Start-Up Acquires Start-Up.

Start-Up Acquires Start-Up.

With LinkedIn getting most of the social media attention from the tech/finance people lately, I have an interesting story about Twitter to share.

An article on BostInno discusses “How 1 Tweet Turned into Dave Balter’s 1st Startup Acquisition“.  Dave Balter, founder of Mylestoned – a startup that is “reframing death through the transformation and discovery of dynamic, meaningful, digital memories” (think Facebook style memorial pages for deceased loved ones) tweeted at Eric Owski to set up a meeting in San Fransisco.

Start-Up Acquires Start-Up.

Owski founded a start-up called Heirloom that allows users to “easily and beautifully digitize your paper photos”. With over 100,000 users, Heirloom has significantly more users than Balter’s newly unveiled company. Not only did Heirloom have a lot of users but those users were the exact kinds of users Mylestoned was trying to attract. Both companies purpose was to preserve the memories of loved ones.

Fresh off a $1.5 million raise, Mylestoned closed its acquisition of Heirloom on June 1st (terms were not disclosed).  While we don’t know the terms of the deal, I have a feeling it was far less expensive to acquire Heirloom (and its 100,000 targeted users) than it would have been to acquire those users from scratch (not to mention the very cool and synergistic Heirloom technology) .

In my experience, synergistic start-up M&A transactions like this aren’t considered enough by founders. I often encounter management teams that are focused on building their business from the ground up and underestimate the value that can be created by acquiring other start-ups or small businesses.

Are you a start-up considering growing through acquisitions? What kind of value can a start-up or small business bring to you company? Please feel free to comment and share!


 

About Ben Kotch:

Ben Kotch is a managing director and investment committee member at Acquis Capital, LLC, a private investment firm that specializes in acquisitions. He has extensive experience with both private and public companies. Ben graduated with an economics degree from Bentley University where he concentrated in entrepreneurship and law.

For more, please follow on Twitter.


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