Startups Stack Exchange Archive

How common is it for individuals to acquire a startup?

In David Kirkpatrick’s book, Facebook was approached by a “New York financier” in 2004 offering 10mm for the company.
Is this unusual ?

How often do individuals (I assume it was an individual) acquire a startup ?

Answer 9063

It is more likely that the financier wanted to acquire the majority of facebook shares on behalf of his company, or on the behalf of another company (which he was a shareholder).

Individuals who put money into companies without operating them are essentially angel investors. But this presumes that the company can operate on its own. Other individuals may buy a company (not a startup - but a small business) so they can either run it themselves, or so they can enjoy a steady revenue stream over many years.

It is rare that an individual would want to buy a pre-revenue startup. By definition, startups are not fully operating companies, and are still searching for the product-market fit. So the individual would have to essentially step in and bring the company to the point where it could be self-sustaining, attract venture investment or be acquired.

But I suppose it does happen. I personally have done this a couple of times (though I would never classify it as an “acquisition”) - where a small team of 2-3 young entrepreneurs have developed a technology or a product, but really are not suited to bring it to market, or run a company. The tech/product meshes well with other projects I am working on, so I give them some money to “buy out” the code, and the IP. This is really more of a IP deal as opposed to an acquisition…


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