
Ask HN: How much did you sell your startup for? - mattleblank
I have a small site (about ~10k active user) that lets users watch movie trailers and create watchlists to get alerts. A buyer is offering $50k for the site. I don&#x27;t know if this is a good amount or not. Its a decent chunk of money for me but not life-changing or anything like that.
For all the folks who sold their startups or sideprojects, how much did you sell it for and what was the experience like? How did you value your startups?
======
patio11
This sounds like an eminently fair deal for this site unless I’m greatly
underestimating how lucrative your advertising is or you have subscription
revenue you didn’t mention.

You’ve made something people like. Congratulations. Nothing I say about
operating the site as a business detracts from that.

Playing the probabilities:

You probably do not have a defensible business. Your users are loyal to Marvel
trailers, not to your site; it is merely a way they know to consume Marvel
trailers. They would switch in an instant to a similar site if yours went away
or was dissatisfying.

You likely do not have any durable advantage in marketing your site. A durable
advantage at your scale is one that a smart person given a month and a $5k
budget couldn’t duplicate.

The nature of your revenue is likely non-recurring. You have to claw your way
up from $0 every month. A change in the advertising market or your biggest
source of traffic is an existential risk to your business. Next month’s
revenue might literally be half of this month’s without you doing anything
wrong.

All of these factors are going to push down the market value of your site to
people who want to buy it and operate it as a business. If you speak with a
broker (I used FEInternational, twice), you will probably told that the value
is ~2X the annualized cash flow you got from the site (revenue minus hard
costs), when using the last six months average as a baseline. (i.e. 24X
average of last 6 months)

If that calculation comes up with an answer well above $50k, and you want to
sell, talk to a broker.

Otherwise, the offer reads (to someone with only educated guesses of revenues
to go on) as generous. Many offers do not turn into transactions; sometimes
they do.

Separately, do you want to sell? What are your goals for yourself and this
business more broadly? Are they helped more by you continuing to run it or by
having $35k or so in the bank?

~~~
mattleblank
All good points. Thanks a lot for the reply.

I'm not sure i want to sell but $50k is a decent chunk of money. I'm
emotionally invested in the site but don't think about it as a revenue-
generating business (or at least haven't so far)

~~~
mycat
>emotionally invested in the site.

Sorry but can you elaborate more?

~~~
mattleblank
Its something I built without much expectation and now there's thousands of
people using it everyday. I get emails from them saying how much they love it.
So in that sense, I really want to keep running it.

~~~
kehers
>I really want to keep running it.

Is the buyer planning to shut it down? Or you mean you enjoy running it.

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cprayingmantis
Instead of asking is this price fair ask if you would pay that price to buy
your site and ask yourself what you would do to make it worth more. If you
don't take the offer you're essentially buying your site for that price.

~~~
lifeisstillgood
>> If you don't take the offer you're essentially buying your site for that
price.

a fantastic way to look at it and a great view on opportunity cost

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ronilan
I once sold a site with a similar setup. It was the kind of site that
generated a lot of interest from a lot of people for a while. Some good
interest, a fair amount of interest from certified crooks and every once in a
while the type of interest you have.

Not going to go over the financials but I will say this:

If you care about the project, and specifically about its future, than $50k is
bullshit. Opportunities are random and far between. It is extremely hard to
envision, start and successfully grow something meaningful. So don't sell.

Else, if you just don't care anymore, $50k is fantastic amount of money. You
can go on a trip around the word, get season tickets to a ski resort or just
buy a made-to-order device that rocks your boat. It will allow you to care
even less about that project, you didn't care about no more. So sell.

~~~
fred_is_fred
Season tickets to a ski resort (where I live) are less than $1k.

~~~
ronilan
For life.

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samnwa
Why not sell 75% ownership and stay on to assist with the continued
development and growth of the site? That way you are still invested and you
reduced your risk in a reasonably fair way. For a small site with limited
revenues, valuation is somewhat subjective as you are projecting forward with
many unknowns.

