Selling a startup in an ‘acqui-hire’ is more lucrative than it seems, founders and VCs say
Acqui-hiring reveals more benefits for founders and employees, offering better pay and job positions despite initial disappointments.
Even in tough venture capital markets, some startups turn to acqui-hiring as a viable exit strategy. Although initially viewed as a setback, founders and key employees often find that joining an acquiring company leads to better job roles and higher compensation than they might have otherwise secured. Figures like Nivas Ravichandran from Frilp and Sri Chandrasekar from P72 Ventures highlight the significant career boosts and financial incentives that acqui-hires can provide.
Acqui-hiring focuses on retaining key talent, often offering founders and senior staff higher stock grants or directorial roles. For example, Frilp co-founders remained at Freshworks longer than expected, benefiting from the career growth opportunities. Such incentives often convince employees to stay, despite any initial reluctance towards larger companies, as seen in multiple case studies.
Investors frequently avoid publicizing non-lucrative acquisitions, but they remain common, especially with 90% of Q2 M&A transactions undisclosed. Many acqui-hires allow companies to rapidly acquire specialized teams, as evidenced by the acquisition of Supaglue by Stripe and Dopt by Airtable. AI startups are now prime targets, valued for their talent despite potential product obsolescence.