Growth Equity Funding Can Be Useful for Founders With $5M+ SaaS Companies

What if you grew your bootstrapped SaaS company to $5M ARR, but you were still having fun and momentum was building? Would you sell it now or keep going?

  • You enjoy having a leadership team and more employees with a great culture
  • Your market finally understands what you do and big customers are finally lining up
  • Your company is the leader in your space and momentum is building
  • More opportunities are visible the bigger and more credible you get
  • You don’t have big VC funding, so you don’t have to “grow or die” and risk everything
  • You’re getting offers to sell your company for life-changing amounts, but you want to keep going and multiply your potential prize
  • Why sell your company now if it’s just getting fun and you and your team are up for a bigger opportunity?

But you’ve been at it for 5-10 years already with no payback yet. And you need help to play this new scale-up sport from an experienced partner.

For these bootstrapped and efficiently funded practical founders, this is where growth equity investors can be practical and helpful.

Growth equity funding is a practical version of institutional funding that is different from the traditional “Get Big Fast At All Costs” venture capital approach.

With more reasonable growth and exit expectations, more help for founders and their leadership teams, and more secondary for founders (to take some money off the table early), growth equity partners can help ambitious founders scale their impact with an efficient approach.

On the Practical Founders this week, I talk to Deepak Sindwani of Wavecrest Growth Partners to educate us on growth equity funding, a specific kind of institutional investor that can be useful for specific practical SaaS founders.

In this expert interview, I ask Deepak the questions I hear from practical founders about this later-stage type of investment:

  • What is growth equity funding and how is it different than big venture capital (VC) or private equity (PE) funding
  • The simple math for growth equity investing-growth-exit that can make sense for founders and investors
  • What type of companies and founders are a good fit for growth equity funding or not a good fit
  • What happened in the tech funding boom time of 2020-21 and what is happening now in 2023
  • What help can founders expect from growth equity investors to help them grow and reduce risk
  • How founders can take money off the table and increase the odds of creating a bigger “second bite of the apple” when they exit

Several founders on the Practical Founders Podcast in the last two months have used some type of growth funding like this to take money off the table now and still keep going for a much bigger exit. Two bites of the apple. And it’s working for them.

Thanks, Deepak, for educating us and answering my questions, and not selling your approach as the “only way to do it.”

Listen to this expert interview on the Practical Founders Podcast.


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