March 13, 2016
Getting acquired is the dream of every startup. One of the major players want to sweep in and purchase your humble product. Of course, this is not easy and for the majority of businesses, this will never happen. A renewed sense of optimism has arisen as PayPal continues its acquisition spree by purchasing eCommerce platform Modest for an undisclosed free.
So how do you increase your chances of getting acquired?
This guide is going to show you five of the assets that you need to get acquired in 2016.
A Superior Team
With the boom in startups, there’s a serious shortage of talent in practically all industries. In the tech industry, for example, it’s a major mark of honor to have someone who is above average. That’s because the majority of the best are already working for the likes of Google and Apple.
The top corporations have quickly acquired startups in recent years partly because they want to acquire the talent working for them. An idea can never get off the ground without the right team behind it.
Make sure you are making inspired hires.
What is disruptive innovation?
This is the type of innovation that happens when companies discover new customer categories. They then create products or services to target this new category, thus leading to brand new markets. Big companies have big decisions to make when this happens.
They either have to hold on to their profitable markets or consider investing in new and lucrative markets. The tech industry tends to see companies acquiring startups so they can gain a foothold in these new markets. The more competitive the niche the more likely big companies are going to seek to acquire startups.
One of the most important assets you can have as a startup is disruptive innovation.
As always, market share is important. If a company is operating in a new industry and they own 35% of that industry, a large corporation realizes that the moment they can acquire that company they will also own 35% of the share. In the event that they are also part of the competition, a company can gain an effective monopoly via acquisitions.
Take a look at social media to see how this works. Facebook is no longer popular among teens. They are more popular among older demographics. Now take a look at Snapchat. Its main user demographic is teens. It’s no surprise that Facebook has attempted to acquire the company on many occasions, thus maintaining its market dominance.
If you own a significant share in a lucrative market, this is sure to attract big investors.
A Complementary Product
Startups don’t always have to forge new markets or produce something completely new. It happens where a startup discovers a flaw with a product and then they produce a product that solves this problem. For example, when Twitter first came to prominence startups began creating products to add new features not provided by the platform.
Twitter acquired a lot of them because they knew that they could add new features while also attracting users who already loved the new features.
Sometimes a company wants to create something but it can’t. Google may have a brilliant idea in mind, but they are prevented from making it a reality because the vital piece of intellectual property is owned by someone else. Even Google can’t break the rules and push on.
Instead, Google has no choice but to purchase the company and its intellectual property. This has led to a weapons war where larger companies will seek to acquire smaller companies with the sole purpose of making sure that other companies can’t acquire those intellectual resources.
As a startup, how do you capitalize on this, though?
You really have to gear your startup towards acquiring intellectual property if you want to operate this type of business model. You need to develop a strong insider knowledge of your industry.
For most people, this will be an added bonus of releasing an awesome product in the first place. You may discover that the company in question has no interest in your product. All they want is the intellectual property you actually own. Following acquisition, they will take your product and release a much-improved version, or even something new entirely.
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