Keeley: Acquirers without developer management experience will waste money on software companies
Colin Keeley · Startup Acquisition Stories with Colin Keeley, Founder at Verne (Acquire'd 2x) · Sep 13, 2022 · at 14:07
Colin Keeley, founder of micro-PE firm Verne, shares advice for first-time acquirers on the MicroAcquire podcast with Andrew Gazdecki.
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“If you've never managed developers before, you're going to blow a lot of money. I'm trying to wrangle them in and build stuff. So like, you know, content sites or something like that, I think is a little easier, like a small content site to start.”
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“So I think Joe Lamont's like an interesting case study of kind of a more different approach where it's a, More hardcore, more like automate everything, rip out the people and do assembly line style.”
Keeley: Acquiring a $400K business takes the same work as $4M
“I guess we probably quickly realized, like, if you're doing something that's 200,000, or like two million, or four hundred thousand and four million, like, it's roughly the same amount of work, so leaning more towards these, like, single digit ARR companies.”
Keeley: Verne gave up convincing founders expecting 10x to 20x ARR multiples
“I just have mostly given up on trying to convince people like you could throw them the micro require reports and be like, well, this is what things are transacting at. But if people think their business is worth 10, 20 times ARR, it's just, you know, maybe the…”
Keeley: Private market downturns lag public markets due to dry powder
“There's a pretty significant delay between the public markets and the private markets. It's like before things really start to turn, just because there's a lot of dry powder out there.”
Keeley: More venture orphans unable to raise will seek acquisitions
“What's exciting to us is, like, more of these companies that are, like, struggling to raise their next round, like these venture orphans. I've seen a few come up on Microquire. I think we're going to see more of those pop up.”
Keeley: Pricing power with low churn measures true customer value creation
“I would say pricing power. Like, not that we do it, but I think if you could double prices and see very low churn, I think that's, like, a meaningful measure of, like, how much value you're actually creating for your customer.”