SaaS Interviews with CEOs, Startups, Founders
The Micro PE Playbook: They Bought 20 SaaS Companies, $60m ARR, 300 people
29 Aug 2024
Chapter 1: What inspired Tim Schumacher to start SaaS Group?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all these podcast interviews. Check it out right now at getlatka.com. Hey, folks. My guest today is Tim Schumacher.
He's a German investor and entrepreneur with a focus on SaaS, ad tech, and more recently, climate tech. He founded and led multiple companies like CETO.com, Ecosia.org, IO. How do you say that, Tim? E-Y-O? E-Y-E.com?
IO. But people always ask that, IO. Wordplay on i slash o, input, output, so yeah.
Oh, got it, got it. io.com, worldfund.vc, and also, I imagine the way most of you guys know him is SaaS Group. They're buying up SaaS companies, one to 10 million bucks in revenue. We're going to jump into all of it today. Tim, you ready to take us to the top? Yeah, I am. Thanks for having me. You bet. Let's put SaaS Group in perspective.
I just want a timeline to start, and then we'll dive into sort of what you're doing actively today. When did you guys close your first deal? What year? First deal was six years ago, 2018. It was deploybot.com. Deploybot.com. Okay. And one of the questions that I always get, you know, there's founders that exit, they go, what am I going to do with my life?
And a lot of them want to go into this sort of like venture studio. Maybe they want to launch their own search fund or they want to do sort of what you're doing. Take me back to the day you signed the doc you signed for deploybot. Did you already have the money lined up or you're like, okay, I got to get the contract signed, then go raise the money. I got to make all these pieces fall in place.
What were you thinking?
No, I had the money lined up. I had two exits before. Cedar.com, we exited. I.O., which is the company behind the world's largest ad blockers, Adblock and Adblock Plus. That's how we know. No one knows I.O., but everybody knows Adblock and Adblock Plus. That one had a lot of dividend exits. And so that was the money I took for.
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Chapter 2: How did Tim finance his first acquisition of Deploybot?
So there's cash inflow that piles up. We use that for other acquisition. And then last but not least, we did do an equity round earlier this year. where we got a bunch of external funding. That was actually the first external equity round we did. And that of course also helps strengthen the balance sheet.
What was that round size? That was about $25 million. And why go that route? You're obviously individually wealthy yourself. Were these really strategic people that you wanted aligned with SaaS Group, or why do the deal?
Yeah, exactly that. I can't name them, but they're a bunch of super successful entrepreneurs who are really
they're all in the sas field they're super smart people also i always love people partner partnering with people who are a few years advanced so for example there's one guy who does a roll up not in a competing space but software and he's just kind of this three four years ahead of us uh in terms of We're 300 people. He's like 1,000 people. Revenue is also threefold.
He went through all the stuff we still have to go through. That's the type of people we really want to align ourselves with. And yeah, so it was a small dilution, but just getting great people on board has always helped.
It also keeps you on your toes.
It also always keeps you on your toes, I think. So in single-digit percentage.
Okay, and people might be hearing you say, okay, we sold single digit percentage for 25 million, but they might be thinking, of what? He's got 20 companies. Can you explain sort of GP, LP structure, like how that works?
You basically sold a GP stake, it sounds like. No, we're not a fund. We're not a fund. We're a company. Our big role model is Constellation Software in Canada, public company. We're just a company like any other company in Evergreen. Yes, we have a few small investors, but first and foremost, yeah, we're just kind of a going concern. Also, we don't flip our companies.
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Chapter 3: What financing strategies does SaaS Group use for acquisitions?
So that's the bankruptcy route. Other deals you've done, some of them actually we've had on the show. So I remember we had dashed this on back in 2022, 2023. Oh, you did?
Okay, cool.
Yeah. They were really proud of the fact that their paid marketing was working. They were spending about $50,000 a month on paid. What did you see when you looked at that business and why'd you end up doing the deal? Well, it's a great business.
First of all, we like online marketing as a category. We know it well. We're all in the space and we love to be comfortable with our own category. We love the founder team or the team that runs it is actually not the original founder anymore. But Antoine, CEO and his team, they're great. Really, really doing well.
They also have a nice product, low churn, really serving a nice niche with agencies. But, you know, and that's a great example where Sask was adding a lot of value. Yeah, they were doing a lot of paid marketing, but also we could add a ton of value when we came in. One of the first things were we slashed their Google paid accounts in half.
So we basically slashed the budget in half, but we doubled the output. So essentially we 4X paid.
uh the lead gen uh just on that google google paid account and and that's exactly some of those those value ads we bring us ask but we have some super specialized super smart people for different disciplines in this case pay-per-click um and we were able to help and um make a strong business we love dash this strong business but we may can make it even stronger
Yeah, they said when they came on, again, this was January 26, 2022, that they were spending $440 on CAC to get a customer that would pay on average $135 a month. So they had about a five month payback. And you're saying one of the values you brought is you saw opportunity to basically make those economics, you know, 100% better, cut the cost in half.
Yeah. Now it's two and a half months payback.
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