Startups are bought never sold, this maxim while true makes a startup acquisition look very esoteric and opaque. This leads to many misconceptions and poor preparation on the part of startup to be amenable to an acquisition. As in the case of funding the best time and place to get acquired is when you don’t need or have to, which requires preparation months or even years in advance.

1. Activating
Potential Strategic
Partners (PSP)
Partnership Thinking

2. Startup -> Idea -> Product/Market Fit -> Success

3. Consumer SMB Enterprise
Global
Market
India
Market
Win in market
Create market
Indian
Founder
Silicon Valley
Founder
An Indian founder

4. Consumer SMB Enterprise
GlobalMarketIndiaMarket
eCommerce
Online Travel
Tech Startups in India

5. Consumer SMB Enterprise
GlobalMarketIndiaMarket
$35 - 60b
India tech startups cumulative market cap
~ $10b

6. “We will miss out on the startup funding”

7. Sanjit Biswas, SF
Acquired by Cisco by 1.2 billion
Sujai Karmapuri, Bangalore
2004-12

8. Entrepreneurial Thinking
Product Thinking
Partnership Thinking

9. Topics 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition Process
4 - Positioning and Preparation
5 - Narrative & Refinement

10. How many of you would like to get
an exit in the next 3 years, at what
price ?

11. #1 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition Process
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

12. 3 options
Profitabl
e
&
Private
IPO Acquired

13. Profitable product companies
Then, setup an innovation labs for incubating the next product idea

14. Product company IPO
Source - http://www.chittorgarh.com/
*Few companies not listed in India
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year to IPO - 6
Year to IPO - 8
Year to IPO - 11
Year to IPO - 11 Year to IPO - 21 Year to IPO - 17
2007
Naukri
Year to IPO - 11
Year to IPO - 10
NASDAQ
9 in last 10 years
NASDAQ
Revenue ~ $13M
Revenue ~ $40M
Revenue - $93M
Revenue - $83M
Revenue - $72M Revenue - $52M
Revenue - $52M
Revenue - $55M
Revenue - $87M

15. Product acquisitions (as of Q4 2016)
$4bn across 354 deals
Source - iSPIRT Signalhill 2016 State of M&A of Technology Startups India Report
Acquihire Avg is $300K

16. EXERCISE
What is the best envisioned outcome
for your startup & which year do you
expect it ?

17. Mean time to IPO or Acquisition (US Data)
From the time of first external investment,
mean time of when M&A happens in 4.5 years
Source - http://pn.ispirt.in/exits

18. #2 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition Process
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

19. Case 1: Facebook - LittleEyeLabs
About - Provider of Mobile App Performance analyser, Kumar Rangarajan - CEO & 3 more founder
Founded - Aug 2012
Funding of $250K via GSF and VentureEast
Traction - 50 paid global customers by end of 2013 (Paid option in May 2013)
Acquisition - $10-$12m, cash + stock deal. Many angels made good 10x return
Lessons from Kumar
● Critical Advice #1 - Why do you want to be VC funded & be burden of expectation of $100m exit ?
● Critical Advice #2 - Acquisition happens because people know people
● Critical Advice #3 - Keep cap tables clean,

20. Not raise more money than is needed,
reduces exit options

21. People know people and they talk

22. Case 2: Cookpad - CucumberTown
About - Food blogging platform, Cherian Thomas + 2 more foundersBased in Bangalore initially 2012,
later moved to SF.
Founded - Jan 2013
Funding - Raised a $1m , ex-boss Farmville creator Zao, Naval Ravikant, Paul Singh, Ashish Gupta
(Helion) but due to fragile condition stayed very silent.
Acquired by Cookpad (Japenese Unicorn) in June 2015, Start to finish took 6 months
Sold at a price where investor made 3X their returns. All cash deal plus earnouts.
Key lessons
1) Moving to valley led to chance meeting with strategics, another startup acquired made mutual
connection
2) VC is exponential business, not raise it unless I am absolutely sure that I need it. Reverse engineering the
psychology of an acquirer is very important.
3) Have a deal buddy that has recently done a transaction ,they are emotionally less invested..

23. Constantly meet people, don’t know
which meeting will come handy

24. Before raising my round whether I am a
hyper growth startup

25. Case 3: Calm.io - Nutanix
About - Devops automation tool, Enterprise Sales. Aditya Sood + 2 co-founder.
Founded - 2009
Funding - Sequoia , raised 4m Series A in 2013
Traction - Indian & US customers
Acquired - Acquired by Nuatanix Aug 2016 (disclosed price of $16 m, actual is more)
Lessons
1. Place/timeline make a huge difference, In 7 years US company(Nutanix) went to 600m, Calm
became $16m.
2. Have to decide what is my economic outcome, own show or IPO/acquired company

26. Payday is when you sell your shares

27. Case 4: Arkin - VMWare
• About: SDDC (Software Defined Data-center)
• Founded – 2013
• Funding: Angels, Nexus Venture Partners $22 mn
• Traction:
• Acquired: vmware acquired in June 2016
• Lessons
– Arkin and vmware started partnering long before the acquisition
– CEO used to work at vmware as a product manager in the past
(people have to connect for a deal)
– Vmware was perhaps a reference during Series B funding

28. Case 4 - TuppleJump - Apple
About - Data Engineering startup, Rohit Rai & Satya Prakash, 16 employees
Founded - May 2013
Funding - Bootstrapped
Traction - Profit Rs 80K, Revenue - Rs 70 lakh
Acquired - Sep 2016 by Apple for $25-$60m.
Key lessons -
Actively building relationship in the US is very important.

