Sourcing SaaS Companies with Financial Criteria
Hi guys,
I received a case study from a firm to identify 20 firms with the following criteria and they asked for a unique sourcing approach to each one. I was wondering how one would go about this given how limited financial information there is for companies within this criteria.
● ARR: Between $5M and $20M
● Status: Bootstrapped or minimal funding
● Location: North America-based
● Vertical: Agnostic
● Profitability: Exceeding $1M in net profit
I've seen suggestions on using Pitchbook, Crunchbase, and CB Insights, but I don't have subscriptions for any of those and they're expensive too. Would really appreciate if people could suggest how to go about sourcing these types of companies while ensuring they fall within the ARR and profitability requirements.
Based on the most helpful WSO content, here are some strategies to source SaaS companies that meet your criteria without relying on expensive subscriptions:
Industry Reports and Publications:
Public Databases and Directories:
Networking and Community Engagement:
Company Websites and Press Releases:
Triangulation Method:
Local Business Directories and Chambers of Commerce:
By leveraging these strategies, you can identify SaaS companies that meet your criteria without incurring high costs for subscriptions.
Sources: PE recruiting technical questions (software specific), Basic Guide Ramping Up On A Company With Public Information Part Two, PE recruiting technical questions (software specific), An Overview of Technology Media and Telecom (TMT) - Part 2 of 2, How to analyse business models?
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Kind of interesting to read the bots response. It actually does hit on some techniques that are utilized by certain firms. The high level answer is this an art, and sometimes you have to be creative. I will make a few points that might help:
1. Research your firm’s past investments. The prompt is broad so showing the extra initiative in understanding their strategy will distinguishing you. For example, do they only focus on enterprise? If so, don’t pitch them an approach that is going to uncover a bunch of SMB names.
2. One criteria is no other significant institutional investor. By definition, some of the databases you mentioned are not going to help.
3. Start with the obvious. Do companies list their customer logos on their website? Do they publicly publicly list pricing tiers? Ok, then you could back into an estimate of revenues for at least what they disclose based on assumptions. Sometimes companies will actually disclose revenue to local business journals or trade publications. The downside is everyone else has this info.
4. The tried and true method is to build a network in a specific vertical. Public data will only get you so far and sometimes things like headcount growth don’t tell the whole story. Company size is often well known by competitors and companies that are customers. Getting deep into an industry through things like networking at trade shows, talking to industry-specific consultants, and former/existing executives is often the quickest way to get to the bottom of not only size, but more importantly who are the leading or emerging players where you would actually want to invest. For me, company size without context isn’t a very meaningful metric unless it is obviously too small.
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