Startups: Keep or Sell?

As the driving force for innovation and change in society, promising startups are often faced with a choice to either grow on their own with investments or sell themselves to a business giant altogether. But just how far do the consequences of each choice stretch?

Although startups are also businesses by definition, not every business is a startup. Similarly, not every executive entrepreneur responsible for the management of their company is a founder. The major difference between both definitions lies in their individual end goals and strategies to achieve them. The main purpose of a startup and its founder is, some might say, more daring — changing the market, the society, and the world. 

It’s Ride Or Die For Startups.
It’s Ride Or Die For Startups.

Unicorn companies — privately held startups valued at more than 1 billion USD — become driving forces of the economy. It’s an intriguing position to be in, and generating even more profit seems to become easier afterwards. That’s why private buyers, tech giants, conglomerates, venture capitalists, and angel investors long for a piece of the magical horned horse and gamble on hundreds of emerging startups in hopes that one day they will be right. But at this point, buyers and investors are fighting their own battle between each other and the actual vision and future of the magical unicorn may get overshadowed by greed and obsession, sabotaging the revolutionary but unproven potential of a startup.

And although the vision of a startup is typically of global scale, initially it seeks to bring about change on the domestic market. Jobs are created at a growing rate as the startup develops, and if a startup becomes successful enough at a global stage, higher qualification jobs attract international talent, diversifying the population and inducing foreign cash flow. And since startups typically look for specific talents with ambitious mindsets rather than set industry professionals, they are able to hire and educate an up-and-coming generation of employees — helping them break the “need experience to get experience” paradox. Additionally, startups, unlike established companies, tend to be more open-minded towards hiring those without higher education; they train them through practice and provide a relatively high salary. As the startup reaches national scale, it can create a market for something brand new, like how Dropbox , which provides purely virtual solutions to its physical alternatives. Or, it can provide cheaper options of higher quality to an existing problem, like Airbnb that even affects tourism, rent prices, and even the demographics of a population in some cases. In either case, startups stimulate competition and attract clients and users from around the world, contributing significantly to the national economy. 

In contrast, when a startup is incorporated into a much larger company, it essentially becomes one of the large company’s new branches that needs to “see the bigger picture”. The initial vision of the founder may no longer be top-priority, ridding the target audience of a fresh product ready to compete with household names, essentially monopolizing and conquering the market. The startup, unless specified during the sale otherwise, may become forgotten as an individual entity that once set out to change the world, but instead became a product overshadowed by its owner. Thus, credit, recognition, and impact on human history also often comes into play when founders make the decision to either sell or not

Success stories may be exciting, but since about 90% of startups eventually fail, with 70% of them failing within the first five years, the option of selling the company at its early stages when the buyers bet only on unproven potential becomes more favorable. But for visionary CEOs, gambling and risks were initially part of the game when founding their startup — then perhaps to some, selling it would be the equivalent of giving in to the system they set out to change.

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