VC veteran says exits are driven by "talent, technology and traction"
Today, Priti Youssef Choksi is a partner of the venture capital firm Norwest Venture Partners. But previously she spent five and a half years in Google, where she worked in strategic partnerships, and nearly nine years in Facebook, where she started business development and later focused on mergers and acquisitions.
Since Choksi knows firsthand how some of the largest companies on the planet think about potential acquisition targets and how the agreements eventually come together, we asked if he would share some of these insights with us during our recent founder-focused Early Stage event. . The idea was to help participants better understand how - and why - certain acquisitions come together; his advice was so helpful that we wanted to share it more widely here.
So where do you start? Choksi suggested that people first understand the "build, collaborate or buy" mentality of big buyers. In fact, while agreements may seem very similar to strangers (an agreement is a business is a business), they are not. First, large companies will build internally if they are strengthening a strategic asset or what they need is sensitive information or technology. A good example of something that Google does he would never buy, for example, is search technology, because research is the crown jewel of the company, he noted. Meanwhile, companies will work together to bridge a product or service gap or when they are trying to create a new platform, he said, pointing to the early days of Google's Android ecosystem.
As for when they finally shop, companies are driven by three things, said Choksi: talent, technology and traction. With talent, as you can imagine, companies can conduct an acquisition with the goal of bridging a talent or leadership gap internally or acquiring niche skills that their current employees don't already have, he said.
Companies are buying technology when they need external technology to increase their organic efforts. Choksi pointed to Luma.io as an example. In 2013, the young company, which created a video capture, stabilization and sharing app, was acquired by Instagram (which was already owned by Facebook); a week after the closure of the Luma agreement, Facebook launched videos on Instagram largely based on the Luma platform.
