Exiting startups – from going public to mergers to acquisitions – is a goal for many founders.
The strategic moves can generate investment returns or limit losses for shareholders and investors, help the startup grow through additions like resources and client bases, and can allow serial entrepreneurs the flexibility to work on their next projects.
Business First talked with three local startup leaders who have successfully exited companies about their exit strategies and advice. Here’s what they have to say.
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Jonathan Strimling took over as CEO of SMTP in 2013, which later acquired and became known as SharpSpring. He led the company for two years, transforming it from a slow-growing email provider to a player in the marketing automation sector, and took the company to the NASDAQ. Strimling transitioned leadership of the company to the original founder of SharpSpring in 2015, and the company was ultimately acquired by Constant Contact in 2021 for $240 million.
Strimling is now president and CEO of CleanFiber, which moved to Buffalo in 2017 after winning a $500,000 43North contest prize. The business manufactures building insulation from recycled corrugated cardboard.
Based on his experience with SharpSpring, startups should set goals and act quickly while hiring slowly, he said.
Aiming to take the company to Nasdaq helped motivate his team, reassure customers and drove strategic acquisition decisions, he added. But hiring is where startups should take their time, because having a strong team is critical.
“We moved very, very fast and in a fast-growing market like that moving quickly makes all the difference,” he said. “The market gave us value in moving quickly to becoming a leader instead of a lagger.”
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Raj Suchak has a different story. Two of his Buffalo companies – Cloud62 Inc. and, more recently, Grit Seed Inc. – have been acquired. He said that’s due to focusing on the customer and the companies’ internal workplace cultures; he didn’t start the businesses with acquisitions in mind.
“People don’t start companies to sell them,” he said. “They start them to solve a problem that they see. A company sale happens as almost like a natural side effect of trying to scale, solving that problem.”
Along those same lines, acquisitions that come to fruition should be about creating win-wins, he added. Leaders should be able to clearly articulate and execute on why and how coming together with another business will help its customers and its team.
Suchak still leads a local Grit Seed team of seven and expects to hire more workers here.
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David Marshall, who currently leads Orchard Park-based Mongoose, sold his previous company LiquidMatrix in 2004.
LiquidMatrix was created with an exit strategy in mind. Marshall knew the top companies who might want to acquire it, and the startup’s leadership made decisions along the way to make itself attractive to those businesses and their competitors.
“If your goal is truly an exit, then knowing the possible exit options from the beginning and strategically planning are best practices,” he said.
But he’s got experience going down a different path as well. Mongoose was created and run to grow through operations, not raising funds or gearing up for an exit.
“If your exit is uncertain, focusing on very healthy (key performance indicators) of the company puts you in the driver’s seat no matter how or when you want to exit,” he said.