Anand: Product companies yield higher valuation multiples than services for equal effort
Rohit Anand · How He Sold His BOOTSTRAPPED BUSINESS For $20 MILLION! ft. Founder of 1DigitalStack, Rohit Anand · Mar 21, 2022 · at 33:36
Rohit Anand, founder of 1DigitalStack and former founder of ValueEdge, discusses his strategic decision to pivot from services to building a software product company.
0:00 / 0:17exact quote · 17.1s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“The effort and the time is the same, right? But just imagine the multiple that you get on a tech product company versus the product multiple that you get on the services company, and many good reasons for that are well known reasons for that. But, you know if you're a owner of a services company, you get the short end of that, right?”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Rohit Anand
Anand: First-time founders need M&A advisors to enforce bidding timelines unemotionally
“So that can be best told by a third party. Because, you know you're always a bit nervous. You know, you were selling your first company. You know, you're talking to somebody in the transaction team or the M&A team of a large company. Do you tell that with that…”
Anand: WNS's initial acquisition draft mandated clawbacks for key employee departures
“And the, when we saw the shareholders, the first draft that came from, they was Shardola Merchant, WNS. We kind of had a heart attack, right? Because they had things like, you know, if somebody leaves, then they'll have a claw back and so on. They had identifi…”
Anand: Selling a company takes three times the effort of fundraising
“Let me tell you that an exit is at least three times more work and effort than a fundraise, right? If you think a fundraise is, you know highly energetic and, you know, takes a lot, very demanding. And I mean, an exit is at least three times”
Anand: ValueEdge sold for $20M with $17.5M cash and RSUs
“It was a twenty million dollar exit with, you know, 17.5 million cash upfront and then the balance in RSUs and all the cash 70% was you know, paid on day one and the 30% was paid over three years.”
Anand: Roche accounted for $2M of ValueEdge's $6.5M–$7M revenue
“In the short journey of Value Edge of seven, eight years, Roche became a two million dollar business. And in, in a company which eventually had a business size of around six and a half, seven million dollars.”
Anand: ValueEdge reached 150 employees and multiple $1M+ clients bootstrapped
“At the time of exit you know, we had a couple of million-dollar-plus clients. There was Roche, there was Merck, there was Bayer you know, blue-chip clients. And it was about a 150 people team with offices in the US in Europe, in Frankfurt and in Switzerland. S…”