

Ask HN: Our big competitor wants to merge with us. What should we do? - anonymouse42

Hello HN, I am a startup founder and we have a very strong technical &#38; design team. We
have been able to build a very useful product which is different and better than any of
our competitors' offerings in an otherwise crowded market. We haven't launched our product
yet but we have received extremely good feedback from our private alpha users.<p>Today we got an offer from one of our competitors, a very well known VC-backed company in
the market. They are interested in a merger since they believe we have better execution
capabilities and they have a great brand.<p>They have a lot of users and have a decent revenue rate.<p>In my opinion this could be a double edged sword for us since culturally we are very different
from that company. At the same time, this offer is very tempting because potentially we can make
it very big together.<p>I am soliciting advice on this issue. FYI, we raised a decent seed round recently and investors
are quite interested in us.<p>PS - Throwaway account for obvious reasons.
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jayzee
It looks like they have a great brand either because they raised a lot of
money or they are backed by a famous VC. It does not seem to be because of the
product.

If the merger offer is not confidential then you can take it to investors. In
this active fund-raising market with great technology, an offer from a very
well known company and a market whose size has been validated by the number of
competitors and the funding of other companies can only be attractive to other
investors as well.

If you have the apetite for risk then it would be very well worth taking a
swing in this case.

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imkevingao
Do you want to be the king or to be rich? Ask yourself that. If you merge with
the company, you'll have a better shot at becoming rich, but dramatically lose
your stake in your current product. If you want to be the king, then keep
pursuing your own endeavor.

So think it over, and talk it over with your partners and determine your
priority. If it's money, it'd be a better choice to choose to merge, if not,
then why not take on more risk if you really believe your product? Your odds
of getting venture backed is definitely higher since your competitor's offer,
but at the same time, since your launch is no longer in stealth and you have
raised your competitor's awareness, it'll be much tougher to grab market
share.

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PonyGumbo
FWIW, every time I've had one of those meetings, it's felt more like an excuse
to find out how the other company was handling shared problems, with only the
remote possibility of merger.

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gyardley
Happy to chat with you about my own experiences merging Pinch Media with
Flurry in late 2009, if it'll be useful. My e-mail is in my profile.

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vijaymv_in
When you are in doubt always raise the valuation!!!

