Some are expecting the cleantech graveyard of startups to start filling up, particularly in the second quarter of 2012. But how companies wind down, sell off their assets, or morph into new much slimmer versions of their former selves, is a personal choice for the companies and investors. Here’s 10 ways you can do it:
1. Make a firesale look like a lucrative acquisition: If you’re selling off your company for pennies to a competitor or larger firm, there’s no reason you have to let the world know. Make the terms of the deal undisclosed, so no one never knows you didn’t have the exit of your dreams. This doesn’t work so well if the acquirer is a public company, as the terms could come out in SEC filings.
2. Hire an expert: Sherwood Partners, and other firms like it, are focused on shuttering your company as quickly as possible, as efficiently as possible, and as quietly as possible.
3. Cold turkey: This approach only really works if your company hasn’t raised much money from outside investors, and could be a good choice for startup teams made up of developers. Just stop doing what you’re doing. Hug Energy shut down its energy software product before it was able to raise funding. Unfortunately a lot of capital-intensive cleantech firms won’t meet this bill.
4. File for bankruptcy: If creditors are knocking on your door, there’s always the traditional approach of filing for Chapter 11. While startups don’t normally do this, large public companies like Evergreen Solar do, and, well did, this week.
5. Sell off piece by piece: Whether you hire an expert or find acquirers yourself, you can sometimes sell off pieces of your businesses for more than the whole, from your various intellectual property to your assets to your software to your domain name. This is another way for your innovations to live on with a new owner.
6. Use your project as a resume: Here’s another one that’s meant for a small, pre-funding, venture. Use your impressive project to get a job at your competitors or peers. Yes, your innovation wasn’t a commercial success, but perhaps it’s cool enough to live on as your personal project in a bigger company, and can score you a high-paid job.
7. Blog it out: There’s something refreshing when it comes to companies being transparent, thorough and instructive when it comes to what went wrong and what they plan to do with their services and companies on the way out. Most companies give a final explanation for their decisions — the Valley is small and company life cycles are short — and communication can also help you find potential buyers or partners for your assets.
8. The carbonite freeze: However, a lot of companies choose to act like Hans Solo on his way to Jabba the Hutt: the slow freeze. Often times this occurs because of lack of funding, and the company is just stuck in a holding pattern, waiting for more funding, but unwilling to completely wind down. Range Fuels comes to mind here. Eventually these companies will dethaw and sell off assets or revive. But will claim that nothing is wrong (nothing here to see folks!) the whole way.
9. Reborn, but not really: Some companies try to keep going by “pivoting” (everyone’s favorite word) into a new company with a less capital-intensive or alternative business model. Say, instead of selling hardware, you’re going to sell services now instead. But sometimes these pivots are more half-hearted pirouettes into oblivion. The new plan often times isn’t different enough from the old plan, which wasn’t working.
10. Throw a party: Be happy, you just made a decision to end something that wasn’t really working. You had a good run, and in a few months you’ll be off running with another idea, business or venture. Time to relax and give yourself props for making it this far.
Image courtesy of conskeptical.
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