A Tech Startup’s Dream
What would it be like to start a business project and two years later sell it for $1 billion? That is exactly what Instagram did when Facebook bought it in April of 2012.
Tech startups are burgeoning in cities like New York and San Francisco. San Francisco’s Silicon Valley has been procuring the lion’s share of venture capital ever since the silicon chip makers set-up shop there. New York’s success was ironically a silver lining its 2008 financial collapse left when a lot of software experts were out of jobs. These bright techies, in many cases, went off to start their own company.
If you’re a startup, do you have anything to lose by selling for the big bucks? It depends on the passion of your vision. That is, you could be bought out and have the buyer change your idea on a whim. It has happened and it will continue to happen. On the other extreme Groupon held out by rejecting Google’s $6 billion offer in 2010. They closed at a $4.57 billion market cap today.
Startups might have better odds focusing on the things Facebook and Google are buying. Facebook has already hired top engineers who formerly worked on Apple’s iPhone. Google’s highest acquisition by far was the $12.5 billion purchase of Motorola since they used its Android operating system. So this may suggests that startups focusing on smartphones in general are on a more lucrative path.
The fact is you really don’t know when you’re going to hit the goldmine. You could be a company minding your own business that, for whatever reason, has a catchy domain name. The American Farm Bureau Federation happened to have fb.com as their domain name that compelled Facebook to fork them over $8.5 million for exclusive rights.