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Corporate Acquisitions of Startups: Why Do They Fail?

Steve Blank

More often than not the results of these acquisitions are disappointing. The goal is to get a corporate investment or an outright acquisition of the startup. The common mistake acquirers make is treating all acquisitions the same. Predicting Success or Failure of an Acquisition.

Notes on the acquisition process

Chris Dixon

Comparatively little, however, has been written about the important transaction at the other end many startups’ life, acquisitions. Here are some things I’ve learned about the acquisition process over the years. But for product and tech acquisitions especially, it is often about getting the attention of the right people at the acquirer. As with financings, acquisitions take a long time and involve lots of meetings and difficult decisions.

Traction is the new IP

Version One Ventures

“Traction is the new IP ” sums up perfectly how the technology space has evolved over the past decade due to the nature of the web. It’s also important to realize how little value investors therefore put on IP when investing in a company. Three of those have since been acquired and patents did not play a significant role in the acquisition process. If traction is the new IP, the question still remains if your startup should file a patent if you see an opportunity.

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Preparing For An Acquisition

YoungUpstarts

In the current economic landscape, it’s common for startups and businesses to seek a buyout or acquisition — in fact, it’s frequently the goal from the start. Whether your company is generating profits or operating at a loss, taxes are a significant risk area in any acquisition.

Intellectual Property 101

Up and Running

If someone asked whether or not your business has Intellectual Property (IP) and your answer is “I do not know” or “I doubt it,” you are not alone. It is difficult to be in a business situation completely devoid of IP worth identifying and protecting.

The Backuisition and 9 Other Types of Acquisitions [humor]

OnStartups

10 Types of Acquisitions. Crackuisition : BigCo is addicted to acquisitions. Sackuisition : This is a deal that's all about the customers or the IP or anything other than the people. So, they go off looking for an out-of-town acquisition to do.

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Steve Blank: Why Corporate Acquisitions of Startups Fail

Inc Startups

More often than not the results of these acquisitions are disappointing. The goal is to get a corporate investment or an outright acquisition of their startups. The common mistake acquirers make is treating all acquisitions the same.

Special: The 56 Israeli Companies Exhibiting in Mobile World Congress 2011

VC Cafe

Allot is a leading provider of intelligent IP service optimization and revenuegeneration solutions based on Deep Packet Inspection (DPI) technology, Allot Service Gateway solutions for mobile broadband are compliant with 3G.4G/LTE and WiMax networks and provide full cell awareness.

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Google Going All In on Mobile

Venture Chronicles

I’m with Larry… this is about IP and what Google is doing is acquiring a massive IP war chest that they can use as currency for access to other people’s IP as well as protect their hardware partners with. If I’m HTC and Samsung this will ultimately be a good thing because the IP equivalent of the Allied Powers has just been formed. In the end, I like this acquisition for Google and now all attention shifts to Microsoft and RIM.

Clean Up Before Raising Funding

Instigator Blog

Deal with IP Assignment as quickly as possible; you don’t want to leave any loopholes in there that will scare investors away. Contractors need to sign proper agreements, with non-disclosures and IP assignment. (Powered by LaunchBit ).

How to Avoid Innovation Theater: The Six Decisions To Make Before Establishing an Innovation Outpost

Steve Blank

Startups are developing IP relevant to the disruption. Acquiring a growth-stage private startup can provide a faster ROI at lower risk than the acquisition of an early- stage startup.

Taking Corporate VC: When It Makes Sense

View from Seed

These corporate VC activities go hand in hand with other strategies of large companies including internal R&D, IP licensing, M&A, etc. . In recent years we’ve seen more and more corporations become more active or establish strategic VC arms.

Top 4 Content Marketing Metrics

Duct Tape Marketing

New Users are the number of people viewing the site for the first time (or for the first time on their particular IP address) while returning users are returning to view your content again. This is the total number of unique IP Addresses that have accessed your site in the filter window.

Key Contracts Every Business Must Use

YoungUpstarts

Whether the information is trade secrets, business know-how, financial data, product plans, customer acquisition strategies, the information a business possesses is what makes it valuable and unique. by Tej Prakash, co-founder of ShouldiSign.com.

Fear of Failure and Lack of Speed In a Large Corporation

Steve Blank

And when we do make bets, they’re small bets on incremental products or acquisitions that simply add to the bottom line.”. They know the activities, resources and partners (manufacturing, regulation, IP, supply chain, etc.) – and the costs to deliver the product/service and have well defined product development and product management tools that emphasize the linear nature of shipping products to existing customers.

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The Oracle Way

Mark Birch

Thus, they launched their aggressive takeover of Peoplesoft, and then proceeded to buy companies such as Siebel, Hyperion, BEA Systems, Sun, and their most recent acquisition of customer service SaaS provider RightNow Technologies.

If It Ain’t Broke, Break It!

YoungUpstarts

Finally, as part of growth of any business is the ability to successfully execute on business development – this can include increased sales, successful fundraising and team member acquisition. By Michael S. Melfi JD, MBA.

Retooling Marketing in a B2B Company

Venture Chronicles

When you combine inbound marketing with account-based scoring, you get a very potent combination of predictable opportunity funnel that also benefits from lower customer acquisition costs. Ping Identity has gone through a top to bottom transformation in marketing over the last year.

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30 Machine Intelligence Startups to Watch in Israel

VC Cafe

This is done by enriching transaction data points such as name, email address, and billing and shipping address with around 2,000 extra data points, such as an IP latency check to measure the real distance from the user, IP connection type, distance between key strokes, and email name match.

