To read the version of this blog in Chinese, click here.
“Nearly every tech startup is for sale, and everyone in Silicon Valley and on Wall Street knows it.” - Amir Kaltak , founder and CEO of LEXIT.
If you watch the show Shark Tank, perhaps you have noticed it too: entrepreneurs walking away from good deals because they are simply too emotionally invested in their own ideas and companies.
Evaluating opportunities to exit, via M&A or otherwise, should be a part of every startup’s strategy. You should be emotionally ready to sell your company when a reasonable deal comes along. That of course doesn’t mean you have to do it right away. Waiting for another deal or pursuing additional funding on your own is always an option.
Startups can be bought for many reasons. Sometimes all it takes is a good PR team to help the startup go viral. Some reasons are a bit more opaque.
For instance, Salesforce, a cloud computing company, bought the Chicago-based Model Metrics because the former was looking for an office in the Midwest…
In addition to the reasons startups are bought, startup founders sell for many reasons, as well.
A startup’s C-Level representatives might not wish to put in the “sweat equity” to grow their startup further. Doing so might entail hiring a big sales and marketing team and setting up the infrastructure. It might mean networking and setting up a global distribution channel.
On the other hand, Wall Street, Silicon Valley, and private equity are constantly looking for acquisitions. Not long ago, companies were not interested in purchasing software companies, but as technology has continued to eat the world, the cash-flow stream has become increasingly predictable.
But, M&A is an often expensive, intensive and time-consuming process. While specialists work for a fraction of a deal’s size, there are also legal fees to pay. An M&A or an IPO could amount to millions of dollars worth of fees.
What if there was a technology that lowered the costs of the traditional M&A process?
Luckily, there is.
When combined, blockchain-based token economics and the modern platform-marketplace industry have the power to unite a critical mass of buyers and sellers. Such a pool ensures more reliable price discovery, and more efficient dealmaking.
Blockchain’s pseudonymous nature allows for privacy when startups are looking to sell. This is particularly helpful in an industry where everyone knows what everyone else is doing, and secrets don’t stay secrets for long.
Want to know more about the future of M&A on the blockchain? Read the LEXIT white paper today.