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From my experience, I would open the discussion with them and be honest about where you are trying to go with the product. Offer up potential partnership arrang

From my experience, I would open the discussion with them and be honest about where you are trying to go with the product. Offer up potential partnership arrangements/rev share (whatever makes plausible sense.) In my opinion, if they could (and it's rare that they would) knock you off overnight, then maybe you don't have a business to begin with. YMMV with that one, but thats what I generally think about it. Although everyone will say, don't let it be a distraction. It's a HUGE distraction. Your motivation to continuing building the product may wane, you may start to devote a lot of time to the negotiation strategy. It's a distraction. Now should you get to the point where you think the acquisition is a good route for you, really the only way to improve the offer is to have other offers (whether that's raising money, or a different acquisition offer.) If you have little revenue to speak of, I'm not sure how you argue you should get a 5000x multiple instead of a 300x multiple.

man_bear_pig 13y ago
I play in a multi-winner space if you play it one way; a winner-takes most space if you play it another way so I'm not too worried about competition. They're actually worried about another competitor who just got in so they want to build out something similar (is my guess). Do you think that this in any way helps me to be able to raise money or would real investors just brush it aside (i.e. does it provide any real validation of concept)? Thanks!
- spinlock 13y ago
  Investors look for validation from peers, competitors, anyone. Having interest is good as long as you can win in terms of executing on the product.
- christopherslee 13y ago
  I can't say whether or not an acquisition offer is validation of an idea from an investor's perspective. To play devils advocate, I could also argue that if you are considering it, then you weren't hockey sticking, and thus i shouldn't invest in you. Also, one thing to consider is, and this is my opinion, that taking early investors could potentially be an impediment to an acquisition. The reason being is that your investors are interested in getting some kind of multiplier on their return. If you were considering a talent acquisition, not having investors means that almost any sum of money could be worth it to you. When my-cofounder and I were shopping around for investment before, we were at a point where we weren't sure if we needed to hire a sales force to help us grow our customer base. So we put together a plan for what kind of money we needed. One kind VC gave us the advice to try doing the sales ourselves for the summer. If it worked out, then we wouldn't need to raise any money. If it didn't work out, then at least we would know it was really hard, and then we could go try to take outside money. Either way we would know something. Fortunately for us, we ended up trying to do sales that summer (it was hard.) And because we had been so open with potential partners (and acquirers), we ended up with a deal that worked out well for us. I'm not sure it would have made sense had we raised any money.

man_bear_pig 13y ago

I play in a multi-winner space if you play it one way; a winner-takes most space if you play it another way so I'm not too worried about competition. They're actually worried about another competitor who just got in so they want to build out something similar (is my guess). Do you think that this in any way helps me to be able to raise money or would real investors just brush it aside (i.e. does it provide any real validation of concept)? Thanks!

spinlock 13y ago
Investors look for validation from peers, competitors, anyone. Having interest is good as long as you can win in terms of executing on the product.
christopherslee 13y ago
I can't say whether or not an acquisition offer is validation of an idea from an investor's perspective. To play devils advocate, I could also argue that if you are considering it, then you weren't hockey sticking, and thus i shouldn't invest in you. Also, one thing to consider is, and this is my opinion, that taking early investors could potentially be an impediment to an acquisition. The reason being is that your investors are interested in getting some kind of multiplier on their return. If you were considering a talent acquisition, not having investors means that almost any sum of money could be worth it to you. When my-cofounder and I were shopping around for investment before, we were at a point where we weren't sure if we needed to hire a sales force to help us grow our customer base. So we put together a plan for what kind of money we needed. One kind VC gave us the advice to try doing the sales ourselves for the summer. If it worked out, then we wouldn't need to raise any money. If it didn't work out, then at least we would know it was really hard, and then we could go try to take outside money. Either way we would know something. Fortunately for us, we ended up trying to do sales that summer (it was hard.) And because we had been so open with potential partners (and acquirers), we ended up with a deal that worked out well for us. I'm not sure it would have made sense had we raised any money.