For many entrepreneurs, the ultimate goal isn’t just to build a successful company, but to achieve a successful exit. An acquisition by a larger company can validate years of hard work, provide a significant return for investors, and see your creation scale to new heights. But building a startup with an acquisition in mind is a deliberate strategy, not a lucky accident.
Jem Walters, a founder of the innovative fintech app Snoop, navigated this journey successfully. Snoop, which uses open banking to provide users with data-driven money-saving insights, was acquired by Vanquis Banking Group in 2023. Walters and his team made specific choices from day one to position their startup as an attractive acquisition target. Here are five proven tips inspired by Snoop’s journey that you can apply to your own venture.
1. Solve a Specific Problem for a Large Market
The most attractive startups solve a genuine, painful problem for a clearly defined audience. Broad, vague solutions rarely gain the traction needed to attract acquirers. Instead of trying to be everything to everyone, identify a niche pain point that a larger corporation’s product suite doesn’t address well.
Snoop didn’t try to become another digital bank. It focused on one thing: proactively helping people save money by analyzing their spending habits. This addressed a universal desire to be smarter with money but did so with a unique, data-driven approach that set it apart. By proving its value within this niche, Snoop demonstrated a business model that could be scaled to the millions of customers of a large bank. A CB Insights analysis of startup failures consistently shows “no market need” as a top reason for failure. Solving a real problem is the first and most critical step.
2. Build With a Potential Acquirer in Mind
From the early stages, it pays to understand the landscape of potential acquirers in your industry. Who are the major players? What are their strategic priorities? Where are the gaps in their services that your startup could fill? Building your product and technology to align with these strategic needs makes your company a logical “buy” rather than a “build” for a large corporation.
Snoop’s founding team, with their background at Virgin Money, understood the banking sector. They knew large banks were grappling with the challenge of digital innovation and leveraging open banking. Snoop was built as a perfect plug-in solution for a legacy institution looking to enhance its digital capabilities and customer engagement. As confirmed by the official acquisition announcement, Vanquis saw Snoop as a way to accelerate its own technology and customer-centric strategy.
3. Prioritize Scalable Technology and Valuable Data
Acquirers aren’t just buying an idea or a customer list; they are buying a scalable asset. This means your technology stack must be robust, secure, and capable of handling significant growth. More importantly, it means your startup should be generating valuable, proprietary data.
Snoop’s core asset was its platform, which could securely connect to user bank accounts, analyze transaction data, and provide personalized insights. This data engine is incredibly valuable. For an acquirer like Vanquis Bank, developing this technology in-house would require millions of dollars and years of development, with no guarantee of success. Owning a proven, scalable platform that already generates powerful customer insights de-risks the acquisition and provides immediate strategic value.
4. Focus on User Engagement and Key Growth Metrics
A large user base is good, but an actively engaged user base is far more valuable. Acquirers want to see proof that customers love and depend on your product. Track and optimize key metrics that demonstrate the health and loyalty of your audience.
Key Metrics to Track:
- Monthly Active Users (MAU): How many unique users interact with your product each month?
- User Retention Rate: What percentage of users continue to use your product over time?
- Net Promoter Score (NPS): How likely are your users to recommend your product to others?
- Customer Lifetime Value (CLV): What is the total revenue a single customer is expected to generate?
While Snoop’s exact user numbers were private, its value proposition was tied to continuous engagement. For the app to work, users had to connect their bank accounts and interact with the money-saving “Snoops.” This active participation proved that the app was not just another download left unused. A strong portfolio of essential startup metrics provides concrete evidence of your company’s current and future worth.
5. Assemble a Team with a Proven Track Record
Finally, an acquisition is a bet on the future, and a huge part of that bet is on the team. An acquirer is looking for assurance that the business can continue to scale and innovate post-acquisition. A founding team with deep industry experience and a history of execution provides that confidence.
The Snoop leadership team was composed of former executives from Virgin Money. This wasn’t just a group of technologists with an idea; they were seasoned financial industry professionals who understood the market, the regulatory environment, and the operational challenges of a large financial institution. This experience undoubtedly made Vanquis Bank more comfortable with the acquisition, as they were not just buying a product but also integrating a team that spoke their language and knew how to operate at scale.
Conclusion: A Deliberate Path to Exit
The acquisition of Snoop by Vanquis Bank wasn’t a stroke of luck; it was the result of a deliberate, long-term strategy. By focusing on a real-world problem, understanding the needs of potential acquirers, building scalable technology, proving user engagement, and assembling an expert team, Jem Walters and his co-founders created a business that was destined for a successful exit. If your ambition is to build a startup that gets acquired, these proven principles provide a powerful blueprint for success.
