5 Startup Assets That Will Get You Acquired in 2016

By: Josiah Humphrey

Seven years after the credit crunch crisis, we're experiencing the best times for startup acquisitions -- ever. Private equity and venture capital funds are enjoying record years in terms of both fund-raising and exits, and big tech companies are loaded with cash. For example, the cash reserves of Apple reached over $200 billion last year.

Related: Etsy Snags Parisian Startup in Largest Acquisition Yet

Innovation leaders like Google, Apple and Facebook are competing to buy their way into hot markets like artificial intelligence, virtual reality, etc. to make sure they don't miss out on the next big thing. Others, like Yahoo!, Microsoft and Oracle, are acquiring companies to stay relevant.

What's particulary exciting are the current trends for startups to buy out other startups and for micro-startup acquisitions. For example, Dropbox disclosed 23 startup acquisitions in the last five years; and recently we've seen a number of two- to ten-person startup acquisitions, such as Pinterest buying Hike Labs -- a two-person startup!

All of this is exciting news, not only for investors but founders who dream of big exits. If you're an entrepreneur or perspective founder, and getting acquired is your dream, here are five assets which -- if you already have them, or are nurturing them-- could get you acquired.

1. A superior team
With the boom in startups, the technology industry has started to experience a serious shortage of talent. What we now see as the rising trend is companies "acqui-hiring" startups. That happens when a company, typically an early-stage startup that failed to gain significant traction, is acquired primarily for its talent. According to John Sullivan, a professor at San Francisco State University: "The normal recruiting marketplace is fighting over the most skilled workers, so there is other no easy channel left to recruit talent."

Google, Facebook, Apple, Yahoo and others have been silently acqui-hiring startups for the last seven years. Tim Cook has even publicly stated that this has been Apple’s strategy - “to bring in companies that not only contribute a product but a superior team to add value.'

Obviously, a great team is one of the key assets of any startup, and it's the single most important thing that is likely to make you successful. When we started Appster, we made it our top priority to recruit a superior team. Clearly, your team is also an asset with a specific price tag on the M&A market.

2. Disruptive innovation
The theory of disruptive innovation was first explained by Clayton Christensen, of Harvard Business School, in his book The Innovator’s Dilemma. Christensen used the term to describe innovations that create new markets by discovering new categories of customers.

When new opportunities arise, big companies face what Christensen calls the innovator's dilemma. That's a choice between holding on to a profitable, existing market and investing in new, emerging markets with the potential to become lucrative.

This decision is incredibly important for the future of a company. For example, when Kodak ignored digital cameras, that missed opportunity led it into bankruptcy. Likewise, the launch of the iPhone has made the likes of Nokia, Motorola, Sony Ericsson pretty much obsolete.

Big companies are slow to react, because the bureaucracy that grows with size finds that chasing every opportunity is a huge risk. Thus, the way to solve the "Innovator's dilemma" is to let startups chase opportunties, and then, once they prove valid, acquire the leading startup. Examples include Instagram, Periscope and Vine.

Read More >> https://www.entrepreneur.com/article/269812