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Startup companies have become bolder and more aggressive in entering different industries. While there are more startup failures than successful ones, the core of the startup, which is the minimum viable product, is still intact. With a few boosts and changes, your MVP can have a new look that can entice potential investors.
If you have a startup you’re trying to sell, or are looking to buy one, then you’re in the right place. Read along to know where you can buy and sell different startups.
Why You Should Buy a Startup
The race for continuous improvement is what drives the buying and selling of startup companies. If you have a knack for making things better than they were before, or for finding diamonds in the rough, then consider buying a startup.
It all boils down to which innovations can help the most people, and provide the most profit at the same time.
Types of Startup Businesses You Can Buy and Sell
Once you’ve made the decision to buy a startup, the next step is to ponder on what type of startup business you’re looking for. Would a SaaS company be more profitable? Will a blog suit you better?
For your reference, here are the most common types of startup businesses that you can buy and sell:
1. SaaS Companies
The demand for Software as a Service or SaaS companies is expected to grow 21.7 percent in 2022. This type of startup business offers services to customers through the software that they create and develop.
With more and more of the workforce shifting to cloud-based technologies such as SaaS, coupled with the rapidly and constantly evolving internet age, it’s no surprise that such companies have dominated the startup marketplace.
2. Domain Names
E-commerce businesses have blossomed and flourished along with the transition from in-person to virtual workplace settings. With around 12 to 24 million registered e-commerce websites, each with its own domain names, it’s clear there is an existing and growing demand for this type of startup.
3. Blog Sites
Content creators and influencers might not prioritize blogging compared to other media forms, but over 570 million blogs still exist all over the internet as of 2021. Blog sites are as important as other social media platforms, especially when it comes to influencer marketing. So, when you buy and sell this type of business, you’ll be happy to know that you have a guaranteed market for it.
4. E-commerce Sites
Eighty percent of global consumers shop online, and because of the COVID-19 pandemic, people have become even more careful about going out to shop. Knowing this, it’s likely that the percentage of growth will shoot up some more in the future. Clearly, e-commerce sites will be a mainstay in our economy, and doing business with this type of startup can do more good than harm for your resources.
Applications, whether free or paid, are common commodities in the market today. People enjoy using them thanks to their gadget-friendly interfaces and the convenience they offer. With the Digital Age continuously evolving, there’s no telling when the rave for apps will stop. But one thing we know for sure is that you’ll still be able to buy and sell applications in the foreseeable future.
Things to Look for in a Startup Business
After you’ve narrowed down your choice of business, you can then proceed with listing down your non-negotiable points for buying or selling.
It’s standard operating procedure to do research about any undertaking you’re planning to venture into. When it’s about buying and selling a startup, here are the things you should definitely look for before initiating a transaction.
Going through customer reviews is a surefire way of discovering the true potential and actual performance of the startup business you’re looking to purchase or sell.
Of course, you’ll want to see more positive reviews and good feedback from its users, but don’t rely on just this type of data. Negative reviews can be very telling as well. If you can, you might even want to try to experience the product for yourself. This way, you’ll have a clear idea of what the startup can offer you in the long run.
This also applies if you’re planning to sell your startup. As its owner, you should be fully aware of what your startup can and cannot do. Be honest with your potential buyer but don’t give away everything your startup has to offer in one go. Keep them curious and give them some recommendations on how to improve the current state of your startup, should they ask for it.
2. Growth Potential
A startup’s growth potential is not limited to the sales it racks up every month or quarter. You can still unleash hidden growth spurts here and there by probing the right points in your startup’s blueprint.
If you’re buying, take note of how the current owner is running the operation’s analytics. Not every chief executive officer (CEO) and developer pays attention to all the potential metrics of success, even though they try to make sure that their startup is hitting its key performance indicators. You can always make your own formula to increase the startup’s growth potential once you’ve decided to buy it.
A higher rate of traffic suggests a good flow of existing and potential customers for a startup. Think of this as publicity. Whether good or bad, there will still be an audience to entertain with interests to satiate. But if you can examine deeper, you’ll want to see a well-balanced proportion of organic, paid, direct, social media, and referral traffic.
