Volset: $1M to $2M B2B SaaS businesses can achieve meaningful PE exits
Einar Volset · Einar Volsett on How TinySeed Works · Jun 10, 2020 · at 50:30
TinySeed partner Einar Volset explains how the expansion of private equity and debt financing into smaller software companies created viable exit opportunities for modest-scale SaaS founders.
0:00 / 1:12exact quote · 72.1s
720p mp4 · rendered on demand · StarZero watermark
“Fundamentally, what I realized pretty quickly is that things have changed very much the last 10 years, like certainly even potentially the last five years, in that, so back in, you know, nine, 2010, if you had a, say, a 1,000,002 million ARR B to B SaaS company you know, at, say, breakeven, it wasn't obvious that you could sell that for any reasonable amount of money, certainly. But I think in part what's happened is that the big sort of the software PE players have moved down market in parts because they realized like, A, it's obviously cheaper to buy smaller businesses, but also I think the debt providers on the back end to do the purchases have started to understand software businesses to a point where the economics make sense for the private equity banks. And so what that means is that sort of, if you get a B to B SaaS business north of a million or two million or something like that, It's worth something, like even if, at least if you're breakeven or better you know, and so, so you can actually have an exit and a meaningful one, both for like founders and potentially for investors, even without, you know, IPO-ing or being acquired for a hundred million dollars by Microsoft or whatever.”
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 Einar Volset
Volset: Sam Altman's $10B startup valuation rule makes no sense
“He wrote a piece and I think in January saying how to invest in a startup. And he said, you should never invest in any company that couldn't potentially be a ten billion dollar company. And I'm like, that doesn't make any sense. Like there's a lot of companies…”
Volset: Brokered sales anchor strategic acquirers to lower private equity multiples
“If you really want to get 30 X revenue or 20 X revenue or 15 times revenue it's hard to do that if you're in like a sales process with a broker. Like if a broker is going out to market, then the strategic knows that, okay, there's a floor in pricing because he…”
Volset: A $75M exit at a low valuation reliably delivers 50x returns
“If you're coming in at one and a half million pre, Then a 50 X return is, is the company sells for 75. Now those kind of outcomes are much more doable and much more frequent than you know, you, I, something selling for seven hundred and fifty million or a bill…”
Volset: Most Angel Investors Fail Due to Insufficient Portfolio Diversification
“I personally think that's why most angel investors do really poorly at the early stage of tech investing. It's because they don't have enough portfolio companies in their portfolio.”
Volset: CS academics view leaving for industry as a personal failure
“If you're in CS academia, like, you know, high up and you decide to go to industry, even if you decide not to go to like pure industry, if you go into like industrial research, they almost feel people, you almost get the sense that people feel sorry for you. L…”
Volset: Regional investors struggle because wealth comes from traditional industries
“Part of the problem is, is that the people with money in Silicon Valley typically made it doing early stage startups, you know, and they, so they understand it. Versus people in places like, you know, Vancouver, or Chicago, or, you know, DC, made their money e…”