The Internet's Back Room for Start-up Acquistions
When the going gets tough, the tough get going—or now, apparently clandestinely succumb to talent acquisitions. Or, at least, this is a trend that start-up M&A network Exitround, which officially launched yesterday, aims to facilitate with its new platform.
The service, which was started by Jacob Mullins, a senior associate at Shasta Ventures, stresses anonymity as a central aspect of its model. For that reason, commentators have already called it an “Ashley Madison for entrepreneurs.”
It works like this: start-ups in pursuit of being acquired post non-specific details about their team and company to a listing on the site. Then development executives and investors browse the anonymous listings, and if they’re interested in a company, they make an overture through the site, which the start-up can accept or decline.
“It’s a dirty job,” Mullins told TechCrunch. “If we do our job right, you just see press articles about companies being sold. Nobody knows about it except for a limited number of users.”
No money changes hands, according to the company, until the start-ups reveal their identities, meet with their potential acquirers, and accept their offer. At that point, Exitround gets $10,000 to $20,000 per hire.
In a blog post on the site, Mullins wrote that: "The large increase in the early-stage funding over the past three years, without the commensurate increase of secondary stage dollars, has caused a disequilibrium in the funding lifecycle where dramatically more startups are competing for a relatively unchanged pool of venture dollars.”
Because of this start-up bubble, young companies who can't seem to piece together Series B funding are now seeking to be acquired by large companies.
It’s an astute observation, and one that is likely substantiated by the fact that private tech acquisitions are on the rise. And although it officially launched only yesterday, Exitround claims to have attracted Google, Groupon, Topix, Threadflip, and Accenture as potential buyers on its site.