{"id":27543,"date":"2017-06-08T13:03:06","date_gmt":"2017-06-08T17:03:06","guid":{"rendered":"https:\/\/www.wework.com\/creator\/creator\/?p=27543"},"modified":"2020-03-30T21:35:00","modified_gmt":"2020-03-31T01:35:00","slug":"steps-for-selling-your-startup-idea","status":"publish","type":"post","link":"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/steps-for-selling-your-startup-idea","title":{"rendered":"Steps for selling your startup idea"},"content":{"rendered":"

How To Sell Your Startup Idea<\/h1>\n

As a startup founder, you\u2019re constantly in sales mode. You know your business idea could make billions, but you need to pitch your startup effectively in order to get the support you need from investors.<\/p>\n

After all that hard work, you might be ready to sell your startup and hand the reins to a capable leader, especially if you have other business ideas to pursue. In the startup world, however, sales require particular finesse. Learn how to pitch your startup idea and how to sell your startup to get the results you want.<\/p>\n

Do Your Homework<\/strong><\/h2>\n

Don\u2019t go into a pitch session cold. Start by identifying investors that focus on your industry and find out what types of companies they tend to fund. If yours seems a likely fit, seek out a warm introduction through your network.<\/p>\n

Connect with the fund via email to provide a brief introduction of your startup and what you do. Ask to set up a virtual or in-person meeting to make your pitch.<\/p>\n

Craft the Perfect Pitch<\/strong><\/h3>\n

Any startup founder in your shared office space can tell you that selling your idea is next to impossible without a great pitch deck. Follow these steps to craft the perfect pitch:<\/p>\n

    \n
  • Keep It Short:<\/strong> Many venture capital funds limit pitch sessions to just 10 minutes, so make your delivery as concise as possible. Remember that even if you have more time, investors may not listen to a long-winded pitch.<\/li>\n
  • Start Off Strong:<\/strong> Don\u2019t save the truly exciting parts for the end of your pitch because you may have lost your audience\u2019s attention by then. Find a way to lead with the best parts to make sure you have everyone\u2019s attention.<\/li>\n
  • Be an Evangelist:<\/strong> Investors tend to feed off your excitement, so don\u2019t rein in your passion. Be enthusiastic about your product but make sure to explain it in a way that the average investor can understand.<\/li>\n
  • Solve a Problem:<\/strong> Any new product worth a substantial investment has to solve a pressing problem in an innovative way. Focus your pitch on the problem and explain how your product offers the ideal solution.<\/li>\n
  • Show Them the Money:<\/strong> It doesn\u2019t matter if you\u2019ve already taken dozens of pre-orders or you don\u2019t have a single subscriber yet. You have to explain to investors what your revenue model is and how it\u2019s going to make money.<\/li>\n<\/ul>\n

    Prepare for Follow-Up Questions<\/strong><\/h3>\n

    Even if you deliver an exceptional pitch, you should still expect to answer follow-up questions. After all, investors have to protect themselves and make the right financial decisions for their companies, so plan to address at least a few value-focused questions.<\/p>\n

      \n
    • Why now?<\/strong> Not every startup is ready for prime time, so if you think yours is, be prepared to offer specific reasons why now is the right time for your idea to enter the market.<\/li>\n
    • How much traction has the company gotten? <\/strong>Startups tend to look like more attractive investments if they already have funding or if they\u2019ve received great press. Be ready to talk positively about concrete progress you\u2019ve already made.<\/li>\n
    • What is the company\u2019s key intellectual property? <\/strong>Many startups depend on intellectual property (IP) for developing innovative products and creating value. Be prepared to offer details about your startup\u2019s IP, steps you\u2019ve taken to protect it, and whether any current or former employees may have compromised it.<\/li>\n
    • What are the biggest risks in play? <\/strong>Startups can be risky investments, and investors need to know what they\u2019re up against. Be ready to talk about legal risks, product liability, or even regulatory issues. Withholding key information about risks could cost you down the line.<\/li>\n
    • What type of exit is most likely?<\/strong> Investors need to know when they can expect to get a return on their investment, so start thinking about this early in the pitching process. Be prepared to discuss whether an initial public offering (IPO) or an acquisition is the most likely exit strategy.<\/li>\n<\/ul>\n

      Selling your startup idea isn\u2019t easy, but if you do your research, craft a great pitch, and answer follow-ups effectively, you\u2019ll have a good chance of landing the investors you need. Prepare to do this dozens of times to raise the finds your startup needs to move on to the next stage.<\/p>\n

