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When Is Acquiring a Startup a Better Strategy Than Establishing One?

  • Startup acquisition company CEO offers tips on when it makes more sense to acquire an early-stage company instead of establishing your own business
  • Finding and taking over a company that shows promise can significantly reduce the risk involved in starting a business
  • Some entrepreneurs may find that their skill set is better suited for scaling up a company than it is for establishing one

Summary by Dirk Langeveld

Entrepreneurs are respected for their ability to put in the hard work necessary to come up with an idea and shepherd it into a successful business. In some circumstances, however, it might make more sense to simply acquire a startup whose owners have already done the early legwork.

Andrew Gazdecki, CEO of the startup acquisition firm MicroAquire, writes in an article for Entrepreneur that purchasing a startup can be an easier and less risky proposition than building your own business from scratch. He notes how the failure rate among startups is high, and that you might stand a better chance of success if you take over a business that has shown promise in overcoming early-stage challenges.

Gazdecki says acquiring a startup also makes sense in several circumstances, including:

  • When an entrepreneur has more talent and skill in scaling company operations than establishing them
  • When an entrepreneur has limited time to dedicate to starting a company
  • If you find a fledgling company that shows promise and can make an offer before its growth accelerates
  • If you find the opportunity to acquire a company offering similar products or services instead of establishing your own company and competing with them

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