How to Sell Your Startup When You're Low on Runway

Running out of cash while trying to sell your company is one of the hardest situations a founder faces. The normal M&A playbook assumes time you don't have — and most advisors aren't built for a three-month window. This guide is.

It draws on Alex Shartsis, who led GTM at Drawbridge (acquired by LinkedIn) and TripIt (acquired by Concur), sold his own company twice, ran corp dev at Opendoor, and now writes Seed to Sequoia. His app Skyp automates outbound — relevant when you're hunting a buyer with two months of runway left.

What a Proper Process Actually Requires

A real M&A process takes 6–18 months. To attract serious buyers you generally need $5–10M in revenue (sometimes less in certain markets), clean books, solid HR, the ability to forecast revenue, and — in the current environment — profitability or at least breakeven.

If you have those characteristics and enough time — or could buy it via layoffs or cost controls — and you want to sell, do that. This guide is for founders who don't have that luxury.

Face the Music

The funding market is tight. Whether it's bad luck or bad timing, some aspects of your outcome are beyond your control. Acquihires that would have been life-changing a few years ago aren't nearly as common anymore.

Consider a YC founder down to his last 4–5 months of cash. He'd seemingly found PMF, but the company wasn't generating enough revenue to reach breakeven or raise in the new environment. ARR was still well under $1M. Only three employees remained — two of them founders — so cost-cutting wasn't an option. He was still scrambling to raise, getting 100% rejection. A bridge from insiders ultimately fell through.

Sometimes shutting down or selling is healthier. Maybe reading this gets you closer to that realization.

It's brutal to say. Even harder to hear. But stopping the VC pitches and starting to think about acquirers — or a clean wind-down — is the right move.

Shutting Down Is a Real Option

Before committing to a sale process, ask whether selling is actually best for you. Selling will drag out the ending — possibly by years if you succeed, but at minimum by the months it takes. Does that serve you? Does it matter to your investors?

If you're down to your last month or two, start shutting down now. There are real legal risks — especially in California — if you don't pay employees, and penalties can be personal.

A full professional wind-down used to cost ~$100K and take months. Services like SimpleClosure can get it done for a fraction of that in a month or two without you becoming a legal expert. Dori Yona, SimpleClosure's founder, wrote about it here. Using a service like that also buys you another 2–3 months to attempt a sale before you have to commit to closing.

Want to Sell? Here's the Playbook.

Assuming you have roughly three months and something worth selling, here is how you run it.

Know What a Good Outcome Looks Like

You want three solid offers. That gives you a read on the market and some leverage. More than three is fine but gets unmanageable — be unresponsive to one and it may walk, even if it's your top choice. Two is risky but better than one. One is better than none but gives you zero leverage.

Offers take about a month. Closings take two. Don't wait.

1. Leverage Your Connections

Your board, investors, and friends-of-the-company are your fastest path to high-trust meetings. Focus outreach on CEOs or functional leaders (CPO/CTO), not corp dev teams. Corp dev will talk, but they rarely push deals forward.

A few channel notes worth keeping in mind:

• Deeply technical companies can try unsolicited emails to Google and similar; cost is low, expectations should be too
• Investment bankers won't represent a firesale, but they will make introductions to look helpful
• Less in-demand bankers charge high retainers you shouldn't pay
• Advisors are underrated: no fiduciary constraints, no legal restrictions on business advice
• Expect a retainer plus a success fee meaningfully below banker rates
• Ideally, line up one or two interested buyers before bringing an advisor on

2. Get an Offer — in Writing

You need a signed LOI with two months of runway to spare. Oral offers and conversations are not enough. Even for an acquihire, get it in writing. A tight timeline leaves no room for miscommunication.

The ideal scenario is a preemptive offer. Relationships you've built may generate inbound interest. That's what happened to Alex: he met a competitor CEO who had just raised a war chest, who asked if the company was open to acquisition. He feigned only mild interest. Three weeks later, they had an LOI.

If that's not happening, run a process. Talk to ideal buyers. Be honest: you're low on cash and need to decide in 90 days. If they're interested, they'll move. If they're not, no spin will change it.

The email that works:

Hi {CEO},

We're low on cash and expect to decide next steps within 3 months. Your company is my top choice for where we'd land because {concise, specific reason}. Do you have 30 minutes to chat?

— {Your Name}

If you get real traction, you can spark FOMO by mentioning a pending offer to others — but don't lie. Use tools like Skyp to automate outreach and follow-ups, especially to targets where you don't have warm intros. AI-powered outbound for M&A interest is one of the rare cases where the ROI is immediate and obvious.

3. Land the Plane

A signed LOI is just the beginning. Closing can take two months or more, and delays are normal. Managing cash during that window is its own discipline.

How to manage cash during close:

• Keep payroll going — non-negotiable
• Pay only the most essential expenses
• Defer everything else
• Do not take a loan from the acquirer — debt comes with recourse, and there are scenarios where they don't acquire your company but end up with its assets anyway

Expect Turbulence

Many deals that look on final approach end up crashing. These are real examples:

• One founder had an LOI from Twitter; Elon bought Twitter and immediately killed all M&A in progress
• Another had a board member renegotiate at the last minute; the delays killed the deal
• A third was in talks when the acquirer's CEO unexpectedly died on vacation — he eventually closed, but barely
• In Alex's own experience, one board member refused a deal seeking more money that couldn't be extracted from the acquirer; the company eventually had to shut down

Keep Your Team Engaged

If you have people around, give them something to run. Keep operating — even try to grow. Experiments that gain traction become selling points. Tools like Skyp for cold outbound or Fin for customer support can replace headcount at a fraction of the cost, keeping the business alive while you close.

Think hard about team size. One top-VC-backed company with 100 employees started a sale process, got uninspiring offers, cut to 12 people, became profitable, and used those profits to pivot — instead of accepting an insulting M&A outcome.

Stay Locked on the Goal

The most important thing: the founder/CEO must stay focused on closing. In one competitive process, the head of product asked, "Is everything we're doing optimizing our M&A process?" — upset that the product roadmap had been blown up to address a diligence item. The answer was an unequivocal yes.

If You Can Buy Time, Do It

Cutting costs, running lean, and replacing expensive headcount with tools buys options. The math is simple:

• Skyp instead of SDRs
• Fin for customer support
• ChatGPT or Claude instead of analysts

One company sold to eBay months after letting all staff go. Evan Williams was the only "employee" left when Google bought Blogger. Lean is not dead — lean can close.

The Emotional Step Comes First

Selling a startup quickly is complex. But the first step is emotional: accepting that the current company is not going to be the breakout you had hoped for. That frees you to make decisions with clarity.

The YC founder from earlier got close to selling but didn't close a deal. A year later, he felt good about it. He ran a clean process. That matters. Every great founder has one of these stories. We just don't talk about them enough.

One More Thing: The Sub-$5M Round Is Not Dead

As you weigh sale vs. raise, the conventional wisdom that you must raise $5M+ or don't bother is wrong — if you count SAFEs, which founders do and should.

Priced rounds under $5M are rarer. In SAFE-land, they're alive and well. Per Carta data:

• The barbell effect is real: more rounds under $1M and over $3M, fewer in between
• Some startups skip straight to $10M+ Series As
• Others raise small, build, then come back stronger
• AI is distorting all of this

If you're raising under $2M, you're probably on a SAFE — and that market is functional. Ignore the noise about mega rounds.

This is not legal advice — just hard-won experience.