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Ask HN: How do I sell my startup?
I have been running a startup for about a year now, and we're profitable and fairly low maintenance. I don't necessarily feel burnt out about the idea, but it would be nice to cash out for a few hundred thousand and put that money away and spend some stress free time hacking at whatever I feel like hacking on (I am like most here and have dozens of ideas fleshed out in my notes).
Our revenue is about $7500/month, with profits at about $6000/month. I have plans to rebuild a lot of the product and grow the userbase this summer, simply because I think it's possible and more revenue would be nice. I think by September, we should be able to double our current revenue numbers via an optimized funnel and some new marketing channels.
Ideally, I'd like to sell for something between $250-500,000. I don't really have anyone inquiring about buying us but that's possibly because we haven't hit "the big time" in terms of brand recognition in our niche.
All that being said, how do you just up and sell a company that probably exceeds a site like flippa or ebay? I feel like I've never seen a "For Sale" sign on a site so I assume that's not kosher, but do I approach a broker or approach people I think would be likely to acquire us if they knew more about us?
TL;DR: How do you proactively sell a profitable startup?
- itsprofitbaron 14y agoFirst of all, before pricing your startup it’s important to know what type of service it is as the multiples you can achieve for various monetization styles varies greatly e.g. Membership Fees, Advertising Revenue (with subsets of Affiliate/Adsense/Display – these also vary greatly as well!) etc. Secondly, having used Flippa since it was part of Sitepoint Marketplace I know that Flippa actually sells a lot of sites around your $7500/month revenue (with $6k/month profit) margins. In fact, sites have sold for over $1MM on Flippa e.g. https://flippa.com/2677949-planetrx-com https://flippa.com/2677949-planetrx-com which sold for $1.2MM. Likewise, https://flippa.com/102961-bloggersunite-featured-blogger-network-51k-page-views-featured-on-cnn https://flippa.com/102961-bloggersunite-featured-blogger-net... sold for $450,000 There are many other sales on Flippa in the several hundred thousand range. Generally sites are sold for a multiple of around 12-18x monthly revenue (although this can increase to as much as 36X depending on your site & how stable these revenues have been over a period of time). For some relevant comparison: Inquisitr sold for $330,000 with $15,000/month revenue - https://flippa.com/138899-the-inqusitr-rare-opp-to-buy-15k-month-news-site-with-1-5-million-uniques https://flippa.com/138899-the-inqusitr-rare-opp-to-buy-15k-m... A file host just sold for $300,000 11 hours ago on Flippa (at the time of this comment) - https://flippa.com/2747329-one-of-the-largest-and-most-valuable-file-hosting-site-on-flippa-w-huge-profits https://flippa.com/2747329-one-of-the-largest-and-most-valua... with profits of $XXXXX.XX per month
- ig1 14y agoSites that sell on Flippa typically sell at a discount, a privately negotiated sale within your industry will almost certainly sell for more. If you end up going to a broker or a site like Flippa it sends a strong negative signal that you can't sell it directly which has a significant downwards impact on the price (also the people likely to buy in those scenarios will lack the value-add that an industry player would have).
- itsprofitbaron 14y agoAgreed, generally I believe that in this type of scenario that its far better to reach out to potential competitors or to companies (where appropriate) who can incorporate the product horizontally or vertically into their service/operations. The comment was just providing some perspective over Flippa, that its not necessarily a place to sell sites for a few hundred bucks which I should probably have made clearer.
- buymycompany 14y agogreat reply, this was very helpful. We are a SaaS market research tool for a specific type of niche just to clarify. I'll start monitoring Flippa and see if I should test the waters there. Thanks again!
- ig1 14y agoI think the general pattern is to go for drinks with potential buyers (typically bizdev people at your competitors) and drop hints. If they're interested they'll bite. Avoid giving away too much information at the early stage though to any interested party, whoever you end up selling to won't want the sites core stats to be known to all the competitors.
- deleted 14y ago[deleted]
- reiz 14y agoI sold one time a company. It worked out for me because I had some relationships. It is always good to know your competitors. Competitors are always potential buyers. And there are always companies who would like to extend their portfolio. This companies have always 2 options. Make it or buy it. Buy it is always faster and you know what you get. I sold to a company which wanted to extend their portfolio. I hope my answer was helpful.