Selling your startup to a sometimes astronomical amount when profitability has not yet pointed out: this scenario is now far from an exception. It has even become a recurring phenomenon in the entrepreneurial ecosystem. At the heart of this trend, we find the idea that the perceived value of a company often lies more in its growth potential and technology than in its immediate financial results. Several founders have been able to take advantage of this model, demonstrating that it is possible to conclude a very advantageous transfer without displaying high profile figures.
Bet on the market and the team rather than profitability.
Potential investors and buyers often seek the nugget capable of quickly imposing itself on a changing market. In this context, short -term income does not necessarily constitute absolute priority. French startups like Captain Train have seduced by their technology and the quality of their interface, to the point of being bought by international actors before reaching a real financial balance. The buyer, by integrating this solution, sees it as considerable time to penetrate a strategic market.
In this type of operation, the relevance of the economic model and the excellence of the founding team weigh more than immediate profitability. The buyer wishes to accelerate his own development by relying on know-how, software or a community already won over. Thus, the skills of the bought startup become the central element of the negotiation, to the detriment of the margins, considered as simple secondary indicators as long as the growth curve remains promising.
The valuation signals that count for buyers
To make a buyer want to pay several million or more, managers must offer wages of solidity. Market prospects, the number of active users and the ability to differentiate themselves in the face of competition are among the essential criteria. Drivy, specializing in car rental between individuals, was bought by Getar, while she was still invested massively in marketing and innovation, to the detriment of profitability. The decisive argument? A solid base of faithful users and a mobility market in full swing.
Technology, when it meets a real demand, can also justify a high valuation. The example of Zenly, French startup of geolocation, illustrates this logic well. Before even making profits, she had attracted a vast international community. Its algorithms and innovative interface have more in Snap, the parent company of Snapchat, which saw the opportunity to integrate a new service into its flagship application.
The hyper-growth strategy to seduce buyers
Sell before profitability often involves a hyper-growth strategy. The founders are on fundraising, invest in marketing massively and quickly develop a new feature to rise to the top of a still emerging sector. This logic is based on the idea that the land must be occupied as quickly as possible, in order to build barriers at the entrance and to extinguish potential competition.
Costs can then explode, but that does not necessarily worry buyers. They know that an actor positioned as a leader can ultimately adjust his prices, reduce his acquisition costs and achieve profitability. Tiller, the French startup specializing in digital recorded funds, led this frantic race to conquer bars and restaurants, developing multiple partnerships. Long before having reached positive margins, his offer caught the eye of a foreign buyer seeking to strengthen his portfolio of solutions for merchants.
The key role of controlled storytelling.
These early transfer operations are not limited to figures and market estimates. The story brought by the management team, its ambition and its ability to inspire the competent confidence for many. Startups that manage to sell quickly have often been able to build a strong brand universe and give a clear vision of the future.
Thus, Manomano regularly communicated on his dream of revolutionizing online DIY, thus gaining the confidence of big investors and sharpening the appetite of international actors. Even without displaying a positive benefit, the company has demonstrated its ability to structure a traditional market and bring a wind of modernity. This story, supplemented by traction evidence (continuous increase in turnover, user loyalty), can convince a buyer that it is better to buy the company before its valuation explodes even more.
The risks of an overly anticipated sale
Selling an unprofitable business is not without dangers. The founders who give in their startup too soon to be regrettable that they have not captured more value if the project really takes off thereafter. Investors, for their part, can judge that a private early departure from the team of the opportunity to build a national champion. In addition, if the sale fails or the buyer imposes too restrictive conditions, the financial situation of a company still unprofitable can deteriorate quickly. It should also be noted that some buyers buy into it, but integrate technology or remove a competitor potential, without necessarily maintaining the initial structure. In this case, the founding team loses not only its independence, but sometimes sees its product or brand subsuminating in a larger group, losing its own identity in passing.
A bet on potential rather than on current figures.
Transactions of this kind are based on a guiding idea: the value lies in the capacity of a startup to upset a market, not in its immediate benefit. It is a question of making a bet, where the buyer pays to save time, leads to know-how and occupies a leading position as soon as possible. On the startup side, this agreement may seem ideal for the founders who see the opportunity to secure their project, reimburse the first investors and offer their employees the possibility of joining a more solid group.
The recent successes of French Tech show that this early sales strategy can be paid for all parties, provided you clearly identify the challenges. We are then witnessing a subtle potential assessment game: each actor attempts to estimate the future size of the market, the adequacy of the solution and the team’s ability to continue to innovate under a new banner.
