Sourcing SaaS Companies

June 16, 2025

by a searcher from Babson College - F.W. Olin Graduate School in Vermont, USA

I'd love to speak with someone who can critique my sourcing methodology. Per my research I should be gaining access to approximately 60-70% of the total deals available within my target. That said, I believe there MUST be ways to get more, quality deals capable of being put into CIM review (goal: 10-15 at any time)...something isn't right. Prong 1 (~35-40%): Consolidating listings from ex. Quiet Light, Latonas, WebsiteClosers - 6 of the major listing services. Prong 2 (~20-25%): Cold Outreach via Apollo.io; plus semi-automated follow ups. Prong 3 (~10-15%): Inbound interest to brokers, in search of off-market listings- 7 brokers email/call mix with follow ups every 2-3 weeks. Many are brokers from the same companies in prong 1. I'm searching for SaaS, 900k-2m cash flow, USA based, my financing is organized.

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Reply by a searcher
from Northwestern University in Minneapolis, MN, USA

The market is massive. Raymond James wrote about Constellation Software's VMS (Vertical Market Software) opportunity in 2016: “Our analysis of software vendors indicate substantial fragmentation with approximately 38,000 VMS vendors...Constellation has also expanded their database of potential targets with now well over 30,000 targets (adding 4k+ targets per year for the last 3-4 years).” That was in 2016, and I have in my notes from a 2022 discussion with an ex-Constellation employee that "The market, we just keep getting surprised at how big it is. Our forecast for how many prospects is that it grew 40% over the last year. Over the last two years, it grew 67%." I think that there are well over 100K VMS targets globally. I know of another database that claims to have over 200K SaaS businesses in the world and over 74K US-based SaaS companies in it. Subtract the ~20K US-based ones they list as having funding, and you're still over 54K. If you define total available as only SaaS (exclude perpetual + maintenance), only to those actively for sale, and only those with 900K-2M in cash flow, then maybe you're hitting some high-ish percentage of coverage. I'd still doubt that you're getting anywhere close to 70% coverage, though, as the market is just so large. I'd strongly recommend leaning into your proprietary sourcing to find more targets and increase the the surface area of your "luck surface area"—scrape the web, find industry-specific databases, do whatever you can to scratch and claw your way to a larger list of targets. They may not all be ready on your first outreach, but they might be ready with a couple of years. Also, you have a much higher chance of winning on relationship or something other than paying top dollar in a brokered process.

Reply by an intermediary
from Spring Hill College in Dallas, TX, USA

My suggestion is focus offmarket 70% or more both directly and including boutique brokers for that size opportunity. You're on the right path. That size company rarely advertise

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