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MenuHow can I build an Ecommerce brand to eventually be acquired by investors?
I would like to learn everything I can about how to create an eCommerce brand to eventually be acquired in 3-5 years. I have experience in eCommerce but no experience at all with acquisitions/selling a company.
Answers
For starter, you can apply the framework that you used to sell a product in your eCommerce business, to selling a brand/website/company to potential buyer/investor. Since you have experience in eCommerce, this must be familiar with you.
For example:
1. Understand the market. Is there a market for your brand? I.e. is there a potential buyer who would be interested in buying your brand? What marketplaces have you looked into to buy and sell these brands/websites/companies?
2. Pricing/valuation. How do you value your business? What valuation methodology do you use? is it a multiply of revenue, profit, or something else? Going backward, what kind of financials do you have to achieve to be able to sell your brand at the valuation you are expecting?
3. Fulfillment/transfer of ownership. How do you manage this? Is your business transfer-ready (i.e. having a system in place that can easily transferable to a new owner?)
Happy to jump on a call to chat more!
I'd recommend a couple of things here:
1. Make sure you go into a vertical that isn't completely saturated. Make sure your product offering and value stands out and isn't in a sea of similar options. Trademarking and patenting can also be great tools to keep people from encroaching in your space, but it isn't full proof and there's tons of ways for people to get around it. More important here is to establish yourself as the original and first market leader
2. Focus on scaling sustainably and profitably. This is one of the most important things buyers/investors will look for. Gone are the days where unicorns that lose as much money as they make are being snatched up or seen as valuable. You want to prove you can build your business and that it can last 100 years on its own
3. Build a defensible position: Establish marketing and business building tactics that make it very difficult form competitors to come into your space. For example if you , you can negotiate category exclusivity in some areas so your partners can't work with any of your competitors. This is immensely valuable.
It's great that you're considering your exit now. Some buyers like to be the first capital to the table so having multiple rounds of funding may be fast no. While other buyers will get in on the fun and hope to make big wins once the company is public. Focus on building a good company with significant revenue...you will have no issue finding a buyer.
Related Questions
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We're a renowned and profitable SAAS travel business, but our banker can't find the right buyer, is this a common issue?
Naturally 1001 variables play into this that I'm blind to but here are some assumption laced thinking points: You're profitable, upwards trending, business, in a very competitive vertical. Yes? You guaranteed have a Buyer, unless: 1. Your asking price is outrageous. Not likely as we've closed strategic sales that were 12x revenues. It doesn't get much more aggressive than that. 2. There aren't enough strategic or institutional buyers. Nope. The buyer market is wide with creative outreach. We've rarely tapped let's say 20% of our pool before successfully securing multiple qualified offers. (And we hold a 100% close rate). 3. You're so big ($1B+) that only a few have an opportunity to buy you AND they don't like you or your brand. Unlikely? More likely... 4. The outreach effort is nominal. Most brokers and M&A intermediaries boast a sub 40% closing ratio and far too many of them are "listing agents" -- whereby they list a property, announce it to a pool of buyers in their database and then "wait". We've seen deals that we normally turn around in 60-days with all-cash offers, take 18-months for "payment plan" deals closed by other firms. The results based on the experience and model employed is indeed apples to oranges. 5. How your business is presented (packaged) is not producing conversions. This too would then be a fault on your banker's side. We "spy on" the competition - it's business as usual on our end - and the typical prospectus and marketing collateral and followup materials are, well, embarassingly slim from, well, everybody. I've never encountered a problem with "the market" (the strategic buyers) and we've sold very niche and distressed properties. We have declined taking on deals where the asking price was a number picked out of la-la-land (in which case we offer complimentary guidance, feedback and let them pursue other avenues for closing the deal - which basically never happens at that asking price)... but that's a sensible discussion and likely one that was already had. If your exit is sub-$100M, your asking price is reasonable (even if aggressive), your business is indeed strong on its metrics, growth and brand value -- then any lack of offers sits with your banker. You're likely looking to play professional basketball but you brought in a kid from a high-school team. Skills mismatch. Upgrade your "player" and you'll move towards a win quite rapidly.RT
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Are promissory note installments considered capital gains? I'm selling my website and would love insight on the financial details.
Yo are talking apples and oranges. Capital gains are related to your basis not the form of payment. If you are a cash basis taxpayer, you pay taxes when you receive cash beyond your basis. We can help you with structure.JH
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Looking for guidance for where I can find investors for my app?
As Ken suggested, there is a wide breadth of mobile offerings and although there are some great "mobile only" funds, each investor / fund has their own thesis that makes them interested in some but disinterested in others. Also, if your revenue generating, you should seriously consider bootstrapping further. Revenue is treated very strangely in early-stage investing and *might* work against you. AngelList is a great way to research investors but not effective in actually connecting with them. Find investors who you are confident will be passionate about what you're doing based on prior job experience or what you know they are investing in. Happy to talk in a call to help explain this further if you need more clarity.TW
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Is fundable.com a successful tool to help raise an equity seed round for a pre-launch startup?
We have used Fundable.com successfully for two rounds of financing both oversubscribed. Here is what I can tell you. Basic info: Fundable.com's platform connects accredited investors to startups seeking investment capital. Startups have a public facing profile that includes general information about the companies product, team, press accolade, etc. If you are raising funds claiming SEC Reg D 506(b) the public profile has no information about your securities offering. If an interested investor wants to view more information about your startup and or your offering, he/she would request access to your full profile. The investor must self accredit on the Fundable site before they are allowed to view your non-public profile. The startup is notified and you have the opportunity to conduct some due diligence on the investor (LinkedIn) and elect to invite them into your deal. Your private page includes the offering (terms). All communication from this point is done outside of the platform, meaning you have the investors email address ( a good thing to have). Fundable charges startups a flat monthly fee to post a profile on the site. In addition you can opt for additional services (help) with your campaign. For a flat fee, Fundable will assign resources to help build your profile, consult with you on your raise, and assist with PR or Marketing. This includes a blast to their investor base of over 40K if my memory serves me correctly. I am sure it is higher today. Our experience: For our first round on Fundable, we elected to use the premium service. Fundable did a great job in helping with our profile. We received 50+ views per day (quite often 100+) and on days we were included in their newsletter we received 200+ views. 10 - 20% of views requested access to our full profile. and 10-20% of those responded to my request for a call. Our close rate was very high. Both of our rounds were oversubscribed in less than 4 months taking averaging $50K per investor. These are high quality investors that have not created additional work (outside of normal investor updates). Many of our investors regularly share news and information about our industry. Several have re-invested in subsequent rounds. Disclaimer: Our startup is in the consumer hardware space which I believe tends to attract high net worth individuals. Obviously results may vary, thus I cannot speak to how well a SaaS play would do crowdfunding in general. Fundable.com's premium services offering may have changed since our campaign. I am not affiliated with Fundable.com. In fact we have been successful on other crowdfunding sites as well. In Closing: I am a proponent of crowdfunding in general. It is disrupting angel investing, providing investors with greater deal flow and exposing startups to an exponentially larger audience, increasing their chances to get in front of investors who understand and appreciate that company's solution and opportunity. Most importantly it is moving capital and driving innovation! Keep in mind, securities laws have changed and continue to change due to the Jobs act of 2012. Before you offer any securities to local investors or choose to try crowdfunding, you should consult with an attorney, and take the time to learn and understand what regulations apply to your circumstances.UB
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How do I go about selling my app?
Hello, I might be interested. My name is Humberto Valle. Feel free to Google me and let me know if you would like to partner.HV
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