What if I got approached by a strategic investor?
We launch new series of 1-minute videos – tips for startup founders from Alexander Konoplyasty, co-founder of Flashpoint Venture Capital.
❓”What if I got approached by a strategic investor?”
👉 Be prepared that strategics like rolling over founder equity into deferred forms of compensation
As the valuation market environment has been changing in 2022 and the overall macro situation becomes more volatile we see more and more start-ups being approached by strategic buyers. They are looking for unique features, products, or teams to complement their own growth. Several things to keep in mind.
Firstly, it is a good sign by itself showing that you are building something valuable. You need to decide whether you as a founder are prepared to keep fighting and building your company, is there enough capital, what’s the competitive dynamics, is there unanimous support amongst your shareholders, is your team supporting you. Sometimes, not all things get aligned and you might want to consider selling. Don’t engage in a bilateral discussion, try involving an advisor and run a competitive process.
Strategics like to drag time and could be hard to negotiate on price in absence of competition. Be prepared that strategics like rolling over founder equity into deferred forms of compensation. Synergies that you might be expecting don’t often materialize. In summary, strategics are a good complement to your fundraising process.