Investment by venture capitalists (VC) is declining, even the ever-hot tech market is experiencing a cooling.  Entrepreneurs and CEOs in start-ups are fairly concerned about survival. A game plan that might just save drowning companies is setting sail direction merger & acquisition (M&A). When preparing, entrepreneurs must see their start-up from the point of view of potential buyers

AVC investments were cut by almost one third in Q2 2022 compared with 2021, IPOs hit a 50-year low.

Big brands like Uber or Airbnb gained from the last downturn, while the majority of companies relying on VC struggled, many switching to an M&A strategy. 

Research shows this strategy to work out in the long run: venture-backed M&A plummeted during the recessionary period but came to an early recovery, VC-backed M&A bounced back and took off again.

A crash course on M&A: The process normally requires 12-18 months from start to end. To get a jump on the process, it’s important to know how you’ll be evaluated by a potential buyer. Most will have a ranked scorecard with specific criteria, such as deal terms, strategic fit, competitive gaps filled, cultural compatibility, potential upside, and finally “lift” – how hard will the purchase and subsequent integration be?   If M&A is likely in your intermediate future, your task today is to reduce a prospective buyer’s lift and increase your “acquirability.”

Many of the actions that make your company a desirable acquisition target will also enable you to better weather economic uncertainty. The decision to sell should be your choice — not a necessity.

How do you sell a product or service when it is yet to exist?

This challenge is faced by many entrepreneurs early on, after successfully getting their startup off the ground, but not having anything to sell yet. 

Carter Cast and Craig Wortmann, two clinical professors of innovation and entrepreneurship,  offer some advice. 

“Start now!” A mistake often made by new entrepreneurs is the dangerous assumption that you only need to be able to sell, not to be an entrepreneur. The kicker is, entrepreneurial selling is a lot different from the selling one might know from a sales department. The reason: you don't have anything to sell yet, and no strategy.

Do not assume everything needs to be perfect before you start selling. The software does not have to be up and running yet, you do not have to know exactly what the customer wants.

Go on offense, get in front of your situation. Let them know about your vision, and the fact that it is not fully developed yet. Get in touch with customers; Test, then go back to the drawing board to refine.

A good rule of thumb: If you can break your services down to a 15 second bit, a tweet, or even just a hashtag, you know you're doing things right.  In the early days of your business, the company, the product, the solution, are all very loosely defined.

What is needed is asking customers how your services resonate with them and whether they would value it in theirs, whether it would solve a real problem for them? These are questions worth asking, questions that are actually making a sale. That's what selling essentially is.