Google organized the October 3 Comptoir Général (Paris 11th) the “Startup Paris Café”, an initiative to bring together creators of start-ups and “mentors” to the various fields of expertise to address several problems: how to use platform “cloud”, take advantage of the mobile include HTML 5 …
The opportunity for Google to ingratiate dynamic young entrepreneurs, and therefore develop its ecosystem. But also the opportunity for them to receive advice from experienced entrepreneurs. Challenges.fr went to ask a million dollar question: what mistakes to avoid, and the rules to follow to be bought out by a high-tech multinational companies like Google, Apple, Microsoft ? Amazon or
resale, no immediate plans
Of course, we had to cross the reef high-indignant cries: “We launching a start-up because we believe in the project, not to spare! ” “We want to create a business, not play to speculators,” we heard here and there, between the cozy sofas round tables and low tables thematic workshops.
Most young entrepreneurs seem obviously sincere, as Tiana Roalison CEO Smartelia, a company that has employees based in Madagascar to provide a service “hotline” remotely French entrepreneurs (secretaries based in Antananarivo take calls from customers and especially sort all their mails in their place, for example): “Actually, my goal in creating this company is to contribute to the development of my country,” she saidMost other “start-upers” met also held a focus on their project and its thrust speech, and admit to most did not have the habit of thinking so early a possible resale. Even older seem to give them a priori reason. “What is needed above all, when you start the start-up is to establish a viable business model,” says Martin Gorner, organizer of the event.
Which knows whereof he speaks: he sold his company to Amazon Mobipocket and now works at Google. And remembers the mad period during which the sale took place: “Actually, Jeff Bezos wanted to buy a” reader “(application for reading digital books Ed) for its business e-books and Kindle, recalls does there. So they approached us, and our CEO spent four months with them to do the “due diligence” (scrutiny of accounts Ed).“He jumped into the first plane … “
Except that the negotiations debouched on nothing So our CEO took his courage in both hands and told them. ‘actually, I understood what you want: you want a technical partnership Then OK, not sales, but put up this partnership ‘In this case, the U.S. responsible for the negotiation jumped on the first plane to see us and offer us.. immediate redemption. ” How has he heard the news, it? “In fact, it happened so weird, does he recalls. This was in 2005 and I went to see my boss to tell him that I had just received a job offer from Apple and as I was leaving the company so he smiled and replied:.. “hey, we need to talk” He had just learned that Amazon agreed to redeem us … So, obviously, I stayed in this adventure. “
” Hello, this is Steve Jobs, I would like to meet you … “
Present also Start-up to the Paris café, Anselm Baird-Smith, the founder of Lala (an online music site), also remembers the day Steve Jobs called them to offer their redemption. “It was in 2009, and I even remember the day: it was on December 9, he smiled.” I was there when our CEO, Bill Nguyen (the United States, Nguyen decides Wen, as John Wayne, Ed) received the call from Steve Jobs: he remained very cold on the phone, very “pro” and not let it show. Then, Jobs invited us all to his villa. It was really warm, because he knew there was competition to redeem us, we were particularly coveted by … Google. “
Although it is difficult to obtain” rules gold “for good selling his start-up, it is possible nevertheless insisting, get some advice and recommendations. Good. because it would certainly be against-productive and premature to consider too early to sell his home- up to a giant web. But do not think there’s any risk of compromising the sale if this one day event became a real possibility.10 golden rules for good selling his start-up
1 / For Martin Gorner, “the first piece of advice is to not think we will be redeemed Google, Amazon, Apple or anyone else. This distracts you from the real purpose, which is to create a good product. Then you have to think first and foremost to develop a large community of satisfied users, he says. A large company became interested in you when you have a very large user base. “
2 /” Do not hesitate to go drink regular coffee with employees of the company you want says for his part Anselm Baird-Smith. This is what we did with Apple employees when we were based in Palo Alto. And we did not hesitate to keep them regularly informed of our developments and our projects, “3 / ” Stay “legal” takes Martin Gorner:. Temptation is high in the world of web to overcome legal constraints, where not too hard to learn about complex legal issues. Error. Any legal flaw can be fatal and prevent the sale. “Thus, the download site Imeem could never have been sold since when was downloading a song, it became available to members of the social network user .
4 / “Stay clear of the allotment of shares” , he says. course, just before the sale, the commotion of battle and question of the distribution of the shares suddenly becomes essential One of the founders may be tempted to assume the lion’s share with maneuvers more or less worthy Error:.. “This type of manipulation ‘can be spotted immediately, and the company redeeming hates that. Better to stick from the start “type distribution” in force in the Silicon Valley and stick to it: some of the capital for the founders, for some employees, for some investors (often venture capitalists) “
5 /” Think be consistent with the ecosystem of the target company , “said a developer who does not wish to be quoted, and explained that when has the choice between several tech, it takes one that is closest to the logic Android as its software in smartphones will be developed for this operating system.
