Closing the deal: Lessons from selling a website

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We closed our first round of funding without giving up any equity as we mentioned in our last post, “why sell a profitable website?” After the sale, our company is financially set for at least awhile, so what did we learn? We learned why everyone says getting funding and closing the deal is so hard. In the end, we think it was worth all the trouble but that doesn’t change the difficulties of closing a deal.
“In the startup world, closing is not what deals do. What deals do is fall through. If you’re starting a startup you would do well to remember that.”
Paul Graham
Selling an asset turns out to be very much like the way Paul Graham describes getting VC or angel investments. It takes a lot of time and work. In the end, we were in and out of talks to sell our site for over three months before we had a check in hand. The deal almost fell through multiple times, in which case not only do we not get the investment, we lose all the time we spent pursuing this deal. That is a scary thought when you’re a bootstrapping startup.
The point Paul Graham makes is that the negotiation never stops until the closing. This hit close to some of our struggles with completing this deal. After a verbal agreement was made, we wanted nothing more than getting back to full time work on our new product Seekler. In fact for awhile we stopped taking on new advertising contracts (not wanting them to complicate the terms of the sale agreement) which turned out to be a mistake, wasting time and losing out on additional revenue. Unfortunately, as some delays to closing came up we realized we needed to make some final improvements on the old website to close the deal. In the last few weeks we put more time and focus back into the old site – increasing traffic, fixing bugs, pursuing additional revenue streams (renewing contracts we had been delaying), and improving the site’s visibility on search engines. After this push to really hit the value of the deal home, we found the legal documents getting pushed around quickly to finish everything up. We learned not to delay any contracts, revenue, or slow down the development until you have a fully signed legally binding deal in hand.
With ink on a few pieces of paper, Pretheory has at least jumped from small losses to a funded start up. We are risking a small but steady income for the chance at solving a far larger and more interesting problem at Seekler – collecting and sorting the world’s opinions on everything.

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