Abut the business I'm the solo founder of a saas company. We sell B2B. We're a team of 8, all great people, and have been operating for 5 years. Last full year financials: revenue $2.2M, ebitda $1.5M. Have been growing 40% yoy.
About me I currently love many parts of my job, the product we make, the autonomy I have in my role, and the financial freedom it's brought me. But, too much is reliant on me being there to do things. I need to hire someone into a general manager (?COO) role – someone who could take things off my hands – but don't know where to start. I don't have a business background and sometimes I feel overwhelmed by it. If I'm honest with myself: I prefer working on the product, and also somewhat on business strategy. I don't really like managing people, and I don't like sales, and I know that I avoid these.
The dilemma I've been exploring taking some investment. I hoped to achieve reducing my risk (everything I have is in the company), and getting help hiring the people I've found difficult to hire. Ideal case would be to sell 20%, but accountant seems to think this is unlikely. I've had an offer from a private equity firm of about $7M in return for selling 55% of the company. I would get 45% of newco, the PE house would get 45%, and 10% for staff equity. I can't ignore the offer, because it's life changing money upfront, and they're talking about the company being worth $30-50M in 5 years.
But at the same time I'm in two minds about taking an investment like this. Understandably I guess, all they really seem to care about is money. I worry they'll want to do things that I consider crappy – I've seen other saas products get bought out and they become hyper-optimised for profit but unpleasant to to the consumer. And I'm worried about signing up to a 5 year journey that I won't like – perhaps working with people who don't share my values, and being accountable to other people. On a good day, a part of me would like to carry on building it myself to see what happens. But on a bad day the idea of an exit on the horizon is attractive (and I think, "what if it tanks - at least I will have got something safe").
I'm interested in hearing from other founders who have taken PE money. What was your experience? What was it like giving up control of the thing that you built? Do you regret it?
It's a 90-minute read about his strange journey of starting and selling his business.
Shoot me an email hello@taylor.town and I'll purchase a copy for you.
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I can't give you answers, but here are a few questions that might be helpful:
• Will you regret it more if you sell and fail or don't sell and fail?
• Do you view selling out your customers as amoral? If so, do your morals have a dollar amount?
• Do you think selling would positively affect your employees?
• What does a perfect day look like to you? Which decision will fill your life with more "perfect" days?
> all they really seem to care about is money.
This makes it sound like the company is your baby. 45% would mean it is not. (Also, you’re right. That’s not inherently bad, making money is helpful for keeping a company going. But it can be.)
Whether you should feel like it is your baby is the hard part, and entirely personal. Deeply subjective. You can’t take any of it with you, so you have to decide what matters while you’re here.