They Got Acquired - What selling IP looks like 🤔

April 9, 2024
​Read on web​

Founders sometimes ask whether it’s possible to sell a business’s intellectual property (IP), even if the revenue isn’t there to support a financial deal.

In practice, these deals are tough to manufacture. But they do happen occasionally, and today’s story is one example.

Even in this case though, the business raised $1.5 million – and sold for 6 figures. So most, if not all, of the money from the sale probably went back to investors.

Still, it’s inspiring to see what this founder did with a simple idea.

When founder Ravi Kurani sold Sutro, he didn’t even have a fully developed product.

What he had was a patent for a microfluidic chip, “a novel way to measure water chemistry that we had figured out how to commercialize,” he explained.

Plus a prototype of the Sutro Smart Pool Monitor, a device that monitors the pool water chemicals and makes recommendations. Or, as he called it, “the Fitbit for your pool.”

He also had $150,000 in pre-sales from a Kickstarter campaign.

Here’s what happened when a buyer showed interest:

​This founder sold his pool monitor when it was still just a patent and a prototype​

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Why I finally moved to an online bank

Here's a personal story from me, Lexi, the founder of They Got Acquired.

A few months ago, I wanted to open a new bank account.

My old-school bank said I had to do that in person. So I took the train all the way from my house in West Virginia into Washington, D.C... and then spent four hours opening an account.

I was incredibly frustrated on the train ride home. I'd wasted an entire day doing something that should be quick and easy.

That's when it hit me: I've run online businesses for the last 15 years. Why have I not tried an online bank?!

So I researched all the options, ended up choosing Relay — and already made the switch.

Here's why I'm pleased with Relay so far:

✅ It's easy to do all my banking from home

✅ It's free (except wire transfers). They offer a $30/month upgrade, but so far the free tier has been plenty for us

✅ No account fees, overdraft fees or required account minimums

✅ Next-day ACH is easy and free

✅ It's built for a Profit First setup (the Profit First creator even uses it)

In this video, I walk through the pros and cons of this move:

If you've been putting off this move like I was, give Relay a try:

Relay is a financial technology company, not a bank. Banking services and FDIC insurance are provided through Thread Bank2,3; Member FDIC. The Relay Visa® Debit Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa® debit cards are accepted.

What kills deals 🪓

Deals fall through. And they often fall through *after* they're under LOI (that stands for letter of intent).

Every founder thinks this won't happen to them, and is surprised when it does. So go into your sale process knowing it's a possibility. You'll likely take different steps to protect yourself and the business if you keep this in mind.

But WHY do deals fall through? Peter Lehrman of Axial looked at 60 deals that failed and identified mistakes those founders made that led to that outcome.

His checklist is below; click through to his Twitter to read more details.

Peter Lehrman @petelehrman We just finished a review of 60 deals that broke under LOI. These 60 deals: + were all lower middle market U.S. businesses + between $500K and $9M of EBITDA + already had a signed LOI + fell apart in diligence 8 preventable mistakes killed these deals. Nothing new in these 8,… https://twitter.com/i/web/status/1773366543146987829 11:8 AM • Mar 28, 2024 3 Retweets 47 Likes Read 14 replies

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Here are a few posts we've published that will help you avoid the mistakes he outlines:

• ​Are you emotionally ready to sell your business?​
• ​How to clean up your books before selling​
• ​Tips for continuing to run your business while juggling due diligence​

See you next time,

Lexi Grant
Founder & CEO
​They Got Acquired​