Thread by @XavierHelgesen

Here’s the inside story of how Enduring Ventures acquired @UpCounsel, a company once valued at $50 million, for $200,000, relaunched it as a SaaS company, and raised on a $28 million valuation 18 months later.

Read below for the playbook to buy a VC-backed company. 👇🏻👇🏻👇🏻

@UpCounsel was founded on a big idea in 2012: build a marketplace for legal services - the “Uber for legal” - where startups could connect directly with independent lawyers.

The business saw early traction and recruited some of Silicon Valley’s top investors.

After raising a $12 million Series B in 2018, expectations were high. The team grew to 40 people in San Francisco.

Unfortunately, some bad luck happened. The company grew, but not fast enough. A lawsuit distracted management.

They couldn’t raise a next round.

In late 2019, the core team was acqui-hired by LinkedIn. LinkedIn wanted the team but had no use for an independent legal marketplace.

Even one with $10 million GMV and 1 million organic monthly SEO views.

With no team and no funding, shutdown was announced in early 2020.

I knew the CEO, so I told him that we might be able to do something.

Quick math told me it would be profitable immediately if we kept overhead low enough.

I felt the brand, the SEO power, and the concept had great long term potential - just not as a VC rocketship.

We couldn’t use traditional financing and we needed some reserves for operations. So we proposed an asset purchase at $2 million with 90% seller financing.

We made sure that the founders would share in the proceeds, as we are founders ourselves and know what it means to them.

The key to getting our offer accepted was understanding the logic of the VCs involved.

They had a large opportunity cost of their time, since they already knew this wasn’t a winner.

Giving them a quick and graceful exit was more important than anything else.

Once we took over, I was CEO for the first 90 days.

First order of business was rebuilding a lean, remote-only team. We brought in Paul Drobot - the former CRO of Atrium, Danny Page as COO and @ycombinator alum @Kjer as CEO.

The rest of the team was scaled offshore.

We realized we had a business model problem. People were leaving the platform after they met their lawyer. Marketplace fees were very high. (20%)

Our solution was to add value for lawyers and charge monthly fees for a limited number of spots

We could then reduce fees to 8%.

Now we were cash flow positive with a great team, but we saw a bigger opportunity. Laws had changed, allowing full service legal firms to be owned by non-lawyers.

We didn’t want to raise traditional venture capital, so we tried crowdfunding. We had no idea if it would work.

The team executed exceptionally (with the help of @MariaSpringer) and we raised $5 million!

$2.5mm in the public crowdfund from 1100 investors, and $2.5mm from a few patient private investors who reached out after seeing the @Wefunder campaign.

I think there’s a huge opportunity for more of these deals to be done.

Not every VC backed company will be a winner, but that doesn’t mean that they have no value.

Finding a way for the company to live on can be a win for all.

Here’s the campaign if you want to check it out. We will have it live for only a short time longer. wefunder.com/upcounsel