For many entrepreneurs, the ultimate goal isn’t just to build a successful company, but to build a company so valuable that a larger enterprise wants to buy it. This “acquisition exit” is a powerful validation of a founder’s vision and hard work. But it doesn’t happen by accident. It happens by design.
Jem Walters, a co-founder of the UK-based fintech app Snoop, knows this firsthand. In 2023, his company was successfully acquired by Vanquis Banking Group, marking a major milestone for the business he helped build from the ground up. Snoop was designed to help consumers save money by using Open Banking data to provide personalised insights and recommendations.
The journey of building a startup with a clear exit strategy in mind is a masterclass in strategic planning. Based on the choices made by successful founders like Walters, here are five proven tips for building a startup that gets acquired.
1. Solve a Niche Problem with Mainstream Appeal
Acquirers aren’t just buying a product; they are buying a solution to a problem that their existing customers have. The most attractive startups are those that identify a very specific pain point and solve it exceptionally well. Snoop, for example, didn’t try to be a bank. It focused on one thing: fighting the “loyalty penalty,” where long-term customers often pay more than new ones for services like mobile phones, insurance, and broadband.
This is a niche problem with massive mainstream appeal—affecting millions of consumers. By leveraging Open Banking, Snoop could offer a practical, data-driven solution. Your startup should have a similar focus. Ask yourself:
- What specific, frustrating problem are we solving?
- Is the market for this solution large enough to interest a major player?
- Can we become the definitive experts in solving this one problem?
A focused solution is easier to explain, market, and integrate into a larger company’s ecosystem, making your business an attractive acquisition target.
2. Build a ‘Day One’ Team of Experts
Investors and acquirers often bet on the team as much as the idea. A founding team with deep industry experience and a proven track record is a significant asset. The leadership of Snoop famously hailed from Virgin Money, a background that provided immediate credibility and an expert understanding of the financial services landscape.
This experience accomplishes several things:
- Reduces Risk: An experienced team is perceived as less risky. They have navigated corporate structures, understand regulatory hurdles, and have a network of contacts.
- Attracts Talent: Top-tier leaders attract other A-players, creating a cycle of excellence that builds a strong, capable organisation.
- Fosters Trust: A potential acquirer needs to trust that your team can not only build a product but also support its integration after the sale. Industry veterans provide that confidence. According to a report by Harvard Business Review, the composition of the founding team is a critical predictor of a startup’s success.
3. Know Your Potential Acquirers from the Start
Building for acquisition means knowing who is likely to buy you. This isn’t about putting a “for sale” sign on your door from day one. It’s about strategic alignment. You should have a shortlist of 5-10 large companies in your industry whose strategic goals would be advanced by acquiring your startup.
For Snoop, any major retail bank looking to enhance its digital-first, consumer-centric offerings was a potential acquirer. Vanquis Banking Group, with its focus on providing credit to underserved markets, saw Snoop as a way to add value and data-driven intelligence to its customer relationships. The alignment was clear.
Analyse the annual reports and strategic announcements of potential acquirers. Do they talk about entering your market? Are they focused on the same customer demographic? Understanding their goals helps you shape your narrative and product roadmap in a way that makes your startup the missing piece of their puzzle.
4. Focus Relentlessly on User Data and Engagement
In the digital economy, data is currency. For a potential acquirer, a large and engaged user base is one of the most valuable assets a startup can have. They aren’t just buying your technology; they are buying access to your users and the insights their behaviour provides.
From the outset, your startup must be obsessed with key metrics that demonstrate health and growth, such as:
- Daily Active Users (DAU) and Monthly Active Users (MAU): Shows how many people are consistently using your product.
- Customer Acquisition Cost (CAC): How much it costs you to gain a new user.
- Customer Lifetime Value (CLV): How much revenue or value a user brings over their entire relationship with your product.
- Engagement and Retention Rates: How “sticky” your product is. Are users coming back day after day?
Snoop’s ability to demonstrate a consistently growing and engaged user base was a critical factor in its acquisition. This tangible data provides concrete proof of your product’s market fit, making the valuation conversation with an acquirer much more straightforward.
5. Be Strategic with Fundraising and Partnerships
The investors you choose can be as important as the money they provide. Strategic investors can lend credibility, provide valuable industry connections, and even introduce you to potential acquirers. Snoop, for instance, secured funding from the venture arms of prominent companies, including Salesforce.
A vote of confidence from a respected name like Salesforce Ventures signals to the market that your startup has been thoroughly vetted and is considered a prime innovator in its field. This kind of validation is invaluable.
Similarly, strategic partnerships with established companies can demonstrate your ability to collaborate and integrate your services, essentially giving you a trial run for an acquisition. These partnerships can prove your model, expand your reach, and put you on the radar of corporate development teams across the industry.
Conclusion: Build with Purpose
Building a startup with the goal of being acquired is not a shortcut to success. It requires immense discipline and strategic foresight. By focusing on solving a real-world problem, assembling an expert team, understanding the market landscape, tracking your data meticulously, and being smart about your funding, you create a business with immense intrinsic value. This value is what ultimately attracts acquirers and leads to a successful exit, turning your startup vision into a rewarding reality.