~~~
mattleblank
25% ownership doesnt appeal to me as much since I'd lose control over the
direction and in that sense, I'd rather sell than work on it for someone else.

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indescions_2017
Back of the envelope calculations ;)

Video pre roll ad rates ~$10 per 1000. Let's say you directly realize half of
that. Or $50 per day. So $50K represents about 1000 days (3 years) of passive
income, at zero growth. So its decent. Provided its offered in good faith. And
you could use that capital to repeat your success in another related vertical.
Say, popular music videos, that tend to get 10x viewership numbers.

Best of luck mattleblank!

------
sebg
[https://feinternational.com/blog/saas-metrics-how-to-
value-s...](https://feinternational.com/blog/saas-metrics-how-to-value-saas-
business/)

~~~
godzillabrennus
Thomas Smale is a great guy. Glad to see his resource shared on here.
Definitely worth connecting with him if you are interested in selling. I met
him on Summit at Sea last year and have kept in touch. He’s a great resource
for this.

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alfiedotwtf
I sold a tiny site that took me a weekend to build for $40k. It was rolled
into another site a few years later, and sold for $25 Million :(

He approached me via email. Went smoothly. To be fair, it was probably only
worth $10k, but the work and advertising he did to it really did value it at
$25M.

~~~
aquadrop
Can I ask how it went legally wise? Did you involve lawyers etc?

~~~
vadimberman
At least in the US, hiring lawyers for a transaction less than US$100K is very
problematic and generally does not make sense.

There are some other legal options (like those express legal advice websites,
or places where they proofread the agreement for US$200).

