What's New: MicroAcquire wants to acquire you
(from the latest issue of the Indie Hackers newsletter)
The company just closed a $2.8 million funding round:
- MicroAcquire wants to help founders make life-changing exits without the stress. If you're hitting less than $500,000 in annual revenue, the platform is primed for you to list.
- Weeks after hitting a $4 billion valuation, Patreon laid off 36 people in an effort to help its creators diversify. It's more important than ever to avoid being tied to a single platform, and Dru Riley revisits paid communities as a solution.
- Founder Tim Schumacher has analyzed over 1,000 indie SaaS projects, and has acquired 6. Most common product mistakes? Wrong pricing and bad user onboarding.
Want to share something with over 80,000 indie hackers? Submit a section for us to include in a future newsletter. —Channing
🤓 MicroAcquire Wants to Acquire You
from the Indie Economy newsletter by Bobby Burch
With a recent $2.8M funding round, startup acquisition marketplace MicroAcquire is expanding its platform to sell more companies. If you're a founder hitting $500K ARR or less, this could be a great opportunity to sell.
Smooth selling
Micro mission: The traditional process of selling a business can be grueling and full of disappointment. Hiring an investment bank is pricey, due diligence can take months, and founders still have to grow their companies as they focus on selling. Even if you find a seemingly good fit, there’s still no certainty that it will work out.
Likely to fail: The Harvard Business Review reports that, while companies spend more than $2T on acquisitions each year, between 70-90% of mergers and acquisitions fail. Most acquisitions fail as a result of executives incorrectly matching candidates to the strategic purpose of the deal.
Matchmaker: MicroAcquire simplifies the buying and selling process with an intuitive marketplace that allows buyers to browse vetted companies by revenue, profit, keywords, or asking price. Sellers can anonymously list their companies in just a few minutes, but first they must share basic info and metrics. This includes product information, asking price, growth forecast, outside financing, and a pitch deck.
Born from experience: MicroAcquire founder Andrew Gazdecki was inspired to launch the platform after the time-consuming process of selling Bizness Apps in 2018:
The exit has always been an important part of the founder’s journey, and the process has been historically characterized by information- and experience-asymmetry that effectively penalizes founders. We’re changing that at MicroAcquire, and shifting the balance of power towards founders.
Early traction: MicroAcquire is now the largest startup acquisition marketplace in the world, and has helped more than 300 startups get acquired. More than 50K startups and buyers are using it to find or sell SaaS businesses. MicroAcquire reports that its combined revenue of currently listed startups exceeds $250M.
Show me the money
The round: MicroAcquire’s $2.8M round included Bessemer Venture Partners, Naval Ravikant, and Remote First Capital. MicroAcquire plans to use the investment to build its team, develop the platform, and introduce new tools that help founders sell their companies. Jeremy Levine, partner at Bessemer Venture Partners, believes that the platform bridges an important gap in the market:
MicroAcquire solves problems on both sides of an exit. I’ve been at the negotiating table during many acquisition discussions, and I’m certain MicroAcquire will play an instrumental role facilitating exits for startups.
Seller profile: In 2020, Andrew told Axios that most companies listed on the platform are bootstrapped, about 3-5 years old, and generating less than $100K ARR at the time of listing. About half the companies listed are headquartered in the US.
Pricing: There are no fees or commissions to list and sell your SaaS company on MicroAcquire. To place an offer on a company, you’ll need to purchase a Premium Buyer account for $290 per year.
Making its own deals: MicroAcquire has acquired two companies in the past 18 months to help build out its platform. In May 2020, MicroAcquire bought ForSaleByMaker to help bootstrapped founders find buyers for their startups. Back in April, the company acquired Exitround, which used proprietary algorithms to match buyers and sellers of small- and mid-market tech companies.
Hear from indie hackers: Dustin McCaffree sold his company, Rocket Note, on MicroAcquire. He was surprised by how easy it was to list and sell Rocket Note on the platform, and had about 15 inquiries within a few hours of listing. In addition to selling the firm, Dustin found that the connections he made throughout the process was a huge benefit, bringing him new friends and mentors.
He shared more about his experience on Twitter. We'd love to hear from more indie hackers who have sold on MicroAcquire!
What are your thoughts on MicroAcquire's expansion? Please share below!
Subscribe to Indie Economy for more.
📰 In the News
from the Volv newsletter by Priyanka Vazirani
📱 Twitter will shut down Fleets on August 3rd.
🌳 Potent cannabis in the US has been linked to a rare 'scromiting' illness.
📈 TikTok is the first non-Facebook app to hit 3B downloads.
💍 Iran is pushing a state-approved dating app to facilitate lasting marriages.
💸 Apple has teamed up with Goldman Sachs for a 'buy now, pay later' service.
Check out Volv for more 9-second news digests.
💰 Building High-Signal Vibes With Paid Communities
from the Trends.vc newsletter by Dru Riley
Weeks after hitting a $4B valuation, Patreon laid off 36 people from its product and design department to go in a new direction: It wants to help creators to diversify, warning against being tied to a single platform. With the case for audience ownership stronger than ever, Dru Riley revisits the role of paid communities.
Problem
Free communities tend to be noisy. There's no barrier to entry.
Solution
Paid communities use strategic friction to build high-signal environments. Members are invested and engaged.
Community builders are aligned with members, and able to invest in great experiences.
Players
Paid communities:
Tools:
Platforms:
Predictions
- Fractionally-owned assets will be the basis of "paid" communities. Nike MAG shareholders have more in common than those of utility companies.
- Community-as-a-Service will become a common XaaS category. Late Checkout helps brands build communities.
- Funds will leverage paid communities for deal flow. See MicroConf Connect (TinySeed) and Founder Summit Remote (Earnest Capital).
