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Startup Exits: A Marathon Where No One Is Left Behind

  Read the story of Logmatic’s acquisition by DataDog.

As a startup founder, thinking through potential exit strategies is crucial.  In fact, the topic of an exit was one of the first things that came up when we founded Logmatic. At the time we didn’t think about a merger or acquisition – we thought in terms of organic growth and green field opportunities. But the important point about exit strategies is to bring them up, discuss them, and most of all, to be in agreement with your co-founders right from the start.

Datadog recently acquired Logmatic. This wasn’t something we planned for or actively pursued; in fact, we were in the process of looking for new fundraising and talking to VCs. We were doing well, showing double-digit growth from one month to the next, and we felt ready for Series-A funding. We’d known Datadog for a while, as they were one of our customers. As we began our hunt for financing, they made us an offer.

Logmatic and Datadog’s products complete each other. We both work in IT system monitoring, and to perfectly monitor a system you need several kinds of data. Each of us offered a partial service and a number of clients had told us they needed both Logmatic and Datadog, since a single product was not enough. The acquisition means the products will now be fully integrated and customers can benefit sooner from a complete service that both companies were aiming towards providing.

Our next steps will be a new adventure together. Datadog is growing fast and expanding globally. At the moment our next critical steps are working with our customers to explain exactly why the acquisition has taken place and show them the added value it brings them. So far, our customers are welcoming the change and are excited to try the new beta version.

From day one, Logmatic has benefited from Microsoft’s support. We received great product feedback from Microsoft and amazing market exposure. Becoming part of the Accelerator program further advanced all of this. But support didn’t end there and we continue to be very involved in alumni activities. The different Microsoft events give me the opportunity to meet great people and incredible entrepreneurs, to get feedback, and to connect with other founders. The programs we have been a part of, around the world, are very inspiring.

At the Inaugural Founders’ Summit that took place in January 2017 in the UK, for example, we explored the topic of negotiations from the perspective of Richard Mullender, former Scotland Yard Head Negotiator; at the Startup Roadshow that took place in April, we revisited the topic from the perspective of Daniel Reisner, who took part in the Arab-Israeli negotiations. These formats gave us space to take a step back from our startups and put things in perspective before taking the plunge back into business again. Beyond that, the activities are really fun and it’s great to be involved and be a part of the community

Overall, acquisitions are exhausting and they take time. They are more like running a marathon than a sprint so here are a few tips for founders approaching (or thinking about) one:

Make sure you have good advisors, especially on the legal side of things. There are so many variables to deal with. We were lucky to have great legal advisors by our side.

Don’t forget your team. At the beginning, it will be hard for you to keep everyone in the loop. But don’t forget them – there should be something for everyone regardless of contracts. We held a BIG party around the acquisition – in fact, we built it into the acquisition deal.

Keep your energy levels up. The whole process is like a marathon and it’s important to stay focused and energized. An acquisition is challenging both physically and mentally and there’s really no training that can teach you exactly what to do.

 

Get to know Amirhossein Malekzadeh, Co-Founder of Logmatic