~~~
aquadrop
Yes, that's why I asked if they used lawyers for this relatively small sum.
But it's not minuscule, so I was interested if they used contacts/agreements,
escrow or something like "you send me money I send you password for account".
Would like to read about such small-scale legalities for small personal sites-
startups if it's available anywhere.

~~~
vadimberman
Try negotiating a fixed sum for the drafting the agreement. I think under $3K
- $5K it can be doable, but also do a lot of sanity checks, e.g. provisions
that you get everything back if the money is not paid in full, etc.

Professional lawyers do make mistakes, no matter how much they are paid.

------
contingencies
Ideas for things you can use to argue for a better valuation: multiple
acquirers (this is the most important by far and can easily double valuation),
better understanding of the buyer's position/motivations/alternatives, macro
industry trends (usually easy to find), your continued involvement over the
handover period, external audits and metrics (eg. security, deliverability,
user growth, etc.), team or documentation maturity, best growth metric
extended over the future income projection. We've just done the final week on
acquisitions in the _Venture Deals_ course[0]. I've posted my notes for you
here.[1] While some of the stuff only applies to larger deals, it shows you
how such deals are viewed by mature, larger scale investors and entrepreneurs
experienced with larger exits.

[0] [https://kfatechstars.novoed.com/#!/courses/kfa-venture-
deals...](https://kfatechstars.novoed.com/#!/courses/kfa-venture-deals-fall17)

[1]
[https://gist.github.com/globalcitizen/9806cfc11bd10cac7cf68e...](https://gist.github.com/globalcitizen/9806cfc11bd10cac7cf68e9d85fc8e99)

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hkmurakami
Take a look at patio11's blog post describing his sale of bingo card creator.
Iirc similar ballpark

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boulos
How much effort have you put in to date? How much are you willing and able to
do over say the next two years? Since you said you haven't tried to make money
from the site, do you actually want to turn this into a business?

I think you might actually be asking "50k sounds okay, can I get more?". I'd
suggest asking yourself "What's the lowest number I'd obviously say yes to?"

------
wprapido
You were already given some solid advice.

If it generates no revenue and you don't want to be bothered by monetizing,
the offer is definitely a no brainer and you should accept it!

There are two major advantages.

First, you will learn about selling a business.

Second, you will have money to bootstrap your next venture.

The amount you were offered is not a life changing amount aka fuck you money,
but the entire experience is absolutely a gamechanger.

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nnn1234
Q is what do you want to do with the site. If you think in your heart of
hearts, you want to grow it, get that offer in writing and raise a seed round
, or ask the guy to be an angel.

If you do want to sell it, ask your buyer how they came to that conclusion.
$5/user is okay but on the low side if you are monetizing per user

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anothertraveler
If you study a bit of corporate finance, you can learn the mechanics of
valuation. At the end of the day, though, how do you determine the market
value of any asset? You auction it off. If you keep it, you are saying it is
worth more than $50K. If you sell it, you are agreeing that the market value
is whatever the other party is offering you.

Rather than trying to calculate explicitly what it's worth, have you
considered trying to find other buyers?

Edit: Another thing to consider is, if this isn't a life changing amount of
money to you, you could treat this like an empirical experiment to learn the
process of selling your company. This will be invaluable experience in your
next start up/side project, or for any future business endeavor where you
engage as an owner or potential owner of a company in a transaction like this.

------
muzani
I did a similar price but for a bit more traction - we had about 3k MAU but
they were all really obsessed with the product.

I had a lot of debt at the time and not a lot of options. Was burnt out. And I
hated my target market (they were literally cultish).

I think I could have gotten more for it, but we'll never know. We calculated
the value as the revenue but the acquriers looked at downloads, number of
emails in the database, brand name.

The trick is don't talk about price if you don't want to sell. Just keep
going, keep getting good growth until it hits a plateau where you'd like to
stop.

[http://www.paulgraham.com/corpdev.html](http://www.paulgraham.com/corpdev.html)

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anmolparashar
Hey, Matt

A lot of founders who are looking to sell their businesses can't estimate what
their company is worth, mainly because they are too emotionally invested in
the project. A good way to see what's a fair price in your case would be to
let the market decide it. I made Soochi [1] so founders who are interested in
selling their business can see how much can they get for their business, as
well as find the right seller i.e. someone who can actually take the business
forward. Let me know if you'd like to list your business on our site? We're
running a $30 off promotion right now!

[1] [https://soochi.co](https://soochi.co)

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spenihana
Try to frame it in terms of $/user/mo over the next n months.

So $50k up front is ~$4K/mo for 1 year (or $5/user/month).

If you monetize, what would be your expected $/user/month? Your buyer
certainly has some figure in mind already, and they're no-doubt low-balling
you.

Is user growth rate positive or negative? What percentage growth have you seen
MoM or YoY?

I would spend some time modeling the various scenarios to put the $50K into
perspective. For example, if you plan on running this site for the next 5
years and you make $x/user/month and you have positive user growth (say 1% net
user growth each year), etc.

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ne01
Why not monetize it instead of selling it? That's probably what the buyer
wants to do. right?

~~~
mattleblank
Monetization is a bit tricky without making the userbase feel like we're
selling out. I was more focused on making the user experience better before I
think about monetization.

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alexanat
Why not counter with ~100K USD or so? Squeeze more out of it, might settle
negotations around 75K.

Then you can make another similar site, maybe for books or video games. :)

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matt_the_bass
Do you have any revenues from the site?

~~~
mattleblank
No revenues but the opportunities are all there because they can buy movie
tickets/etc.

I decided not to monetize it for other reasons.

~~~
ChuckMcM
Given that, it might be instructive to get a handle on what the buy values at
$50,000. Could just be the domain name and/or the "host authority" (when a lot
of other (legitimate) sites refer to your site on the web it is perceived by
search engines has having a bit more 'authority' than other sites.

If it's the latter you might find they buy it and replace your content with a
bunch of links to porn web sites. You'd want to be ok with that before you
sold it.

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featherverse
42 million U.S. dollars.

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tdburn
This should easily have a $1Billion dollar valuation. Settle for nothing less!

~~~
paulie_a
It really is 1999 again.

