Why B2B SaaS Businesses are Our Favorite Acquisition Targets

Why Niche SaaS Businesses are Our Favorite Acquisition Targets

Since 2015, SureSwift Capital has acquired over forty businesses. While not all of those businesses are in our portfolio today, over the last nine years, we’ve refined our ideal acquisition target and perfected our growth strategies.

Part of that process has involved zeroing in on the type of businesses we love to acquire – and for SureSwift, that’s B2B SaaS companies.

While we currently have both B2B and B2C SaaS businesses in our portfolio, and we’ve found that both have their pros and cons, the superstars in our portfolio have tended to be B2B SaaS businesses, often bootstrapped, that solve a niche problem for the end user with unique efficiencies or user-friendliness.

What is a SaaS anyway?

If you’re in the same circles as SureSwift, odds are good you’re already familiar with the Software as a Service (SaaS) model. But for those who aren’t (or could use a refresher course) here are the basics:

At its core, Software as a Service, or SaaS, is a software distribution model. Unlike the traditional method of buying and installing software on individual devices, SaaS operates through the cloud. This means that the software resides on remote servers, accessible to users via the internet.

One of the standout features of SaaS is its subscription-based structure. Instead of shelling out a hefty upfront sum for software licenses, users pay as they go. This not only eases the initial financial load but also ensures continuous access to the latest updates and features.

The versatility of SaaS applications spans a multitude of industries and functions. From project management and customer relationship management (CRM) to human resources and accounting, SaaS has found a foothold in every aspect of business operations. Its flexibility and scalability make it appealing to businesses of varying sizes, from startups to large corporations.

Why the SaaS model is perfect for the SureSwift portfolio

There are a few key components of this model that make SaaS a perfect fit for SureSwift, including:

  • Scalability & Longevity
  • Remote Operations
  • Transferrable Expertise

1. Scalability & longevity

The first two aspects of SaaS we love go hand-in-hand. Because SureSwift doesn’t operate as a traditional flipper, we need to acquire businesses with long-term growth potential.

A great SaaS business provides an indispensable solution to its end user, and that subscription model we talked about earlier means that as long as you’re taking care of your customer and keeping products up-to-date, profits keep coming in month after month.

For example, SureSwift portfolio product LeadDyno has been knocking down their churn rates with targeted projects and campaigns, including updated navigation tools and fresh reporting screens, which they identified as churn reasons through customer feedback. It’s attention and action like this that keeps paying customers coming back month after month. Of course, achieving great numbers is the cumulation of a lot of work from team members managing product development, customer success, and more – something we’ll discuss more later.

The growth potential of SureSwift businesses comes not only from acquiring new customers, but also from expanding the types of customers we can market to and build relationships with. Businesses like Vitay and MailParser came to us with a great product that was doing well with individual customers, but once we acquired them, we were able to identify an additional potential market in enterprise clients. These larger customers tend to require a higher touch approach, and access to best-in-class customer support, which small founding teams struggle to provide with limited man-hours, but we have the resources to chase down at SureSwift.

2. Remote operations

SaaS businesses and remote operations are like two sides of the same cloud-based coin. The inherent nature of their cloud-hosted products often aligns seamlessly with remote work structures. As a remote-first company, this also means that product teams can seamlessly integrate into the larger SureSwift community after acquisition if they choose.

While this is a big benefit for business founders and their teams, it’s also a massive win for us to be able to bring along product expertise that could be lost in a transition. Acquiring SaaS businesses not only means obtaining cutting-edge products but also embracing entire remote teams that are already accustomed to working collaboratively from different corners of the globe. SaaS companies often possess the infrastructure, tools, and mindset that align well with our remote work environment. This synergy not only streamlines the transition but also allows us to tap into a diverse talent pool, enriching our capabilities and expanding our reach.

3. Transferable expertise

Another piece of the operations puzzle is the variety of subject matter experts we already have on board at SureSwift. While each business in our portfolio is unique, there are aspects to operating and growing a SaaS business that are pretty universal, and we’ve organized years of experience, expertise, and best practices with our Exceptional Operator Framework (EOF). While each of our products has a distinct and autonomous team, they have the benefit of other marketing professionals, developers, customer success specialists, and more only a Slack message away.

Efforts to reduce churn, like the ones we talked about for LeadDyno earlier, involve the whole product team’s input and expertise. When one product team scores a big win, it’s natural for other teams to reach out for advice on replicating that success. We’re big believers in sharing such insights, which is why we’ve included built-in strategies for it in the EOF. These include Guilds, where folks in similar roles across the portfolio get together to chat about their wins and challenges. Plus, we host Learning Labs where all of us at SureSwift can tune in to hear team members talk about recent initiatives.

A booming SaaS market

The SaaS landscape is currently experiencing remarkable growth, driven by the demand for efficiency, data-driven decision-making, and streamlined processes. As businesses across various sectors strive to modernize and optimize their operations, SaaS solutions have become essential tools in their arsenal. This trend is reflected in the significant investments being made in the sector, underlining its sustained relevance. Projections for the future paint an encouraging picture, with expectations of continued expansion.

Given all the positives of running a SaaS business, it may be surprising that anyone is selling one. However, there is a huge marketplace for every size of SaaS business, with new products being launched and listed every day. SaaS founders decide to move on from their businesses for a million different reasons, and SureSwift has been hard at work over the past seven years making sure that we know what these founders need and want in an acquisition.

As we witness the dynamic growth and evolution of the SaaS landscape, our excitement to contribute to its progress deepens. The potential for innovation and transformative solutions is immense, and this propels our enthusiasm to welcome more exceptional SaaS businesses into our portfolio.

If you’re a SaaS Founder considering an exit, be sure to check out our Founder page for more information and to get in touch!

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