
Selling My Bootstrapped SaaS Business (2017) - blackdogie
https://tylertringas.com/selling-my-bootstrapped-saas-business/
======
arvidkahl
We recently sold our bootstrapped SaaS to SureSwift Capital as well.

It took us less than two years from founding to exit. I write about it at
[https://thebootstrappedfounder.com/from-founding-to-exit-
in-...](https://thebootstrappedfounder.com/from-founding-to-exit-in-two-years-
the-feedbackpanda-story/) . Danielle, my Co-founder, and I did an interview at
[https://www.sureswiftcapital.com/blog/bootstrapped-saas-
foun...](https://www.sureswiftcapital.com/blog/bootstrapped-saas-founders-
sell-business/) as well. Both articles give some insight into the process of
selling the company and how we got it to that point.

Our experience was very positive. We had structured our business to be as
sellable as possible, even when we didn't intend to sell it. Having
documentation and automation in place at every corner made the due diligence
and transition phases a joy.

I see a lot of people in the comments here asking for valuation and structural
information. In researching the process before we sold, I had the same
questions, and never really found reliable answers. It seems that every
transaction is inherently unique. All numbers we throw around, MRR, EBITDA,
multipliers, they are thrown out of the window once you look at the actual
business, it's internal workings and dependencies.

My suggestion for fellow SaaS bootstrappers who want to sell their business:
make sure you can hand it over easily, make sure you are not required (to
remain part of the operations), make sure your infrastructure is either easily
migrated or well-documented.

You will want to negotiate, as value is in the eye of the beholder.

I am currently writing at length about this whole process. I'll release it on
the blog before the end of the month.

~~~
newusertoday
can you share the range at which your business was acquired?

~~~
arvidkahl
I can’t. But it was substantial. Like for Tyler, it was life-changing for us.

In many ways.

------
dangrossman
I have a $400K/year bootstrapped SaaS I'd sell if I didn't have to deal with
the _process_ of selling it. But because I'm not willing to pick up the phone
and talk to buyers and lawyers, and the long-term transfer of knowledge about
an old tech stack and all that, I'm likely going to sit on it until some day I
shut it down, or some kind of marketplace appears where you can flip a
business like that without getting on the phone.

~~~
Cthulhu_
Alternatively you could hire someone to take over the day to day of it while
you, being the sole shareholder, get the rest of the profits without having to
spend much time on it, leaving you free to pursue other interests.

~~~
tylertringas
My two cents: It's a great idea if you find the perfect person but is very
hard to go out and _do_. The compensation you need to provide to bring on
someone to run the entire business, in terms of salary + ownership is often
ends up with pretty similar economics to just selling. Also very tricky waters
to navigate long-term if you both retain a majority ownership of the business
but cede all day to day operations and strategy to somebody else. Likely to
end up either with some conflict or the hired CEO gets tired of doing 100% of
the work in a business they only have a minority stake in. Definitely not
impossible and has the potential to work out to better economics than a sale
if all goes perfectly. (I'm the post author btw)

------
sideproject
For anyone interested in perhaps purchasing a side project to pursue your very
own SaaS, take a look at a project that I've been running on the side -
SideProjectors

[https://www.sideprojectors.com](https://www.sideprojectors.com)

Lot of interests in the past few years around "indie makers" and "life style
businesses" and "side hustles" have attracted quite a few interesting projects
to be posted on my site. It's been cool to see these projects being exchanged.

~~~
jakear
I’m seeing “NaN undefined 0NaN” in the rightmost “Details” box for each
posting. Mobile Safari

~~~
sideproject
Hm. Thanks for reporting it. Could you send me a screenshot by any chance?
Can't replicate it on my end (hello@sideprojectors.com)

~~~
edoceo
I use BrowserStack for my webapp. A little script hits dozens of pages, grabs
screenshots and let's you quickly see across many, many browser/os
combinations

------
bayesian_horse
One problem with bootstrapping is that the founders carry all the risk.

The alternatives, i.e. selling equity for capital, usually means the founders
mitigate some of that risk. For example their salaries would not come
completely from their own capital anymore.

I think that's important to keep in mind. Bootstrapping is not the optimal
solution for everyone. If you fail, you pay dearly, especially in opportunity
costs, but many also touch their savings or their families' money.

~~~
beberlei
That wasn't at all the problem for me in the first years of bootstrapping. I
didn't invest with my own capital, but by putting my spare time into it.
Funding was provided by the early customers. I kept working full time for my
previous employer for one year, then part time the second and third year with
decreasing hours.

