Why is it worth merging with another startup?
Our ninth video in the series of 1-minute tips for startup founders from Alexander Konoplyasty, co-founder of Flashpoint Venture Capital.
❓”Why is it worth merging with another startup?”
👉Revenue synergies from upselling both products to customers, cost-savings, cash on balance sheet
As we are going through market turbulence, and the growth agenda at bigger start-ups is replaced by efficiency, we are coming more often across merger situations. Why is it worth merging with another start-up? Some things seem obvious. Revenue synergies from upselling both products to customers, cost-savings, cash on the balance sheet. Creating a larger company might make fundraising easier. But there could also be value destruction – defocus of management on the M&A and integration; management and values compatibility; capability to realize synergies altogether. Try analyzing the P&L of the potential merger candidate, their GTM, management motives for the merger, are all shareholders interested and why, etc. Some of these could be hidden from you and not obvious. So think carefully and take time.