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5 reasons to sell your startup  

Previously, Ben Horowitz made the point that if you are early in the market and have a good chance of being number 1, you should not sell your company.

Elad Gil looks at the reverse question: what are good reasons to sell a startup?

  1. You're exhausted and don't want to keep going. In the context of startups, this makes sense. A startup is usually nothing without its founders, so if the founders just can't keep going, it probably makes sense to sell. However, if you're building a more traditional company, it's worth pointing out that there are other ways to "take a break": you can hire someone to be the CEO of your company, for example, and morph yourself into a more passive shareholder. You'll reduce you profits, but you'll also greatly reduce your stress levels.

  2. The founding team is about to blow up. Same argument as above.

  3. The acquirer is willing to "pay ahead" substantially.

  4. You are about to get massively crushed by a competitor.

  5. You need financial security or regular cash flow. As Ben Horowitz pointed out in his article, that's a pretty bad reason to sell the company. If the founders are running out of cash and considering selling the company to pay the rent, perhaps the company should pay them a better salary. If the company can't afford that, then it's probably not going to sell for a good price anyway.

It's also worth reading Elad's thoughts on those five reasons.

More from the library:
Don't solve problems that you don't have
Investment increases your risk