Also now that its running on its own, I also feel that I have less risk,
because with a profitable company there is no requirement for growing a
specific amount that investors demand or otherwise they take your control
away.

~~~
bayesian_horse
As I said, this varies from situation to situation.

Also, you may be confusing risk with outcome. Your outcome was positive. If
your business had failed, at any point, you would have lost any benefit from
the work you put in. It's also not quite fair to assume that the time you
worked on that project is worth 0 Dollars.

------
hahla
If you’re interested in selling your side project or SaaS business shoot me an
email (in profile) with the URL, avg monthly pageviews, and October’s full
month revenues if any. I started out 15 years ago brokering but have
transitioned into running my own network of sites. I can make an offer within
24 hrs if I’m interested and you can skip the hoopla of fielding buyers,
creating financial statements, spending weeks on QA, paying 8% brokerage fees,
etc.

------
einarvollset
Above about $1-2m enterprise value, any half serious buyer will require
exclusivity as part of an LOI. In fact, it is a good signal of an unserious
buyer if you get an LOI without a binding exclusivity clause.

~~~
thematt
How common are breakup fees as part of an LOI?

~~~
jalonso510
Even in deals where there is a breakup fee, it's not a part of the LOI. It
would be negotiated as a part of the Merger Agreement or Asset Purchase
Agreement, to cover what happens if the deal signs, but then one party breaks
off before moving to closing. The LOI is always non-binding so there's no firm
commitment to do the deal at that phase and no penalty for breaking up.

------
dang
Discussed at the time:
[https://news.ycombinator.com/item?id=15497632](https://news.ycombinator.com/item?id=15497632)

------
klausjensen
Great read, highly recommended.

I especially liked this paragraph:

 _The absolute most important factor in getting a great deal in a sale is not
having to sell. All of the work here happens well before the sale. Craft your
business in a way that you would be perfectly happy to run it indefinitely.
Get your work /life balance in order and your stress level under control. Go
into a sale process with the idea that if you don’t get exactly the offer you
want, you are 100% willing to just wait it out and run your business for
another year._

~~~
brianwawok
And for this to happen you really want to bootstrap from day 1. If you have
investors on your back you have pressure to grow or bust.

Bootstrapping isn’t always easy but it seems to have been worth it so far!!

~~~
tylertringas
Bootstrap or just don't raise 'too much' capital and not from VCs. Lots of
optionality still available for founders who raise eg less than $500k and
don't give up control. (I'm not exactly neutral on this tho)

~~~
brianwawok
For sure! Friends and family can be a good source, but can imply different
risks (i.e. awkward Thanksgivings).

------
aksdjn2123
Does anyone have any idea how much his business would be sold for? He
described it as a "life-changing amount of money". If he was doing around 50k
in MRR at the time he sold, what would his valuation look like?

~~~
Nilef
Around 2.4 million - possibly higher depending on the mechanics and industry
of the actual business

Typically it’s ARR x 4

~~~
zaroth
I’ve not seen multiples that high selling two companies. The multiple depends
heavily on the growth rate. If you’re growing at 25% YoY — unless you’re in a
hot market — it’s probably closer to 2x revenue.

~~~
hahla
Average is 3x LTM revenue or last year for seasonal business.

------
davidw
> There’s always a risk that these posts turn into a 5,000-word humblebrag.
> But I really do think it’s worth a read because, unlike most business
> acquisition stories, which often feel like an out of the blue stroke of good
> luck, the way that I sold Storemapper _feels very replicable for other
> entrepreneurs._

Emphasis mine, but that's why I love reading about these things. It seems
somewhat realistic compared to moving to silicon valley and doing the VC
fueled rocket ride.

------
brianwawok
A few years old but a good read!

I worry that perhaps the advice isn’t quite the same for all businesses. My
SaaS business is fairly technically complex. I don’t think it would appeal to
a non-technical buyer that gobbles up simple Wordpress sites. I think it makes
the available market of buyers a lot smaller. I hear less stories about this
kind of business being acquired (although I know it happens)

------
Giorgi
That's amazing, considering your whole business model can be replaced by just
a wordpress plugin

~~~
eatwater123
But like; it was a Shopify plugin, so saying it can be replaced by another
plugin (for a different platform completely) doesn't make sense here, right?

------
mrunkel
Nice article. Well written and with just enough detail.

I am curious though if the team also had equity in the company?

~~~
tylertringas
(post author here): The team did not have equity but I paid out substantial
bonuses voluntarily to all employees. There's a lot of work to be done on how
to incentivize employees in bootstrapped startups tbh. Nathan Barry has some
good posts on the topic but I don't think it's a problem with any best
practices yet: [https://nathanbarry.com/profit-
sharing/](https://nathanbarry.com/profit-sharing/)
[https://nathanbarry.com/equity/](https://nathanbarry.com/equity/)

~~~
mrunkel
Thanks for taking the time to answer. Yeah, you arrived at the root of my
question which was how do you share with your team, especially in a closely
held startup.. I probably would have been better served directly asking the
question. ;)

------
sk5t
Not a bad article, although the couple of paragraphs about hiking Mount
Kilimanjaro and the like are beyond cringey.

Seconding the desire to know the corporate structure and how it worked out for
the team. Any equity split? How did these factors add or subtract to the sale
process? Cash sale or some interest in the acquirer? It's really baffling that
these would be left out.

