Forewarning: the following is just a theory -- I have nothing to back it up beyond anecdotal evidence.
Why do some startups get acquired and not others? Here's a thought experiment. Suppose you have two startups in the same space with about equal traction. What factors could lead one of those startups to get acquired over the other?
I believe a major factor is availability bias on the M&A side. That is, the buyers know more about one over the other and are (often legitimately) biased in their favor.
You might think that this initial bias wouldn't help much in the end because the buyer would proceed to evaluate both startups and pick the one they thought was better. However, the bias isn't easily severable. If they know more about one, they're going to be primed to pick that one, assuming their foreknowledge is positive.
And from my (albeit limited) experience, not all M&A departments take such a top-down approach. They may only consider the one company they know about. They may also not even be considering that space at all but for knowing about that company.
So, what can you do about it?
First, you need to determine your acquisition targets. Make a list. Go wide. Put anyone on it that you think has some synergistic or strategic reason to buy you.
- Newsletter. When you meet people at the targets (either randomly or strategically), ask them if you can add them to a special newsletter you send out quarterly where you include inside info about your industry based on your unique position within it. Who can refuse that? We did that at my last startup and it worked well. If there is one secret in this post, this is it. I love it because it fires on lots of cylinders: it keeps you in their mind while at the same time (if you do it right) showing your company is awesome and that you are awesome (given how you choose to frame the insights).
- Investors. Investors, especially ones with lots of startups, are involved in acquisitions all the time, e.g. super angels. These guys know the M&A guys and they talk startups. By virtue of being involved with them, I believe you have a leg up. Now this alone is not a reason to take external funding, but I believe it is a real benefit. (There is another related benefit of substantially increasing the price, but I'll leave that for another post.) For the record, my last company had no external investors and we did get acquired, I believe that occurred from doing the immediately above and below tactics.
- Partnerships. The more they know you, the greater the availability bias when they think about acquisitions. And if you're already doing a partnership with them, it honestly makes a lot of sense. Assuming the partnership is fruitful, you're actively showing them how you can benefit their company. Also note that partnerships, if initiated by a buyer, can be a potential acquisition in disguise. That happened to us. We had the newsletter, then they reached out for a partnership and it turned quickly into acquisition talks.
- AngelList. This is a new one that I discovered the other day via Naval, and which prompted me to write this post. Check this out. It's the corp dev (M&A folks) on AngelList. Wait, what? They're not investors... But just as AngelList has started expanding into Series A and later financing, I believe they'll also keep growing down the chain to M&A. It makes perfect sense. They have startup profiles, and startups updating their traction metrics. They can then make it super easy for you to maintain that newsletter I was talking about above. This channel is currently under-utilized (given it is so new), and so is especially attractive.
- Press. Pretty obvious, but it really helps. People trust certain channels, and press is often one of those. In startup land, that Techcrunch/Techmeme visibility can help here for sure, but other targets may play better with more specialized places (such as trade magazines). Then there is the more creative tactics -- I didn't put it up for this purpose but a ton of people saw the DuckDuckGo billboard, which has led directly to partnerships.
- Networking. Of course, you can't beat literally getting in front of the right people in a casual context. I hate to say it, but living where your targets are can help here if you can get to the same social events. You can get around this somewhat by going to conferences and the like, but people are thinking about different things in that more professional context (and are often bombarded).
Let me take a step back and say you don't have to want to get acquired to take these steps. If it turns out for one reason or another that it eventually makes sense for you, then you'll be in a better position. Also, they could help in other things, like business development.