Mon, May 16, 2016
By now this nugget of startup wisdom should be well known: Companies are bought, not sold. And yet many entrepreneurs sadly don’t seem to act accordingly (and Silicon Valley, in all it’s glory, doesn’t foster good behavior as well).
Let me explain: When you build a company which builds a product users want and pay for, is cashflow positive and generates revenues — your fate is entirely in your own hands. You can sell your company when you feel the time and price are right; and if it doesn’t feel right (yet), you just keep running the company. You raise money to drive further growth. If the investment doesn’t come through or the terms aren’t what you expect — no big deal, you just keep chugging on. Everybody is happy and life is good.
Contrast this with a company which is running out of cash. You need to raise capital to keep the company afloat. You easily find yourself in a situation where you have to take the deal on the table, if you like it or not. You approach suitors from a position of weakness — you can’t afford to walk away from the table if something with the deal feels off.
Focus your energy on building something that matters. Something which people gladly will pay for. Keep an eye on your cashflow and revenue position.
It might not be sexy in the short term (so much more fun to dream up “get rich quick”-schemes) but trust me: It becomes mighty sexy when it’s time to cash out.