Independent Sponsor? Raise a fund?
August 13, 2023
by a searcher from Miami University of Ohio in Barcelona, Spain
Last year we acquired Lanteria.com, our first acquisition in the HR SaaS space.
We have grown revenue 30%, and I started making the rounds on HR podcasts announcing that we are in the market to acquire more companies.
Since then I've been getting a significant amount of inbound from founders looking to sell their bootstrapped HR SaaS businesses.
My biggest weakness is not having a strong funding partner behind me. So I'm trying to decide:
Should we set out and raise a $10 million fund to acquire 2-3 more HR SaaS companies? Or should we start working these deals as an independent sponsor.
My concern about the IS model is being too slow to move. The biggest leverage in our market is speed to close, it can make a huge difference in the price multiple.
I have no interest in raising a fund for the management fees. I would be in it for just the carry.
Any recommendations about the best way to approach this that aligns us the most with investors?
from The University of Michigan in Miami, FL, USA
Find investors who are interested in this space and are bought into your investment thesis – you would need to pitch and build a network of investors regardless of which model you pursue. If they are willing to participate in a fund, great (but unlikely). If not – your IS model becomes more efficient vs. starting from zero every time.
from New York University in New York, NY, USA