Startup News & Analysis

Photography startup Snappr buys Photographers.com.au, but founder warns acquisitions can “kill” young startups

Dominic Powell /

Snappr

Matt Schiller and David Lye. Source: Ernita Siregar.

Australian photography-on-demand startup Snappr has acquired competitor and fellow photography business Photographers.com.au to further strengthen its position in Australia as it continues to tackle the US market.

Photographers.com.au was founded eight years ago by David Lye, and acts as an online directory for both photographers and customers to connect one to the other. The platform has over 5000 photographers currently in its database.

Snappr was founded in May 2016 and launched with $200,000 in funding. The startup provides individuals and businesses a way to search for and hire professional photographers while managing coordination and payment through its platform. The startup then headed to the US six months after launch to participate in the coveted Y Combinator accelerator, relocating its headquarters to San Fransisco.

For a while, the two businesses were discussing a partnership and cross-promotion, Snappr co-founder Matt Schiller told StartupSmart. But as the two companies got to know each other better, discussions of an acquisition began to form.

“The whole process took about six months overall, and this is not only the first acquisition we’ve made but probably the first of its kind in the Australian photography industry,” Schiller says.

Lye will step down as chief executive of Photographers.com.au and continue as an advisor and investor in the business. The deal’s valuation was undisclosed, but Schiller says it was done partially in cash and partially in equity.

However, despite raising $2.5 million from prominent Silicon Valley investors last year, Snappr’s war chest wasn’t full enough to tackle an unexpected acquisition and this lead the startup to raising additional capital to bankroll the deal.

Schiller says this wasn’t an issue as the company’s backers were keen on the deal, and “very excited and supportive”.

“Before we came along Photographers.com.au was the only digital player in the photography space of any substantial size, but Snappr quickly grew to be a bigger platform in terms of revenue,” he says.

“The two platforms working together and side by side will let us offer the same sort of photography but with more options than the sum of our two parts.”

Schiller says the platforms will continue to operate independently of each other, however, there will be significant cross-promotion between the two and photographers registered with Photographers.com.au will be given the opportunity to easily sign up with Snappr.

Acquisitions can “kill” early-stage startups

Rolling through an acquisition process as a two-year-old startup would likely have many founders baulking, and Schiller agrees that in the majority of cases, an acquisition this early is a bad idea.

The founder says he’s heard his fair share of startup horror stories about acquisitions that have gone wrong, and says they’re often distracting and detrimental for early-stage startups.

“An acquisition can be distracting and take you away from your core business. There can be concerns around integration, which is something very challenging, and all sort of unexpected issues can come up,” he says.

“In the end, what was key for us making this work was to make the deal as simple as possible, and run the two businesses side by side rather than integrating the platforms.”

The Snappr team were also given some poignant counsel by investors: set a time limit for how long the deal should take to finalise, and limit the amount of hours each week you spend on organising the deal.

“It was a straightforward deal, and we were very conscious of only allocating a small amount of time to let the deal happen so it didn’t distract from our growth,” Schiller says.

“But even with a deal as straightforward as this one, it still took up a lot of time. I can only imagine a more complicated acquisition would kill a startup of our size.”

NOW READ: Mike Cannon-Brookes shares three vital lessons from Atlassian’s $577 million acquisition of Trello

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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