Want to build a startup that gets acquired? This founder shares 5 proven tips

At a glance:

• Jem Walters of Vanquis shares five actionable tips for startups seeking acquisition
• Key advice includes cautious planning, agency partnerships, and enterprise-grade quality
• Snoop's acquisition by Vanquis in 2023 highlights successful execution of these strategies

The importance of cautious planning

Jem Walters, now CTO at Vanquis, emphasizes that rushing into development can derail a startup. He recounts how his team spent six weeks evaluating Snoop's feasibility before committing. "Don't feel like it's necessary to start cutting code on day one," Walters advises, stressing the need for a feasibility assessment. This phase involved analyzing technology requirements, partner dependencies, and customer acquisition strategies. Walters notes that many startups fail because they neglect this critical evaluation period, jumping into development without understanding market viability.

The Snoop team's approach contrasts with common startup pitfalls. While competitors might prioritize speed, Snoop's methodical planning ensured alignment between technical capabilities and business goals. Walters highlights that this phase wasn't just about technical feasibility but also about validating the problem-solution fit. The team identified open banking mechanisms as a key enabler but recognized they needed to add actionable insights beyond basic financial tracking. This dual focus on infrastructure and user value became foundational to Snoop's success.

Strategic agency partnerships

Snoop's growth was significantly accelerated through partnerships with tech agencies Inawisdom and Hi Mum! Said Dad. Walters explains that these collaborations were structured with clear boundaries: the agencies provided expertise in data analytics and product development while retaining ownership of the codebase. "We said to them from the outset that, 'When we're done, this service is going to be run by a Snoop team employed by us,'" Walters recalls. This agreement ensured IP control and eventual in-house scalability.

The partnership model evolved over two years. Initially reliant on agency talent, Snoop gradually transitioned to internal hires as the business matured. Walters attributes this success to maintaining clear guidelines about the agencies' roles. The arrangement allowed Snoop to leverage external expertise while preserving autonomy. This approach not only reduced upfront costs but also created a sustainable model for scaling technical capabilities without compromising quality.

Building in stages with short-term goals

Walters advocates against long-term planning in favor of iterative development. Snoop's platform was built using two-week sprints, allowing the team to adapt to changing circumstances. "Have a North Star, have a direction of travel," Walters says, emphasizing flexibility over rigid roadmaps. This approach enabled rapid prototyping while maintaining enterprise-grade standards.

The staged development was critical for Snoop's security implementation. Walters notes that building security features incrementally allowed the team to test and refine protocols without delaying the overall timeline. This method proved particularly effective when addressing regulatory requirements for financial data handling. The team's ability to deliver working software quickly created a feedback loop with potential customers, validating assumptions about market demand.

Delivering enterprise-grade quality

Despite being a startup, Snoop maintained standards comparable to established financial institutions. Walters explains that this was necessary given Vanquis's potential acquisition interest. "If your exit strategy is, 'We want to be bought by a bigger business,' then think like a bigger business," he advises. Snoop implemented bank-grade security measures, including encryption and access controls, even though it wasn't a traditional bank.

The focus on quality extended to all aspects of the platform. Walters highlights that Snoop's development team prioritized performance and capacity planning from the outset. This proactive approach ensured the platform could handle growth without technical debt. The decision to maintain high standards proved pivotal in attracting Vanquis, which valued both the product and the team's expertise in digital business operations.

Avoiding greed in exit strategies

Walters cautions against overestimating acquisition likelihood. While Snoop's acquisition by Vanquis was successful, Walters emphasizes that startups should focus on sustainable operations rather than exit fantasies. "All you can ever hope for with a startup is to achieve an outcome where the product persists," he states. This perspective helps entrepreneurs maintain resilience through challenges like economic downturns or pandemics.

The lesson from Snoop's journey is that exits are unpredictable. Walters acknowledges external factors like the coronavirus pandemic impacted their timeline but ultimately reinforced the importance of building a resilient business. Vanquis's acquisition wasn't just about the product but also the team's capability in digital transformation. Walters suggests that entrepreneurs should view any positive outcome—whether acquisition, continued operation, or other—as a success.

Key takeaways for aspiring entrepreneurs

Walters' experience distills into five core principles for startup founders. These include thorough planning, strategic partnerships, iterative development, quality focus, and realistic exit expectations. Each principle addresses common pitfalls in startup journeys, from premature scaling to neglecting security. Walters' advice is particularly relevant in today's AI-driven landscape, where technical complexity often increases startup risks.

The Snoop case study demonstrates that acquisition success isn't solely about innovation but also about execution. Walters' tips provide a roadmap for balancing ambition with practicality. For founders navigating uncertain markets, his emphasis on adaptability and quality offers valuable counterpoints to the pressure for rapid growth. The acquisition of Snoop by Vanquis serves as a real-world example of how these principles can lead to successful exits.

The role of security in startup viability

Security considerations emerged as a critical factor in Snoop's development. Walters notes that even non-financial startups handling user data must implement robust security measures. This became especially important when considering potential acquisition by financial institutions. Snoop's implementation of enterprise-grade security protocols, including data encryption and access controls, proved essential in meeting Vanquis's requirements.

The security focus extended beyond technical measures to include compliance with regulatory standards. Walters explains that Snoop's approach to data handling was designed to meet the same standards as traditional financial institutions. This level of security not only facilitated the acquisition but also built trust with potential users. For startups targeting regulated industries, Walters' experience underscores the necessity of prioritizing security from the earliest stages of development.

Building a team for long-term success

The transition from agency reliance to in-house team building was a strategic move for Snoop. Walters explains that this shift allowed greater control over product development and innovation. The in-house team, composed of former agency members, brought both expertise and institutional knowledge. This approach created continuity while enabling Snoop to adapt to changing market conditions.

Walters highlights that building an in-house team requires careful planning. The transition wasn't instantaneous but occurred over two years as the business scaled. This gradual approach allowed the team to develop institutional knowledge while maintaining the agility of a startup. The success of this model demonstrates that startups can achieve both scalability and control through strategic team development.

The impact of external factors on startup journeys

Walters acknowledges that external challenges like the coronavirus pandemic and economic instability affected Snoop's trajectory. However, these factors didn't derail the acquisition; instead, they reinforced the importance of building resilient business models. Snoop's ability to maintain operations during these challenges proved attractive to Vanquis.

The experience teaches startups to focus on controllable factors while remaining adaptable to external changes. Walters suggests that entrepreneurs should build redundancy into their operations and maintain flexible business models. This approach helps mitigate risks from unpredictable external events while keeping the focus on core business objectives.

Conclusion: Lessons from a successful acquisition

Jem Walters' journey with Snoop provides actionable insights for startups aiming for acquisition. His five tips emphasize the balance between ambition and practicality, innovation and quality, and growth and sustainability. The Snoop case study shows that acquisition success depends not just on a great product but also on execution, strategic partnerships, and realistic expectations.

The acquisition of Snoop by Vanquis in 2023 serves as a benchmark for what constitutes a successful startup exit. Walters' experience highlights that while innovation is crucial, the path to acquisition requires meticulous planning and execution. For aspiring entrepreneurs, these lessons offer a framework for navigating the complexities of startup growth while maintaining the flexibility needed to adapt to changing circumstances.