A little while back I had coffee with a very successful VC and we chatted about our views of what’s happening in SaaS. The things we are both interested in are very similar, our thoughts on risks and markets were well aligned. At the end, he noted how the key final thing he looks for in SaaS start-ups is potential acquirers. Would Salesforce buy this company? Would Google?
I totally get it. Indeed, I’ve lived it and practiced it. Of the 4 start-ups I’ve been a part of, 2 as a co-founder and 2 as an executive — 3 out of 4 were acquired by a Logical Acquirer than was predicted at Day Zero or close enough. The fourth had an IPO, eventually.
And as the number of SaaS companies continues to grow and explode, and as SaaS changes and penetrates more and more market segments … it seems like there are more and more exciting SaaS companies without a natural acquirer. At least that I can see, or believe.
And if it’s IPO-or-bust … for many entrepreneurs at least, that’s pretty intimidating.
So I guess the key higher-level questions are two:
- If I’m thinking of starting a SaaS company that I really believe in, in a good market — but I see no logical acquirers — should I still do it? IPO again seems so far when you are at $0, especially if you don’t even have a Beta yet.
- If I’m running a SaaS company that’s post-Traction, and it’s getting tough and I can’t see an IPO — should I still really go for it there are no logical acquirers? Maybe, check out a little?
Personally, my answer to the first question when I was co-founding both my companies was No – I Wouldn’t Do It without a Logical Acquirer or Three. My answer to the second question was … I Just Don’t Know … I don’t know what I’d do if it turned out there were truly No Logical Acquirers once I was into it and didn’t feel an IPO was in the cards. I do know I would have felt boxed in.
Today, I have at least the privilege of a certain amount of objectivity. And I see so many SaaS markets just exploding.
So Today. Today, I think I would go for it even without any Natural Acquirers. Why? I believe there are enough great opportunities to just kill it in SaaS, get to seven figures and then eight figures in ARR. The markets and market pull are bigger. And once you get to $10-$20m in ARR … it’s just really fun. Having Scale. It’s worth it, if you have a great team. I didn’t really know this before, in SaaS at least.
And also, as long as you are in Tech … priorities can change. At Adobe Sign / EchoSign, we had a number of potential M&A conversations over time. All but one were with Logical Acquirers. But there was one I would never have predicted on Day 1, or even Day 365. It came about over time, as the markets changed, and as the markets grew. And as we grew.
I think today in SaaS, if you have a great market and market pull … it will work out. I wouldn’t worry — as much — about Lack of Natural Acquirers. It wouldn’t stop me. Not anymore.
How many of those would you have guessed?
SaaS Companies Acquired in 2021
- A Cloud Guru to Pluralsight
- Advicent Solutions acquired by InvestCloud
- Agari acquired by HelpSystems
- Altus Technology acquired by Momentum Telecom
- Ascent Business Technology Inc acquired by TraqIQ
- Bazaarvoice acquired by Thomas H. Lee Partners
- Blue Yonder acquired by Panasonic
- Bold360 acquired by Genesys
- Boomi acquired by Francisco Partners
- Boomi acquired by TPG
- Cedato acquired by EX.CO
- Changepoint acquired by Planview
- Chargeback acquired by Sift
- Chorus.ai acquired by ZoomInfo
- Clarizen acquired by Planview
- Clause acquired by Docusign
- Cloudvirga acquired by Stewart
- CoConstruct acquired by Buildertrend
- ContractRoom acquired by Mitratech
- DialogTech acquired by Invoca
- Divvy acquired by Bill.com
- Docsend acquired by Dropbox
- Ekata acquired by Mastercard
- Exponea (acquired by Bloomreach) acquired by Bloomreach
- Gigster acquired by Ionic Partners
- Greenhouse Software acquired by TPG
- JAGGAER acquired by PwC France
- Kenna Security acquired by Cisco
- Kount acquired by Equifax
- Lingotek acquired by Straker Translations
- MindTouch acquired by NICE Systems
- Mobile Solutions acquired by Brightfin
- Mya Systems acquired by StepStone
- Nuxeo acquired by Hyland Software
- PactSafe acquired by Ironclad
- Qualtrics acquired by Silver Lake
- QuanticMind acquired by Centro
- Reflektive acquired by Peoplefluent
- Reward Gateway acquired by ABRY Partners
- RSG Media acquired by Naviga
- Scalyr acquired by SentinelOne
- Second Street acquired by Upland Software
- ShowingTime acquired by Zillow Group
- Sparkcentral acquired by Hootsuite
- Sqreen acquired by Datadog
- SupplyFrame acquired by Siemens
- SyncHR acquired by PrimePay
- Talentcube acquired by Phenom
- Targetprocess acquired by Apptio
- Terafina acquired by NCR
- The Marlin Company acquired by Appspace, Inc.
- thinktank.net acquired by Accenture
- TradingScreen acquired by Francisco Partners
- Utilant acquired by Majesco
- Wrike acquired by Citrix Systems
- Zaius acquired by Optimizely
- Zipwhip acquired by Twilio
(note: an updated SaaStr Classic post)