Decide what you are actually selling
Before anything else, be clear whether you are selling the company or the assets. An asset sale transfers specific things, such as code, the domain, users and contracts. A share sale transfers the legal entity, including its liabilities and its tax history.
Most failed startup sales are asset sales, because buyers do not want to inherit an entity with unknown obligations. It also tends to be simpler and faster. The trade off is that your company still needs winding up afterwards.
- Source code, repositories, documentation and deployment configuration
- The domain name, brand assets and social accounts
- Users, and whatever data you can lawfully transfer
- Customer contracts, integrations and app store listings
Work out what it is worth
With little or no revenue, valuation is a replacement cost conversation. What would it cost a competent team to build this, and how long would it take. Six to twelve months of engineering has a defensible number attached to it.
Where revenue exists, even small revenue, buyers commonly work from an annual multiple that reflects how much of that revenue survives the handover. Concentrated or contract dependent revenue is discounted heavily.
Prepare before you list
The single highest return activity is documentation, written while people who understand the system are still available. Architecture, deployment, third party accounts and known bugs. Buyers pay more for a system somebody can explain.
Get your ownership story straight. Contractor agreements without intellectual property assignment, unclear licence obligations and personally held domains all surface in diligence and all slow deals down or kill them.
- Written architecture and deployment documentation
- A list of every third party account and who controls it
- Confirmation that all code is owned by the company
- Honest metrics, including the unflattering ones
List, negotiate and complete
List where buyers of this specific type look. A marketplace for failed startups reaches people explicitly seeking distressed technology assets, which is a narrower and more motivated audience than a general business broker.
Expect diligence on code quality, ownership and metrics. Expect the buyer to ask why you are selling, and answer it plainly. Expect to be asked for a handover period, and price it in rather than resenting it.
Common questions
How do I sell my startup if it failed?
Sell the assets rather than the business. Package the code, users, data, domain and documentation, price against what it would cost to rebuild, and list where buyers of distressed technology look.
How long does it take to sell a failed startup?
Commonly one to three months from listing to completion. It takes longer if ownership of the code is unclear or the founders disagree on price.
Do I need a lawyer to sell my startup?
For anything beyond a very small asset sale, yes. Asset transfer, data protection and your obligations to shareholders all benefit from advice.
What if my startup has no users and no revenue?
It is still sellable. The code, the domain and the design have replacement value, and buyers regularly acquire products purely to save build time.