There is, in fact, such an absurdly high of demand for this business by buyers (see the thread for examples) that I think it is going to bootstrap a supply chain for them.
We're already seeing strong inklings of it in the MicroConf community.
h/t @tylertringas
We're already seeing strong inklings of it in the MicroConf community.
h/t @tylertringas
@tylertringas "Absurdly" meant as an intensifier rather than a pejorative here; the economics absolutely work out for the PE firms and their LPs. (As to whether they work out for the people selling the software company, "It depends" but I personally have no regrets around selling my companies)
@tylertringas What does a supply chain look like for software companies? Well, think of how YC/angels pass companies to Series A firms pass them to ... pass them to an IPO.
Particularly concentrate on early stages there around e.g. market selection, prototypes, meat-and-potatoes execution.
Particularly concentrate on early stages there around e.g. market selection, prototypes, meat-and-potatoes execution.
@tylertringas If you think that the rate limiter is simply engineering hours, then you'd want the supply chain to all be in-house at a company which you control, where you pay teams of W-2 engineers to ship 8 SaaS companies a year and sell 6 of them in year 3.
I bet rate limiter is founders.
I bet rate limiter is founders.
@tylertringas In which case supply chain looks like people identifying would-be founders, staking them with enough money to get the ball rolling, and educating them about exit options at the appropriate time for their circumstances.
@tylertringas "Sketch the math out for me."
You could imagine a hypothetical SaaS company with 1 to 2 co-founders going through ~$100k of living expenses before revenue came in, covering reasonable engineering salaries after 12~18 months, getting to $500k profit on $1.5M ARR in 3~4 years.
You could imagine a hypothetical SaaS company with 1 to 2 co-founders going through ~$100k of living expenses before revenue came in, covering reasonable engineering salaries after 12~18 months, getting to $500k profit on $1.5M ARR in 3~4 years.
@tylertringas That company is probably worth $2 million to a PE buyer; more if the growth rate looks attractive.