If it’s your first time buying a startup that’s on the edge of financial instability, we urge you to consider scouting the marketplace for startups that have more competitive revenues and returns.
If the startup you’re eyeing isn’t making as much revenue as you’d expect for its line of business, then trying to revive it, even for the sake of a challenge, may not work out. Sure, miracles have been known to happen before, but not every time.
Regardless of the type of startup that you choose to buy or sell, there will always be expenses to pay. The best approach to weighing finances is to check which of the two elements amounts to more: the inputs or the outputs?
If the inputs you need to keep the startup operating are more expensive than the sum of its outputs, can you still reallocate funds to make spending more efficient? If you can, then the startup can still turn a profit. Otherwise, it’ll be harder to guess.
6. Find Out Why It’s For Sale
Reviews, growth potential, traffic, revenue, and expenses are all important considerations when buying or selling a startup. But the most critical question to ask is why it’s up for sale in the first place.
The sooner you can find out the reason for this, the faster you can come up with a plan to better handle and manage the startup. If the seller isn’t giving you direct answers about why their startup is for sale, you should consider dropping any offer you’re thinking to give. With that behavior, it’s easy to tell that there’s something they’re trying to hide.
Look for trustworthy buyers and sellers to protect you from any scams.
Where to Buy and Sell a Startup?
We’ve enumerated the types of startups and what to look for when buying and selling them. Now, the next question is: where to buy and sell a startup?
Here are 10 online marketplaces that we recommend you check out to scout for your online businesses.
If you’re looking for a pioneer marketplace, then this might be the place for you. Founded in 2009, Flippa is the number one global online marketplace where you can buy and sell a startup business.
As of writing, this peer-to-peer platform has sold over 300,000 digital assets globally with millions of users from the creator economy and investors community.
Are you looking for an online marketplace with heavy traffic of both buyers and sellers? Look no further because BizBuySell is just one click of a mouse for you.
With monthly page views of 15 million, you’re sure to have both the exposure you need to sell, and the coverage you want to buy a startup business. You can also find franchise business opportunities in different locations and industries by using their very helpful search bar.
Tiny Capital has had its fair share of miserable experiences dealing with investors since 2007, when they started. But after much contemplation of Warren Buffet’s approach to business, they came back stronger in 2014, buying startups instead of founding them. While this online marketplace has less impressive numerical values for sales and company inventories, Tiny Capital is still valued at over $1 billion as an enterprise.
If you don’t have a startup to sell, maybe you’ll be more interested in helping Tiny Capital find deals instead and earn a minimum of $25,000 for each successful negotiation.
For people scouring the marketplaces for mergers and acquisitions, you should check out FE International. They provide professional advice aside from the know-how of buying or selling a technology business. With their advice, you can go through contract drafts, the sale process, and post-sale obligations in a breeze. If you’re dealing with significant amounts of money and equity, you’ll do better with professional assistance like the one offered in this marketplace.
Do you have a web application side-project-turned-profitable business that you want to sell? Or are you someone who’s looking to buy a web application that you can earn from? If you’re either of the two, then Borderline is the perfect place to go because businesses listed here are mostly web applications. Be sure to read Borderline’s disclaimer though before entertaining any deals.
Exchange by Shopify
Exchange, powered by Shopify, is an online marketplace specific to e-commerce startup businesses. You can buy and sell online stores and websites here categorized by industry, business type, and location. This platform is as secure as Shopify can get, so you can sit comfortably through any exchange.
You might be more interested in buying or selling a startup in a specific niche. This can be anywhere from health and fitness to accessories and apparel, beauty, automation, or travel. Even kitchenware, office supplies, food and beverages have startup businesses that are up for buying and selling. If this applies to your hunt, then Empire Flippers is your best option.
IndieMaker is an online community marketplace that appeals to independent makers or startups looking to sell their projects and businesses. While this platform still has a long way to go in terms of the number of users and businesses sold, you can list your project here for free and instantly market it to over 15,000 active buyers.
