Making Money

The Complete Guide to Selling Your Online Community (2023)

January 4, 2023
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min read

Communities can be considered as full-fledged products and selling them takes effort. Read the list of steps that you need to follow while selling.

The Complete Guide to Selling Your Online Community (2023)
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Any place that gathers engagement is monetizable. So, if you have an engaged community, then you can definitely make money from it. But this doesn't guarantee that said community will be desirable for an acquisition. 

The best example of this is YouTube channels. Yes, there may be some merger and acquisition (M&A) activity with YouTube channels. But it is not the norm, and there is a reason for this. When buying a YouTube channel, there is a risk that you're buying a person. Once that person grows old or irrelevant, then the acquisition becomes a failure. A person as a product is a weird concept, which is why M&A teams are allergic to buying people. A YouTube channel with 3-4 people that get screen time is much more likely to get bought than a 1 person channel.

Communities are products

Investors see communities as full-fledged products. This is because admins and moderators are fungible. They can be replaced with another person without destruction of the community. That's why we're seeing more and more community M&A value — because M&A teams see communities as products.

Some communities have their own product, and they see great exits too. Prosus recently acquired Stackoverflow (a community for engineers for 1.8 billion USD). Stackoverflow works like a forum with gamification features.

Many consumer startups today are communities. Most don't even need to hire engineers to build their own products. They could work well even with a white-labeled platform like Scenes. It'd be hard to sell your community if you've built it on Discord or Slack. This is because both need third-party logins and a third-party download.

Naval Tweet on Building an audience, Hashnode, 9gag, Buzzfeed and Pinterest, are all examples of communities that have their own app. 

If you want to interest M&A teams in companies, then you should be able to spawn out your own app. Having a Single-Sign-On based sign-in system and a white-labeled web experience are also important.

The process of selling your community

1) Pre-build relationships: You can't meet an acquirer and sell the next day. Find a potential list of acquirers and get an initial meeting. Make sure they're in the same space as you, otherwise the acquisition won't ever make sense for them.

2) Continually send growth updates to potential acquirers: Updates are important. Most of these people are really busy and won't hang around your community every day. Send them updates as interesting events and growth happen.

3) Most communities will be bought, not sold: Don't bank on cold pitches. The outbound sales process will rarely work when it comes to selling a community to an acquirer. Typically, you will probably get inbound interest from a champion inside a company. Hence the constant growth updates!

4) Social media clout: Third-party validation from respected people in the industry can make entire deals happen. Zapier bought Makerpad based on a single tweet.

5) Dying down: Most conversations will fizzle out, with people canceling deals at the last minute. This is the same with startup acquisitions and shouldn't be any different here. Focus on the community and don't fully mentally invest yourself in the potential exit. As someone who has sold a company before, building castles in the air before a deal is done will lead to emotional ruin here, I promise you.

6) Value your company properly and ask for what you're worth: This is especially hard to do when there aren't enough examples to anchor to. There are not enough communities that have been sold for us to figure out exact valuations or revenue multiples, unlike the startup world where there are a plethora of examples.

Selling your community to a potential acquirer won’t be much trouble, as long as you keep these points in mind. If you’re still unsure, we’re here to guide you through the process to make sure you get the results you need. Talk to us here

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