Business Model Analysis of Exitround

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Background of Why I like Exitround

I just recently read this article and really liked the business model of this company, Exitround.  Essentially they help startups anonymously seek acquirers and they’ve just helped facilitate their very first acquisition.

Most startups fail.  Of those that don’t fail a very small percentage become extremely successful to the point where they have an IPO and can hire someone like Goldman Sachs to sell shares in their company.  But there is an in-between group of startups that are successful but not nearly enough to use a large investment bank.  For example, imagine you’re leading a startup that is making some profits but you’re completely burnt out from working 7-day weeks for the past few years.  And you decide you’ve had enough and it is time to sell so that you can move to some small island and sip Pina Coladas with little umbrellas.  So what do you do?  Trying to find a buyer is still a real pain in the butt.  You may try to tap your immediate network but this is a very limited set of buyers and you’re unlikely to get the competitive price you could get if you tapped a much larger global audience.

exitround

So why is Exitround a great business model?

1) You can reach a much wider audience than your personal network through this global marketplace.  Exitround even says they have Fortune 500 companies, which would be very difficult to tap via other channels.

2)   Selling a company is not the type of thing you want to announce all over your website and social networks.  Why?  Because it is likely to be viewed very negatively by your customers.  And the last thing you want to happen right before you sell is a sharp downturn in sales.

3) Acquirers have very poor information currently about who is willing to sell.  It is a lot of hard work for them to call companies themselves and find out if they’re willing to sell.  So it’s a lot easier if they can just check out a site and filter out the companies they’re most interested in.

4) Startups are often very poorly informed about when to sell and how much they should seek as a selling price.  Exitround plans to help here as well by forming an “industry council” that will produce useful content on this topic.

So if you’ve got a startup that’s turning over a few million a year and you want to chuck it all and jet off to the tropics… then go check out Exitround!

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