      Sell Your Startup<\/h2>\n

      Many startup founders stay with their companies for years or even decades, providing leadership and strategic advice. However, there are plenty of reasons to sell your startup. If your company isn\u2019t moving in the direction you want, or if you have other business prospects on the horizon, selling could be a smart move. Follow these steps to sell your startup and come out ahead.<\/p>\n

      Find the Right Time<\/strong><\/h3>\n

      In the startup world, timing is everything, especially when it comes to leveraging a sale. The best time to sell a startup is when you don\u2019t have a pressing need to do so, since alarm bells or major risks can turn off potential investors quickly.<\/p>\n

      Rather than waiting until your company has lost traction or missed fundraising goals, do your best to think ahead. Even when you have no intention of selling, be open to casual conversations about a potential takeover.<\/p>\n

      Never open the floor to serious talks about mergers and acquisitions (M&A) or begin negotiating until you\u2019re ready to move forward. Doing so without serious intent can confuse your team and cause your investors to lose trust.<\/p>\n

      Convey Your Vision<\/strong><\/h3>\n

      If your startup has a lot of potential, it should be an easy sell. If you can\u2019t convey your vision, however, you may struggle to negotiate a deal.<\/p>\n

      Selling your company isn\u2019t the same as pitching your startup, but it\u2019s close. When talking with potential acquirers, be prepared to discuss what objectives your company has achieved and what your growth potential is. Help acquirers understand how they\u2019ll benefit from this major investment. This may require researching your target acquirers thoroughly, building relationships, and getting to know them well before sealing the deal.<\/p>\n

      Know Your Value<\/strong><\/h3>\n

      Acquisitions can go downhill quickly when any party involved has unrealistic expectations about the startup\u2019s value. Before starting negotiations, get an honest valuation and do your due diligence to ensure its accuracy.<\/p>\n

      Keep in mind that a range of factors, including recent acquisitions in your industry and the team\u2019s value, can affect the overall assessment. Share both the high- and low-end versions of your startup\u2019s valuation with investors and other key players so everyone on your team understands what to aim for.<\/p>\n

      Work With Your Investors<\/strong><\/h3>\n

      Unless you own your company outright, you\u2019re going to need to work closely with your investors to make a deal that allows for your exit. Remember that no matter how much your investors like or believe in your company, their primary objective will be making sure they get a return on their initial investment.<\/p>\n

      To get everyone on board, make sure you understand where they\u2019re coming from. For instance, large investors can typically afford longer growth horizons, while smaller investors typically need earlier exits and faster returns.<\/p>\n

      Get Reliable Advice<\/strong><\/h3>\n

      Selling your startup can be incredibly complicated, and few founders tackle the process alone. Instead, seek out advice that you can trust.<\/p>\n

      Most startups hire legal experts to review contracts and term sheets as well as handle some of the high-level conversations with investors. Your current legal team may be equipped to advise you on a sale, but don\u2019t hesitate to talk with them about finding a mergers and acquisitions expert when the going gets tough. Some companies also hire investment bankers to broker deals, but in general, this is only necessary for high-value startups.<\/p>\n

      Sign a Term Sheet<\/strong><\/h3>\n

      As you begin to review term sheets, an experienced lawyer will advise you to negotiate each detail as much as possible. After all, you don\u2019t want to let important details slip by only to let them ruin negotiations in the 11th hour.<\/p>\n

      Once you\u2019ve worked out a deal that provides the best possible scenario for your startup and your team, sign the term sheet. Once the deal closes, you\u2019ll have sold your startup and you\u2019ll be ready for your next business venture.<\/p>\n

      Whether you\u2019re pitching an idea or selling your company, you want to emerge on top. Keep these tips in mind as you build your business and shape your reputation in the startup world.<\/p>\n","protected":false},"excerpt":{"rendered":"

      How To Sell Your Startup Idea As a startup founder, you\u2019re constantly in sales mode. You know your business idea could make billions, but you need to pitch your startup effectively in order to get the support you need from investors. After all that hard work, you might be ready to sell your startup and […]<\/p>\n","protected":false},"author":899,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43910,43902],"tags":[],"class_list":["post-27543","post","type-post","status-publish","format-standard","hentry","category-business-solutions","category-professional-development"],"acf":[],"yoast_head":"\nSteps For Selling Your Startup Idea | Ideas by We<\/title>\n<meta name=\"description\" content=\"Don\u2019t go into a startup pitch session or a sales meeting unprepared. 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