Do you have a YouTube channel or WordPress site that you can no longer maintain and operate, but still has promising growth potential? Why not sell this digital property through Trustiu? You can also buy and sell AdSense here if you’re interested. With this shortlist of items to sell, you can tell that Trustiu has amassed reliable data to run its online marketplace.
Like IndieMaker, Side Projectors did an awesome job choosing a name for their online marketplace, don’t you think? While both sites allow visitors to buy and sell the five types of startup businesses we talked about previously, Side Projectors have more to offer from its member developers than IndieMaker does. For one, you can also find e-Commerce websites, and applications for selling on Side Projects.
Well, that’s it for our list! To summarize, here’s a table of the online marketplaces we listed and the types of startup businesses that you can find in them.
|Online Marketplace||SaaS Companies||Domain Names||Blog Sites||e-commerce Sites||Applications|
|Exchange by Shopify||✔|
*Social media accounts and other digital properties
Aside from these 10, you may also check out TransferSlot for other developer’s side projects that you might be interested in. For YouTube channels, social media accounts, and other digital properties, you can find more of them at Accs Market and FameSwap. Just be cautious in dealing with the previous owners of the accounts.
Brokers who sell profitable businesses can be found at Latona’s, where they are very welcome. In the meantime, coding enthusiasts and developers mainly have their creations posted at CodeCanyon. You can scour even more websites for sale at Digital Exits, too. Lastly, if you’re looking for an assortment of startup businesses, then head to MicroAcquire for a wider listing coverage.
You Might Ask
How do you start and sell a startup?
To successfully start and sell a startup, try to follow these steps :
- Scout for potential startup buyers
- Look for your startup’s strongest point to sell to buyers
- Be clear and firm on your non-negotiable acquisition metrics
- Be proactive in connecting with the potential new owners of your startup
- List your startup on different online marketplaces for more exposure
- Do a background check on the people who have given you offers and be decisive about which one to accept
What do most startups sell for?
On average, a successful startup that’s been acquired by a new owner could have an initial venture capital of $29.4 million. After selling, it can amount to $155.5 million, according to a Crunchbase report. This is one of the best scenarios in the marketplace. But in reality, most startups are assessed using different valuation methods.
When should I sell my startup?
Ideally, you should sell your startup when you come into any of the following situations:
- Before you run out of money to operate and maintain your startup
- Before you hit a bigger failure
- When you’re not getting your expected revenues
- When the internal environment becomes difficult to navigate and rally
- When the external environment becomes harder to deal with using your current resources
What is a startup acquisition?
When a startup has successfully gained traction and starts to thrive in the market or industry it’s in, more established companies become interested in them. If these larger entities choose to buy this new startup, the process is called startup acquisition.
What to do after selling a startup?
What you do with the money you get from selling a startup is totally up to you and your team. You can split the amount based on the shares you’ve agreed upon and live separate lives. Or, invest the money into conceptualizing a new minimum viable product to reenter the market with. Whatever you do, it’s always best not to spend it lavishly on things you’ll regret in the long run.
How long do startups last?
Startups can last long enough to become a promising empire, or they can be just enough to enter the market. A third of the startup companies typically close up shop within the first two years, while more than half of startups can live up to five years or more. As time goes by, the numbers tend to shrink because of the tough competition.
Buying and selling a startup is not an idea to horse around with. If you fail to do your research and just go around the marketplace buying startups on a whim, the chances are high that you might be spending resources on the wrong thing. This is also true when you’re trying to sell a completely functioning and income-generating startup for no good reason. Evaluation is key for a successful transaction involving startup businesses.
Now that we’ve given you some pointers to look out for when buying and selling a startup, we hope you’ve become better equipped and ready to enter the vast jungle of up-and-coming startup companies eager to dominate the market as soon as they can.
If you’re still looking for more references, you might want to check out this article on how seed funding works. This will be helpful once you know at which stage in the venture capital investment the startup you’re looking to buy is in.
Happy shopping, or selling!