What sourcing channels have SaaS searchers found the most success with?

April 29, 2022

by a searcher from University of Pennsylvania - The Wharton School in Washington, DC, USA

I am early in a search for a small SaaS business (<5M ARR), and am using a variety of channels for sourcing companies. I would love to hear feedback on which channels other software searchers have found the most success using:
- Brokers
- Marketplaces
- Direct outreach to founders based on company profile (LinkedIn, Crunchbase, ProductHunt; ###-###-#### cohorts of accelerators and incubators)
- Pitching consulting offers to founders to build relationship / learn about company

I am also considering developing content (LinkedIn, Twitter) around the search to build authority in the space and drive deal flow, but not convinced this is a good use of time.

Reply by an investor
from University of Texas at Austin in Austin, TX, USA

I think the odds of actually buying the SaaS business via self-funded search are pretty low. Any decent software business trades at multiples way beyond what you can pay as a self-funded searcher. So the "Software" businesses you actually have a shot at are either service pretending to be software or outdated, shrinking legacy businesses. I've probably seen###-###-#### deals from self-funded searchers and not a single SaaS deal.

Obviously I would love the deal. If you can buy a growing SaaS business with a few million of ARR for <5x EBITDA, I'd happily provide the whole equity. Just think it's very unlikely to find a seller willing to take a 50-80% discount to market.

Reply by a professional
from New York University in Los Angeles, CA, USA

We can help streamline your first two bullet points into one interface to help you monitor what's listed out there: we built Kumo (https//www.withkumo.com), which aggregates and de-dupes deals from all major brokerages & marketplaces.

We just launched our beta, and Searchfunder folks actually get a $300 discount (code: SEARCHFUNDER300) I currently see 479 deals on Kumo in the SaaS category!

+7 more replies.

Join the discussion