If you haven’t heard about acquire.com, it’s a platform where business owners can list their business in order to sell it. The marketplace has a feature that allows you to get notified by email about the new businesses listed on the platform. Since October 2023, I've been following newly listed SaaS businesses that report yearly revenues of over $100,000. My aim was to see if I would discover interesting trends or startup concepts. In total, I saw around 70-80 SaaS companies in this segment (>$100k TTM), and here are five takeaways from analyzing them.
1. Sell vs. Buy Dynamics
The first thing that strikes me is how you can see that acquire.com is first and foremost a “sell side” platform.
It’s an experience I've had on the VC side, but there's a significant difference between wanting to sell your company (i.e., actively seeking a buyer) and being approached by a potential buyer who is interested in purchasing your company (i.e., the buyer is actively looking to buy you).
This “sell side” dynamic is particularly visible in the “reason for selling” section of their listings. Many founders cite growth stagnation or personal and financial reasons for wanting to sell. I’m not suggesting this is either bad or good; it simply underscores that acquire.com is primarily a platform to sell your business. As a consequence you will find certain types of SaaS companies, but it is not necessarily the whole market. And I think the same can be said of the buyers. You probably find a certain type of buyer on this platform.
2. Sales and Marketing is the glass ceiling of many SaaS businesses
Another interesting aspect that stood out from these listings is how it seems that sales and marketing is the 'glass ceiling' for the majority of these businesses. In their 'growth opportunities' section, in which founders share how the acquirer can grow the business further, the items the most frequently mentioned include actions like 'hire a sales team,' improve SEO, or increase online marketing.
You might argue that this simply reflects the nature of 'growth opportunities.' However, I have the feeling that in many cases, if the businesses were more effective in sales and marketing, they likely wouldn’t opt to sell. Thus, it appears that breaking through this 'sales and marketing' ceiling is often the most significant challenge for many founders and small teams at that stage (rather than improving the product or building more features for example).
3. The “SaaS powered” agency
Despite requesting to receive notifications only for SaaS startups, I still saw plenty of agencies. Some were straightforward agencies, while others were disguised as “SaaS startups”. It's interesting to note how agency owners try to add a 'SaaS' twist to their agency in order to appear more attractive.
4. Niche vertical SaaS are perfect for sell side platforms
In terms of software categories, it was interesting to see that there were many vertical SaaS startups. I saw SaaS solutions targeted at rental property managers, sports teams, tax managers, solar system sellers, parking managers, healthcare providers, etc. While they may not constitute the majority of the listings I received, there were certainly many of them.
And I think it confirms a bit my previous comments on vertical SaaS. Often, these businesses are created by industry insiders who have identified specific pain points to address. However, scaling vertical businesses presents tough challenges that I covered: They require 'Swiss Army knife' products with numerous features and a go-to-market strategy that includes robust lead generation and an effective inside sales model.
This is why it makes sense for many founders of such companies to sell their business once they hit this ceiling.
5. No “breakthrough” ideas
Initially, when I began following new SaaS listings on Acquire, my goal was to discover original business ideas and products as well as to find inspiration.
Unsurprisingly, given the crowded nature of the B2B software space, most of the startups I encountered offered relatively common products. Whether it was as a powerful suite of SEO tools, customer service automation software, a CRM platform for small businesses, an invoicing software for freelancers, etc. most of them were not incredibly original. The most significant originality I saw was in the niches or verticals for which some of these products were designed (yet they relied on typical SaaS products). So no “breakthrough” ideas for me.
And by the way this isn't a critique but rather a confirmation that it’s extremely hard to find original product ideas and business concepts in the SaaS industry and that the difference is persistence and execution (I know, nothing groundbreaking in my comment either). This is why I have a huge respect for all these SaaS founders.