29. Serendipity must be engineered

30. #3 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition
Process
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

31. Like selling art, but can’t leave to chance
● Selling a ‘Art’ rather than
‘Ice cream’
● Acquisition an important
business process
requires a plan.
● Complex sales process -
one final buyer.
● ‘PSP’ is to ‘Acquirer’,
‘Lead’ is to ‘Customer’,
vs

32. Process unique & different
● Buyer driven rather than seller driven.
● Value is in the eyes of beholder.
● Price discovered only via auction
● Fragile, complexity kills a deal

33. ● No other way to solve a problem
● Acquisitions are directional !
● Favour perceived category
leader
● Derive from personal relationships
From the eyes of an acquirer

34. Funding affects the options
● An early tech exit today in US is $15-25m
● VC require 20% IRR -> 30X return from each investment.
● Unintentional Moonshot Expectation (Thumb rules)
○ Series A - 10X
○ Series B - 4-7x
○ Series C - 2-4x

35. Position > Prepare > Cultivate PSP Relations > Co-create > Partner > Close
As Thought
Leader

36. #3 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition
Storified
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

37. Startups are a small boat
on a voyage, chasing a
DREAM ISLAND
Startup
Dream
Island

38. They pick a TAILWIND to
help propel forward.
else paddling on own, is a
tough journey.
Tailwind

39. Potential Strategic Partner
are BIG TANKER SHIPs,
have own ISLAND to chase
irrespective of the
TAILWIND
Potential Strategic
Partner

40. When Potential Strategic
Partner gets excited with
new one, they go after this...

41. Other Startups and
Players
Once destination &
direction get aligned
startup comes under the
radar

42. Lead to possible discussion
on how the small boat’s
engine can fit in the PSP to
reach the island faster

43. Indian Startups don’t come
on a global STRATEGIC
RADAR, even if chasing the
same DREAM ISLAND

44. As an Indian startup what should
you do ?

45. Know your PLAYGROUND

46. Without an AIRGAME....
Any Sales will feel
like Sisyphus
Journey

47. GROUNDGAME - Co-create a future together

48. Have right Story, make sure you are understood ?

49. ● Know your PLAYGROUND
● Come in the radar - AIRGAME
● Habit of building relationships - GROUNDGAME
● Have a tailored NARRATIVE
To summarize

50. #4 1 - Startup outcomes ?
2 - Acquisition Stories
3 - Acquisition Process
4 - Positioning and
Preparation
5 - Narrative & Refinement
6 - Habit

51. 1
2
3
4
Who are top 5 companies that can help you
grow your market ?
What category would you describe yourself in ?
Who are top 5 players in that category ?
Draft a one Pager for each of them on their size of
revenue, business units they have, which business
unit would fit in, past partnership/acquisition they
have done, org structure
PLAYGROUND

52. 1
2
3
4
What conferences that your PSP speak or
attends ?
Who are the top 5 journalist , analyst that write
about the trends in your category ?
Who is the Gartner equivalent (Industry Influencer)
in your Industry ?
5
What the are the top 5 research reports or online
articles do your PSP read ?
AIRGAME
What is your position vis-a-vis them in the category ?

53. 1
2
3
4
What is the name of the SVP of the business
unit in each of 5 PSP that you identified
Draw org chat of those in that organization,
who does the corporate development report to
?
Who has the most dominant role in the company
- product manager, head of sales, head of
marketing
Who in your current network can help you
introduce to any of the person in that organization
5 What is your initial introduction line to reach out to
him/her ?
GROUNDGAME

54. Exercise
Identify Playground, Airgame &
Groundgame

55. #5 1 - Startup outcomes ?
2 - Acquisition Case Studies
3 - Acquisition Process
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

56. 1
2
3
4
What is your mission ? (The dream Island that
whole world is after)
What tailwinds are helping you ? (The big
trends in your space)
What makes you real and is unique about your
engine ? (Differentiation - a large player may envy)
How are you going to grow to big a titanic on your
own ? (value is created, invokes fear)
5
What makes you best suited to reach the mission
faster than others ? (invokes greed)
Narrative Elements

57. Name a Big, Relevant Change in the World
Narrative Structure
Show There’ll Be Winners and Losers
Tease the Promised Land
Present Evidence that You Can Make the Story Come True
Source - Zuora Deck https://themission.co/the-greatest-sales-deck-ive-ever-seen-4f4ef3391ba0

58. Exercise
Write your story

59. Entrepreneur Investor Partners
Other Stakeholders
Decision Maker
Message Loss Ratio at Every Stage
Keep Message
Simple, Short
and to Top 1%
?
Narrative - pass the chinese whisper test ?

60. #6 1 - Startup outcomes ?
2 - Acquisition Case Studies
3 - Acquisition Process
4 - Positioning and Preparation
5 - Narrative & Refinement
6 - Habit

61. Its a funnel, needs a process and a habit
Time
Seeding Tending

62. Thank You

63. To know about our next session or corporate
workshops, please write to Edu@theNextSpace.co