The Exchanges

Q within your criteria, and you were saying you're pretty agnostic. Is there, let's, let me, let me reframe it. Um, is there, like, a certain, uh, size in terms of, like, revenue, um, or, uh, use case? I noticed, um, a pattern, like, a lot of your acquisitions are developer-focused, um, tools. Like, what, What's like a perfect acquisition, um, for Xenon? And that's, that's a really hard question, so.

A No, no, no. We, we actually have it written down. We have, um, certain deal criteria. So for us, we focus on B to B, first of all, uh, B to C. It's different skill sets than what we have. We have a circle of competence and B to C is outside of our circle of competence. The second thing we'll look for is we look for around a million In recurring revenue at a, at a minimum level at a low bar. And that's because we feel like at that level of revenue, the business has enough to support itself as its own cost center without, without needing an injection of capital to sustain marketing and sales operations, which we think are actually critical to a business. Um, and the other thing is a recurring revenue stream. So the, the, the revenue model, Needs to be recurring. There are instances where we've actually done transactions a little bit outside these criteria. So one example would be scripted where, um, it didn't actually have a recurring revenue subscription business, but we immediately saw that the one could be implemented. So, um, we, we went ahead and, um, applied that to scripted.

AI assessment note: “we focus on B to B, first of all... around a million In recurring revenue”

Q It's a very, it's a very helpful intro. I guess the question I have is, um, how many acquisitions has, you know, made in total?

A So we've done 49. Transactions with founders since 2010. So around 12 years old, around 50 transactions. That gives you a bit of a feel for our, our cadence. Um, and I think that if you're talking about micro private equity, then Xenon might actually be one of the first companies on the scene doing this, this sort of thing. And, um, and it started with Jonathan doing an actually a transaction with one of his friends. A friend who had a main company, and then a side company that he was working on, and the side project started to pick up steam, and so he was like, what do I do with this, this, this main thing that, that I have, and that was a company called Exceptional, and this side project was a company called Intercom, And I'm sure yourself and most people on the call know what intercom.io or .com is today.

AI assessment note: “So we've done 49. Transactions with founders since 2010.”

Q I prepare for in advance? Um, if you had to give maybe like just two or three tips, uh, to startup founders listening, looking to sell their businesses, um, what would it be? Like prepare in advance? Um, yeah. Yeah. Just, just the, the, the top two or top two or top three, because I'm sure you have 50, but I want to hear the top two or top three.

A Yeah, so, so first, I would say, before you go down that path, have a real think about, like, if you have a significant other, talk to them, uh, and come to an agreement on what you would accept. To, to hand over your business. I think that's really important. Um, and it's really important to get that done and out of the way and clear because that, that point alone, especially if you have a significant other could, could cause you some strife down the line. And I think you need to, to have that, that, that number or those terms in mind to be able to, to talk with, um, potential buyers in good faith and, and with full representation and intention of transacting. Second of all, I would say, um, know some basic numbers and they don't have to be exact because, oh my God, like getting a, getting a firm MRR number, that can be a struggle. Like we know this, we, we bought their metrics. Um, so like we, we know the struggle, but like if I'm super honest, their metrics has two competitors as well, ProfitWell and ChartMogul. Um, there's probably some, some emerging companies as well. I think a great thing to do, if you're using Stripe, or Recurly, or Braintree, or, um, in, in Bear Metrics's case, Shopify as well, um, if you connect to one of these service providers, one of these, these, um, SAS Metrics data aggregators, It'll load all of your data, and there'll be like a little bit of pr…

AI assessment note: “first, I would say... talk to them, uh, and come to an agreement”

Q you've acquired, I know you've acquired, um, some companies that I admire, like Mike requires integrated with bare metrics. You guys bought that company, um, UX pin, um, uh, you know, a lot of really, really great task businesses. Um, how do you, You know, what do you, what's like your sweet spot? What's like a company that if it comes in, you're like, this is perfect for Xenon Ventures.

A Yeah. So we are pretty agnostic. We'll, we'll have conversations with, with pretty much anyone, even if then outside our criteria, because we like to just say hello. And, um, the, the least we can do is, especially if it's your first transaction is, is give people a bit of a heads up on what they could expect and what they should actually insist on, like what's standard in the market. If you're going to sell These are things that you should probably insist on having, and these are things that you should definitely not, um, or you should at least pay mine to, and, and here's what they mean. So we're always happy to have those conversations. Um, cause we, we sort of believe we play a role in the ecosystem. Um, and sometimes, especially for, for founders outside the Bay Area, where they may not have the community of other founders that have gone through these similar experiences. And we, we find like they, they have less knowledge about, um, like what they should accept and, and, and what they should not. Uh, so You'll need to now remind me of your question, because I've done this thing where I've just walked off, off the trail of the question.

AI assessment note: “I've done this thing where I've just walked off, off the trail of the question.”