from Hacker News

Selling My Bootstrapped SaaS Business (2017)

by blackdogie on 11/20/19, 2:07 AM with 74 comments

  • by arvidkahl on 11/20/19, 9:04 AM

    We recently sold our bootstrapped SaaS to SureSwift Capital as well.

    It took us less than two years from founding to exit. I write about it at https://thebootstrappedfounder.com/from-founding-to-exit-in-... . Danielle, my Co-founder, and I did an interview at https://www.sureswiftcapital.com/blog/bootstrapped-saas-foun... as well. Both articles give some insight into the process of selling the company and how we got it to that point.

    Our experience was very positive. We had structured our business to be as sellable as possible, even when we didn't intend to sell it. Having documentation and automation in place at every corner made the due diligence and transition phases a joy.

    I see a lot of people in the comments here asking for valuation and structural information. In researching the process before we sold, I had the same questions, and never really found reliable answers. It seems that every transaction is inherently unique. All numbers we throw around, MRR, EBITDA, multipliers, they are thrown out of the window once you look at the actual business, it's internal workings and dependencies.

    My suggestion for fellow SaaS bootstrappers who want to sell their business: make sure you can hand it over easily, make sure you are not required (to remain part of the operations), make sure your infrastructure is either easily migrated or well-documented.

    You will want to negotiate, as value is in the eye of the beholder.

    I am currently writing at length about this whole process. I'll release it on the blog before the end of the month.

  • by dangrossman on 11/20/19, 7:16 AM

    I have a $400K/year bootstrapped SaaS I'd sell if I didn't have to deal with the process of selling it. But because I'm not willing to pick up the phone and talk to buyers and lawyers, and the long-term transfer of knowledge about an old tech stack and all that, I'm likely going to sit on it until some day I shut it down, or some kind of marketplace appears where you can flip a business like that without getting on the phone.

  • by sideproject on 11/20/19, 5:02 AM

    For anyone interested in perhaps purchasing a side project to pursue your very own SaaS, take a look at a project that I've been running on the side - SideProjectors

    https://www.sideprojectors.com

    Lot of interests in the past few years around "indie makers" and "life style businesses" and "side hustles" have attracted quite a few interesting projects to be posted on my site. It's been cool to see these projects being exchanged.

  • by bayesian_horse on 11/20/19, 10:20 AM

    One problem with bootstrapping is that the founders carry all the risk.

    The alternatives, i.e. selling equity for capital, usually means the founders mitigate some of that risk. For example their salaries would not come completely from their own capital anymore.

    I think that's important to keep in mind. Bootstrapping is not the optimal solution for everyone. If you fail, you pay dearly, especially in opportunity costs, but many also touch their savings or their families' money.

  • by hahla on 11/20/19, 5:14 PM

    If you’re interested in selling your side project or SaaS business shoot me an email (in profile) with the URL, avg monthly pageviews, and October’s full month revenues if any. I started out 15 years ago brokering but have transitioned into running my own network of sites. I can make an offer within 24 hrs if I’m interested and you can skip the hoopla of fielding buyers, creating financial statements, spending weeks on QA, paying 8% brokerage fees, etc.

  • by einarvollset on 11/20/19, 5:41 AM

    Above about $1-2m enterprise value, any half serious buyer will require exclusivity as part of an LOI. In fact, it is a good signal of an unserious buyer if you get an LOI without a binding exclusivity clause.

  • by dang on 11/20/19, 6:10 AM

  • by klausjensen on 11/20/19, 12:33 PM

    Great read, highly recommended.

    I especially liked this paragraph:

    The absolute most important factor in getting a great deal in a sale is not having to sell. All of the work here happens well before the sale. Craft your business in a way that you would be perfectly happy to run it indefinitely. Get your work/life balance in order and your stress level under control. Go into a sale process with the idea that if you don’t get exactly the offer you want, you are 100% willing to just wait it out and run your business for another year.

  • by aksdjn2123 on 11/20/19, 8:32 AM

    Does anyone have any idea how much his business would be sold for? He described it as a "life-changing amount of money". If he was doing around 50k in MRR at the time he sold, what would his valuation look like?

  • by davidw on 11/20/19, 5:00 PM

    > There’s always a risk that these posts turn into a 5,000-word humblebrag. But I really do think it’s worth a read because, unlike most business acquisition stories, which often feel like an out of the blue stroke of good luck, the way that I sold Storemapper feels very replicable for other entrepreneurs.

    Emphasis mine, but that's why I love reading about these things. It seems somewhat realistic compared to moving to silicon valley and doing the VC fueled rocket ride.

  • by brianwawok on 11/20/19, 2:27 PM

    A few years old but a good read!

    I worry that perhaps the advice isn’t quite the same for all businesses. My SaaS business is fairly technically complex. I don’t think it would appeal to a non-technical buyer that gobbles up simple Wordpress sites. I think it makes the available market of buyers a lot smaller. I hear less stories about this kind of business being acquired (although I know it happens)

  • by mrunkel on 11/20/19, 4:58 AM

    Nice article. Well written and with just enough detail.

    I am curious though if the team also had equity in the company?

  • by Giorgi on 11/20/19, 2:58 PM

    That's amazing, considering your whole business model can be replaced by just a wordpress plugin

  • by sk5t on 11/20/19, 5:44 AM

    Not a bad article, although the couple of paragraphs about hiking Mount Kilimanjaro and the like are beyond cringey.

    Seconding the desire to know the corporate structure and how it worked out for the team. Any equity split? How did these factors add or subtract to the sale process? Cash sale or some interest in the acquirer? It's really baffling that these would be left out.