There’s a new thing happening in the software startup game that didn’t happen very often just 5 years ago:
- Some savvy startup founders are self-funding software companies and growing them to $1M or $2M ARR in 2-3 years,
- Then they sell them for serious SaaS multiples of 5x-10x revenues (nice math, right?)
- Then they start another savvy startup and do it again.
It used to be that a $1M-$5M SaaS company was just getting into the chute to get funding, then grow to hundreds of employees, and sell many years later. If they were lucky.
Or a software company got big VC funding early and played the long game. These are the ones we all hear about.
This is a completely different game with serious prize winnings for founder-owners who can efficiently create serious software businesses quickly that can be handed off to others to keep growing. Serious growth, seriously fast.
These “build-and-flip” entrepreneurs are masters of the startup sport.
They let others handle the scale-up stage, which is a very different sport. The scale-up acquirers can win this game too.
This is all powered by a very active acquisition market for serious software companies between $1M-$5M ARR that didn’t exist a few years ago.
Serious SaaS multiples of 5x-15x revenues are available to smaller startups now because there is a growing crowd of active financial buyers, strategic buyers, and entrepreneurs with cash who love scaling businesses that others started.
There are probably 100x more micro deals than the big billion-dollar mega-deals we hear about.
We just don’t hear about all the “little” deals.
This isn’t the only way to play to win in the software startup game, it’s just another way.
And it works great for some founders.