Over the last 5 to 7 years, we have seen more and more startups that have defined their ambition based on an earlier exit point as compared to most Deep-Tech startups.
Rather than setting their ambition goals on a certain market share and a revenue target, they set their ambition on being high-volume (HV) ready and, at that point, find a suitable “mothership”. There are several reasons why this strategy is seeing more adopters. Most important is the lengthy path for a Deep-Tech startup to reach that “market share” objective. That path might take 8-10 and sometimes 12 years with a high number of venture rounds which dilutes their original ownership to a thin percentage. Markets might change, the venture capital scene might change, etc. Therefore, planning for a 3-5 year path to bring a product to the high-volume marker and at the same time looking for a suitable acquirer where the product would fit with the acquirer’s marketing and sales organization not only secures a much faster exit but also a more secure one. Despite the obvious lower valuation, founders hold a much larger percentage of the company’s outstanding share capital.
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When people talk about “pillars of fundraising,” they often assume there’s one universal list. However, there is no single universal set of pillars in fundraising. Different fundraising experts describe different four-pillar models, each with its own logic and purpose.
Many founders who receive a Non-Binding Offer consider it a big achievement. Especially after months or years of development, a potential acquirer looks like a sign that hard work is bearing fruit. But being excited sometimes may lead founders to make mistakes.
A successful deep-tech M&A transaction requires more than just buying and selling — it requires unique insights that no ‘typical’ advisor should have access to. The success of such a complex deal hinges on knowing how new technologies relate to other technologies, IP, and current & future market trends.