Sell My Start Up - HELP!

by Dr_Esi. Posted on Sep 10, 2020    2    5

Help Selling a Business

Hi all - I have a novice question which I hope I can get some guidance on!

As it stands, I currently have a start up web app which is still at the pre-sale stage. I have invested quite a bit of my own capital and time in building the first few drafts of the website, generating several ads, and building a decent email list of funneled users.

I had a colleague of mine approach me about joining the start up. A few weeks in, they expressed reasonable concern that they want some protection beyond just a founders agreement which I drafted at the start.

At this point, I started entertaining the idea of selling the entire thing to this individual in return for some agreement/settlement that I would not pursue or compete in the future. They mentioned they are open to the idea.

I wanted some thoughts on how to structure something at this early stage for a sale since the tangible assets are the domain, the email list, the website, and the registered trademark for the name.

The main thing here is that he would be essentially paying me to exit and stay out of the way aside from these assets. How would you structure something like this? Is there some form of non-compete settlement/agreement or something?

Any help would be appreciated! Thanks in advance!


itprobablynothingbut 1

If you guys have a price in mind, ignore this advice, but if not, there are ways to structure the exit as covertable debt. I know both parties want the transaction to be finished, and that makes sense, but if pricing becomes a point of contention, you might want to look into it. Non-compete, non-voting shares, etc could still be part of the deal. You would get paid later at the A round of investment (when the company’s value is easier to ballpark).

Sascot 2

It’s just a straight asset sale (itemize what it is you’re selling) and if it were me, I’d want a 5 year non compete

Unic0rndream5 1

Five years is a bit on the heavy side.

Since websites tend do be valued at 30-35x monthly, it would make sense to have a 3 year non compete so the buyer could at least make their money back.

This situation is a bit unique since you’re pre-revenue

nimble_fox 1

I'd agree with 3 year (but to each their own), make the deal worth while to yourself. That clause by itself is an addition to the assets you are selling.

  Dr_Esi 1