Opportunities
- Build an audience first. Start with a newsletter, podcast, or YouTube channel. Audience-to-community solves the chicken and egg problem. Trends.vc reached 20K+ subscribers before Trends Tribe meetups were launched.
- Craft a mission statement. (See Compound's Manifesto.) Ask yourself questions like: 'Why do you gather?' and 'What problems do you solve together?'
- Use challenges to gamify success. Launch MBA members produce 12 products in 12 months.
- Create rituals. Host standups, meetups, co-building sessions, and retreats to form bonds and productive habits. Trends Pro Members build compounding relationships in daily standups.
- Leverage user-generated content. Hundreds of people tweet using #100DaysOfNoCode, bringing attention to the community.
- Nurture one-on-one connections to build a stronger community.
- Build growth tools to draw members into your paid community. See the No-Code Marketplace directory, toolkit, and book.
Key lessons
- Price is multi-dimensional. Compound requires you to submit your best writing to apply. This is non-monetary friction.
- Paid community members have skin in the game. Investment limits noise and boosts engagement.
- You're the average of the five people you surround yourself with. Paid communities raise the average.
- Beware of reverse network effects. Scale changes everything, especially niche communities. Engagement drops as communities grow.
Haters
"You already covered this."
Yes, and I've covered no-code, bootstrap funds, and micro private equity more than once also. There's still more to learn.
"Most of these communities are online."
Google jiu-jitsu, church, country club, or university if you're looking for offline paid communities.
"Some online paid communities are built without an audience."
Cold outreach, personal networks, and borrowed credibility can work.
"Paid communities are exclusionary."
Yes. So are "free" communities. You can't pay to become a Navy SEAL, but the price can be your life. Price is more than money.
"What about community fatigue?"
Fatigue is a forcing function for quality. The same goes for newsletters.
Links
- What's your favorite paid community? The tweet behind this report.
- Turning an Audience Into a Community: Girls' Night In went from a newsletter to a community.
- Come for the tool, stay for the network: How to overcome the chicken and egg problem.
More reports
Go here to get the Trends Pro report. It contains 200% more insights. You also get access to the entire back catalog and the next 52 Pro Reports.
What are your thoughts on paid communities? Share in the comments!
Discuss this story, or subscribe to Trends.vc for more.
🧠 Harry's Growth Tip
from the Marketing Examples newsletter by Harry Dry
Some startups transcend hooks. Own your niche in one line. Write with conviction. You're THE solution.
Discuss this story, or subscribe to Marketing Examples for more.
💲 Founder Tim Schumacher Talks Buying SaaS
Hi indie hackers! I'm Tim Schumacher, founder and internet and climate tech investor.
Our company, SaaS.group, buys SaaS businesses hitting between $500K-5M ARR, ideally bootstrapped, and run by a very small (founder) team. We have analyzed over 1K projects, talked to hundreds of founders, and acquired six projects so far: Juicer, DeployBot, Snip.ly, Prerender, GitTower, and ScraperAPI.
AMA!
What are your key criteria for the evaluating companies for acquisition?
In the end, there's no right or wrong. But these six factors have an influence on the value of a business:
- MRR/ARR, profit
- Market size
- Product positioning, differentiators
- Number of customers
- Number of founders
- Growth rate
What is your end goal with buying more SaaS?
I don't have an end goal. Actually, I strongly believe that the best businesses aren't the ones where the founder is gunning towards an exit, but the ones with no end goals. My mantra is: Just run a good business. That gives you plenty of options.
Where did you get the money to buy SaaS companies?
Some money came from a past exit (Sedo). We also did a small friend and family round, and we're taking some bank loans to finance acquisitions. This mix works well for us.
How do you structure the deals?
We work both with brokers and with founders directly. I will email founders if I find their projects interesting. If there's a general agreement on price and terms, there's usually some sort of handshake agreement in the form of a letter-of-intent (LOI). This is followed by deeper due diligence. Next, a contract is drafted and executed, usually in the form of an asset deal: An asset deal is one where the buyer does not buy company shares, but the assets of the project (i.e. the website, source code, customers, etc.). Sometimes, we also do share deals, but that's more rare in this market segment.
Here's a great article from the original founder of Juicer who sold the business to us. It explains how things worked for him!
What are the biggest mistakes made by bootstrapped startups?
Nobody has summarized this better than Paul Graham in this article. Everything except #11-14 (these deal with VC money) applies to bootstrapped startups as well.
Do most of the deals include earn-outs?
Yes, most deals have at least a small percentage of earn-outs.
Are you mostly hands-off after the acquisition?
No, we are not hands-off. We’re operators. The only exceptions are situations where there’s an existing team in place which continues after the acquisition. In those cases, we’re really more like hands-off investors.
How important is the quality of the code of the project?
We always conduct technical due diligence, including a source code review. Since we are mostly acquiring businesses from developers, the technical due diligence almost always runs smoothly. Most stuff, including missing documentation, can easily be fixed. Sometimes this can be part of the transition time, or even the earn-out.
In our entire history we only had one case where, after looking through the code, we came to the conclusion that the entire platform would need to be re-factored. We ended up having to back away from the project. In this case, it was not the only problem; there were other messy things brought to light by the due diligence.
What are the most common product mistakes that you see?
Wrong pricing, bad user onboarding, and complicated, clumsy UX that hasn’t been properly tested.
Discuss this story.
🐦 The Tweetmaster's Pick
I post the tweets indie hackers share the most. Here's today's pick:
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Special thanks to Jay Avery for editing this issue, to Nathalie Zwimpfer for the illustrations, and to Bobby Burch, Priyanka Vazirani, Dru Riley, Harry Dry, and Tim Schumacher for contributing posts. —Channing