6 / “ Choosing the Right legal status for his company. “ The blogger and creative business Guilhem Berthelot was amused to identify all possible legal status for a start-up,” says Loïc Dubie, founder of Tel Orion (a start-up that provides an interface for blind use of smartphones with touch screen). “In fact, he scratched those inadequate … There were only the status of the SAS, which is actually the one we have chosen!” That said, nothing prevents you to learn for yourself: the guide (free) start-ups Olivier Ezratty page 118 provides a summary table showing the characteristics of the different statuses
7 / <. strong> “Warning to shareholders” , warns Jeremy Jawish, co-founder of Shift Technology, a start-up specialized in the detection of insurance fraud. “It must be solid or concrete.” The reason? “The prospect of a takeover puts shareholders emotion, paranoia or greed may come into play, so it is better to just flat from the beginning, he says the ideal:. Meet in upstream, in the presence of a business lawyer who will function, if not mediate, at least to inform, explain and reassure the important point. avoid at all costs that one person can block everything. “
8 / ” Being ultra-selective in case of entry of a new shareholder says Jeremy Jawish. And even avoided as much as possible this event …. even with only 0.01% of the capital, a new shareholder is another entity in the device, which has rights, privileges, and can complicate matters when you sell. “
9 /” Caring for the story-telling says creative start-ups that do not wish to be quoted: at the end of the appointment, the investor must want to tell his family, his family or associates what he saw and heard during his meeting with with the start-up. “
10 /” Do not knock down all his cards at once :.. it is better not announce a single asset by appointment And announce another at the next appointment at the end of the appointment, the investor must remain unsatisfied and wanting to ‘More … in a new appointment, “says creative start-ups who do not wish to be named. And who says he could give eleventh and last council at a future date …
Bonus Advice Olivier Ezratty, author of the guide start-ups
What if a company offers to buy your company early in its life cycle, with a recovery yet too low?
This rare condition causes a dilemma for the creator and investors in the startup: a “like” is it better than two “in the bush”? (…) If the acquisition in the early stages of the life of the startup is useful for the growth of the project and product, even a condition of its survival, the proposal should be seriously considered. If, against the startup has the means to grow, it may certainly consider the offer, but prefer to preserve its independence
Acquisitions may be of a different nature. Technological (frequent in software and large the Internet), geographic (as Meetic or Kelkoo buying companies in neighboring European countries) or simply market consolidation (Kewego at American Digital Kit). It is at such exit opportunities that may involve conflicting interests between founders and investors in the startup, they may be more eager to monetize their investment the founders. Hence the importance of the shareholders’ agreement that will provide such a case.
Is an upstream output is interesting because of a low dilution of capital?Not sure! A startup that thrives normally sees its value gradually evolve, including each funding round. Certainly, the founders will be diluted at every turn, but if the value of their shares is developing favorably in each round of funding and will be even greater when an output, having expected will pay. If, against the startup runs out of cash and that raising these funds will be in a lower value, then, yes, sell earlier may be a better deal for creators.
How to sell to large groups? How to understand the strategy of the big players may redeem startups such as Cisco, Google, Microsoft, Oracle or IBM
Large companies are acquiring startups to enter new markets, to increase their market share, or to extend the existing offers functional spectrum allowing them to consolidate their position or to increase the income generated.
We can aspire to redeem a large company. We can prepare the following ways:
- For product quality and user experience
- Par. timeliness and market access, which will create a user base whose size will increase the acquisition cost and the attraction to the great actor. This is the miracle and uncommon scenario Skype and YouTube acquired by eBay in 2005 and Google in 2006
- For a good product architecture -. Including software – with a high degree of modularity, scalability, or portability of the solution. Well-defined internal and external interfaces facilitates Ront-integration by a large corporation.
(…)
- For the protection of intellectual property – especially immaterial – the startup. Number of acquisitions do not occur because this step is not taken with success.
Here is some information on the methods used by Microsoft Corp. acquisition in Don Dodge blog.
How is the process of redemption
From several possible ways. The startup may be approached directly by the manufacturer concerned who will be going directly to the point, or evoke a partnership to start. In other cases, the startup application to an investment bank to conduct de-steps prospecting with poten-tial buyers.
If an industry is interested manifest, the process of “due diligence” will start with de-tailed all facets of the business analysis: the market, the product, equipment, intellectual property, customers, partners, teams, the capital structure and financial accounts. This can take months, especially if the manufacturer conducts this process in parallel with several potential acquisition targets.
What follows is a negotiation on the amount of the acquisition. This amount is paid in cash and / or shares in the leading industrial acquisition. This is called “being paid in paper,” which is generally avoided because of the vagaries of the stock market. A portion of the proceeds may be conditioned by the future results of the acquired business (turnover, profitability, market share, volume diffusion).
(…)
Industrial output is now the main outputs for investors in a star-tup since IPOs were scarce. They relate to half of foreign companies. And because large industrial groups of French digital industry are not very healthy and NIH (not invented here) syndrome affects especially all major French companies.
Should priority one “exit strategy” to the detriment of the business model
On the Internet, it is a common temptation the Contractor said that creating the killer application (“killer app”), “his startup will quickly bought by Google or Microsoft, even before you have created income or even a hearing.
at all the same
This strategy is very risky and rarely works. Just because the chances of being acquired is thin, it is better to the alternative case, and thus quickly generate revenue and achieve profitability of the business model as soon as possible
Can be redeemed by another startup
Yes, it is possible and it does happen from time to time. Most often, because the startup is not going well, can not generate revenue, but all the same advantages: a team, a product and / or user base. It will be merged with an acquiring startup, usually for a modest amount. But it will apply the saying “unity is strength.” Recent example is ViaFamilia family social network acquired in August 2010 by its competitor Hello-tipi70. In other cases, it may involve a small startup that developed a third or additional product for your platform. Thus Seesmic, the startup Loïc Lemeur, acquired Ping.fm early 2010.
