce’s network and business development resources, Slack was able to reach out to a much wider market of potential customers and users.

For Slack CEO and co-founder Stewart Butterfield, the acquisition represented not just an increase in personal net worth, but a whole new set of opportunities for him to take his vision for Slack to greater heights.

Do your research

An acquisition isn’t the only way out

Think ahead