2022 W47 - Mergers & Acquisitions calls
Rows is now "Building in Public". Every week I'll post about one thing that happened!
Check them all [object Object].
Recently I've been noticing a lot of M&A activity. At Rows we have also received some requests for conversations with a strong component of Corporate Development, M&A and/ or Product Strategy.
Last week was especially busy.
These contacts can be high value for your startup, and most likely not because of acquisitions!
Contacts are pretty normal
Contacts don't mean your company is going to be acquired.
These types of strategic contacts are one of ways that large businesses build their strategy. It's important to them to stay connected to newer companies to see how the market might evolve in the future. In that sense, there's lots of reasons for larger companies to talk to a startup:
they're mapping the industry;
they want to hear about your product learnings and hypothesis;
they want your product to be a part of their platform efforts, for example by integrating in their marketplace;
they want to learn about how you work, how you are doing, and develop a relationship for the future. Your product, team and technology might be enablers of their growth.
For startups, strategic contacts mean that your company is interesting, and working in an area of relevance. That's pretty motivating.
My intuition tells me that a contact by an M&A department improves the likelihood of your company seriously engaging from 0% to just 1%. That shouldn't change the focus of your startup, which is probably still Marketing and Product.
Like Rows, most startups don't contact companies for M&A purposes. First, we don't have M&A departments. Second, selling a startup is a different journey. Yes, you may find a good partner with lot's resources available to implement your vision. And there's no shortage of great companies with enough talent, product and users. But if you can grow on your own, you should grow it out yourself.
Rows goal is to continue investing in the product. We want to be the standard spreadsheet where users import data, analyze it, and share it as gorgeous reports.
That said, we still do want to meet companies. Our interest is obvious:
Users. Our product is a productivity tool, and anyone can use it for their own or their teams. That's true for any horizontal product, but especially true for a spreadsheet! So why not convert these super senior professionals working in the tech and startup space?
Integrating Products. Example: our recent Embed feature is a certified banger; and any platform that allows us to display our Embeds is more valuable for our users, and for their users too. So, we take meetings because they are a great way to get us into those platforms.
The Market view. If a company asks a lot about mobile collaboration, it's because they think that mobile is the key to more business, or because their offering is incomplete. If they talk about backend engineering, or database components, or X, it's because that's what is coming up in their other conversations!
M&A meets Rows
Over the last 2 weeks, 4 separate companies talked with us. Those add to the 5 others that have engaged with us since the summer.
It might be the effect of the season.
M&A teams may want to see what's happening in the market before the year closes. Or it might be that the current economic situation favors large companies searching for good opportunities:
The 9 companies that we've talked with recently were distributed like so:
2 public companies with a market cap >100b
3 public companies with caps 10-100b
3 large companies with caps 1-10b
1 startup 🖤
The angle has always been Strategic. Some are strictly M&A teams whereas others are people with a Strategy & Corporate Development hat, which includes a bunch of M&A but also Strategy, and others work in senior Product or management roles. All teams involved are small (1-4), and so their style tends to reflect the personality of the couple of people working there. There's a bit of everything: the spreadsheet mega fan, the engineering minded, the product wiz and even the fully buttoned business person.
Some have asked us for many meetings in a few short days, others prefer a touchpoint every couple of months. They are all tech companies.
Things to do in a M&A call.
In our experience, you got to keep it real.
Listen. Understand what their interest is. Are they interested in a particular sector? Is it spreadsheets, or low-code, or something else? Do they have a particular challenge, which you will infer from the topics approached? Do they want to get to know you and the team?
Give them a Demo. M&A is like VC, they see dozens of companies in a month. So don't tell them a story, show it. For Rows that means a 2min demo going from head to toe: Start a blank Spreadsheet→import Data→add a Chart→Share it→Embed it into Notion. After that demo, questions flow naturally.
Simplify their vision of you. Don't be afraid to be specific. Rows is "focused on building the best Data and Sharing experience of any spreadsheet." This is what we're doing; This is our speciality. If they're interested, dig deeper! For us it involves a lot of sub-topics like the challenge of Virality, streamlining the consumption of Data, Charts, Grids and more.
Understand their M&A profile. Do they do a lot of acquisitions? What was the last acquisition they did? How did it go? Who are they connected within the company? Are they close to the product and marketing teams? Some of this you can get online, some you can't. Ask. If they can, they will tell you.
Get value. As I pointed before, we currently really want to get Embeds into more hands. We also want to continue developing Data integrations. So I will ask for intros into their platform teams so that we can get some results. I will also ask M&A people about their spreadsheets, as we may solve their Data and a better interface.
Overall, the more focused and practical the conversations, the better the relationship develops. So I talk with M&A people like I would talk with an interested user.
When you're in a startup, every contact with outsiders is about creating believers!
Having multiple M&A contacts made last week a different week. Let's see what happens next week! See you then.