The Importance of Partnership Agreements, NDAs, and Security: Lessons from HBO’s “Silicon Valley”

Up and Running

Even from the outset, Pied Piper had problems related to IP, with the founder having to beg a local irrigation company for the rights to the company name. Most NDA violations don’t end with a company acquisition, but they can be costly nonetheless. Image via HBO.

Corporate Dev Will Kill You

Mark Birch

The worst is that they steal your IP, fund a competitive offering, hire away your talent, low ball an acquisition offer, bad mouth you to investors, poison your culture…well I can go on. I have been telling startup founders for a while about the dangers of the corp dev guys.

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Qualcomm’s Corporate Entrepreneurship Program – Lessons Learned (Part 2)

Steve Blank

Doing so meant they would have to take risks for IP acquisition and customer/market risks outside their experience or comfort zone. I ran into Ricardo Dos Santos and his amazing Qualcomm Venture Fest a few years ago and was astonished with its breath and depth.

Top 120 Startup Posts for 2010

SoCal CTO

IP Law for Startups , June 23, 2010 Groupon’s Growth Made Possible by Facebook - Leveraging Ideas , May 5, 2010 Automating Themed Logo Changes by Season - TylerCruz.com: An Internet Entrepreneur's Journey , October 18, 2010 Selling a Business - A Guide for Investors and Entrepreneurs - Angel Blog , February 28, 2010 Minimum Viable Product in practice - Guy Nirpaz , October 17, 2010 Want to Know How VC’s Calculate Valuation Differently from Founders?

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Startup Blog: Intellectual Property: How Do I Get Rights to Patents?

Taffy Williams

There are a few ways to obtain the rights to IP for your NewCo. But, for you or your NewCo to obtain licenses or acquisitions of rights to IP, make sure you are negotiating with the CORRECT owner of those technology rights.

The Top 4 Items You Need Documented When Selling Your Website Through a Broker

Blogtrepreneur | Entrepreneur Blog

These lists have value beyond by providing a new future owner with an audience to instantly market to after acquisition. Providing the right information to a prospective buyer is an important step in selling your website business.

The investment that didn’t happen

K9 Ventures

On future occasions, whenever I expressed an interest to invest, the founders came back and told me that they had an acquisition offer on the table! However, the IP climate remains unchanged, and it’s likely that other villains will continue to exploit similar situations.

The Intersection of SEO and CRO (and How to Maximize Long Term Growth)

ConversionXL

How do you balance traffic acquisition with conversion optimization? Treat Googlebot just like any other user and don’t hard-code our user-agent or IP address.”. You can usually tell this is the case when your SEO traffic converts well below other acquisition channels.

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Why The Media Has Been Wrong About YouTube Networks

Both Sides of the Table

It is the world’s best customer acquisition for video consumers to get them to come to your O&O where you can make your $25 CPMs. Give access to music that is legal, avoiding lawsuits and ensuring revenue isn’t captured by other IP owners.

McAfee To Acquire Finnish Stonesoft For €297 Million

ArcticStartup

In a big acquisition for Finland, McAfee has announced the acquisition of Helsinki-based Stonesoft for a nice €297 million in cash.

Synopsys acquires Oulu's Codenomicon

ArcticStartup

The details of the acquisition were not announced. Synopsys meanwhile provides electronic design automation and semiconductor IP, but Codenomicon will plug into their software quality and security testing solutions under its Coverity brand.

The Advanced Guide to Transactional Emails That Convert

ConversionXL

Use a dedicated IP for transactional emails. Identify all of the machines, IP addresses and sending domains you use. Testing starts from your point of email acquisition, so your options are certainly not limited.

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The Boston Surprise

Fred Destin

As a remarkable IP powerhouse Boston always has and will continue to produce hard tech innovation that produce meaningful outcomes. Now that I am leaving Boston I can talk about its startup ecosystem in all candor.

Read My Lips: We Are Not Walking Away from WebOS

Venture Chronicles

Watch for two main arguments being presented, the first by the tech pundit community and the second by HP itself in an effort to salvage whatever dignity remains after spending a lot of money on an acquisition that many people, including myself, said makes sense but then completely failing on the follow through. First the tech pundits, who are centering on the IP is the main asset argument.

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Tune In, Turn On, Drop Out – The Startup Genome Project

Steve Blank

Founders overestimate the value of IP before product market fit by 255%. . We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team. In April 2010 I received an email that said, “I’m an incoming Stanford student in the fall and working on a project that a number of people suggested I get in touch with you about.&#. Ok, I get a lot of these.

Getting Series A Ready

StartupCFO

Go to Market : - Company has identified a first engine of growth: A clear channel for acquiring and retaining users. - Company has initial data around cost of customer acquisition. At Real Ventures , we run a dedicated program of seed stage investments.

14 Interesting Findings From The Startup Genome Project

YoungUpstarts

Founders overestimate the value of IP before product market fit by 255%. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

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Registering A Domain Name For Your Business

YoungUpstarts

Your domain name is different from its IP address. Most users find it easier to remember a site name instead of its IP address (a string of numbers, such as 109.87.6.543). Another business may pick up the domain name and prevent or delay your acquisition of it.

Booxmedia acquired by Amino

ArcticStartup

The acquisition provides the Group with an immediate capability in this area whilst also providing a platform to build upon.

The Four Main Things that Investors Look for in a Startup

Both Sides of the Table

So NEVER talk about early exits, quick flips, tuck-in acquisitions, previous interest shown by acquirers, etc., What about Product / IP? I obviously don’t speak for all investors.

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

We want money to make some acquisitions (investors would prefer to fund M&A if they know specific deals – not to encourage bad behavior. So money spent should add equity value or create IP that eventually will. I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. ” I highly recommend reading it.