It’s one thing getting funding for your start-up, but when’s the best time to exit?
Tommy Ahlers, founder and CEO of mobile contacts app Zyb, which was sold to Vodafone in 2008 for €31.5 million, knows a thing or two about the subject and told delegates at our GeeknRolla event on Tuesday that to sell isn’t always the best option.
Why should you listen to this guy? Simples: “I’m a millionaire,” he says in his opening gambit. Speaking from Copenhagen – his travel plans fell victim to the volcanic ash saga – he says start-ups should ask themselves: “Do you really want to exit?
If that’s all you want, then you are focused on the wrong things. If you try too hard you will not make it. It’s worth remembering that it should be one of the objectives of a company but it should not be the aim.
He says the the aim for some start-ups should be instead to build users or revenue organically, rather than looking for the big sell. “When I sold to Vodafone and they wrote a check for €31.5 million, it wasn’t about the money, it was about the success for the business.” He even admits that Vodafone have taken Zyb down a slightly different path than the one he would have, but, he says, at least it still exists and plays a role in Vodafone’s 360 content/apps strategy.
Comparing finding a VC suitor to online dating, Ahlers says VC might only see the start-up as one night stand if all they offer is packaging and there is no great product there. VCs hold the cards in funding talks, but “What are your plans for my business?” is perfectly reasonable question for founders to ask investors.
And for people waiting for their big moment to come along some time soon, Ahlers reminds us that “You only get lucky if you work really hard…”
Speaking on a panel just after Ahler’s speech, Google’s head of corporate development for EMEA Anil Hansjee, gave an insight into how he views the buyer-start-up relationship:
Getting to know one’s acquisition is critically important. I can think of several acquisitions we’ve done where we’ve got to know them over over time without buying… and then we’ve woken up and realised we can’t do the same thing they do and we press the button.
Hasnjee says Google has made 70 acquisitions in the last nine years and despite the the acrimonious split between the founders of Dodgeball (who then founded location-based mobile start-up Foursquare), said fall-outs with entrepreneurs wasn’t something that happens very often.
Serial investor Saul Klein of Index Venture – who’s played a key role in too many high-profile fundings to mention – said that: “Most entrepreneurs are not looking for an exit, they’re looking to create a great product and change the world in some way; an exit is not an end in itself.”
He added that too many people make the mistake of thinking that founding a start-up will make them rich and warned that many dismiss the public option: “An exit comes along when you create something of real value… Too often we think of exits as selling to other companies and not going public through IPOs.