“Sold too early” is historically a derisive term thrown at founders who exited startups still on an upward trajectory, and it’s true that almost every successful company went through periods of interest from potential acquirers, even if it was just casual inquiry. But after a decade in venture capital, alongside my immense respect for the founders who just keep building, I’ve also come to appreciate that knowing when to get out matters as much. And so looking backwards over the last few years of ZIRP Boom, we can now honor those folks who got the bag for their companies by taking the right offer at the right time.
Here’s what I’m purposefully excluding: SPACs, crypto, founder/investor secondary that didn’t include the team, potential fraud, soft-landings dressed up as acquisitions, never compensated their teams with equity, etc. This is about actually interesting companies that probably had to make hard decisions about raising more capital or selling. Although I wasn’t involved in the situations I’m naming below (and so can’t 100% vouch on the details), they’re ones which never had any backchannel stink on them and all seemed to be successful enough before M&A (stage-specific – ie the more mature companies had proven more than the younger ones did). I’m also sure there’s a bunch that I’m forgetting – feel free to disagree or expand the list in your own post.
Frame.io by Adobe: Natural landing spot for a fast-growing SaaS video creation company at reportedly $1.275B in cash. I’m sure the company could have stayed independent and continued building but they exited during a period where multiples were high, antitrust wasn’t an issue, and to a company that can carry the product forward.
Honey by PayPal: $4B in cash for this incredibly mainstream product – maybe one of the last great non-gaming consumer product acquisitions on the books? I assume next phase of the business would have required more and more negotiated merchant/CPG deals, build out the ad network aspects, and always face some privacy/consumer data regulations? What a win!
Locker Room by Spotify: Remember when everyone needed their Clubhouse clone? Spotify gave Betty Labs an estimated $67m for the Locker Room app that became Spotify Greenroom. I believe they’d only raised a seed round so founders/company still had majority of equity (hopefully!). Right place, right time, right decision.
Mirror by Lululemon: There was some snickering about why would Mirror cash out while Peloton, Tonal, and other connected fitness devices were the future. No one is snickering now. Mirror built an impressive product and then took the $500m buyout, not having to worry about customer retention, hardware supply chain, and post-COVID inflation chill.
I’d toast to all these founders but as a result of these outcomes they probably have better champagne than I do! 🍾🍾🍾🍾🍾🍾🍾
(When I asked some friends for their nominations others which came up were Afterpay, BentoBox, Slack +++)