What is the best way to fund a roll-up strategy in a SaaS niche market without a stake/company (LOIs signed and ready to go)?

Vbogdanovic's picture
Rank: Monkey | 36

Speaking more of from a fundraising perspective versus sourcing the deals to a regular PE firm. Would an Angel investor/VC be more willing to fund such a venture?

Comments (6)

Aug 14, 2018

How exactly would this ever be the case in reality (LOIs signed but no capital lined up)? I mean I guess it could happen in theory with a fundless sponsor, but those guys typically still have relationships with capital providers, with whom they have presumably been in touch before signing some LOIs.

Angels and VCs are not a good source of capital for this (probably) - way too hands on and too big of a stake within a company. Best bet is probably HNW and family offices.

Aug 14, 2018

VC's generally take minority stakes, good angels won't take too large of a stake either.
That said, I do agree that they're probably not the best source of capital. Not sure what is...

Aug 15, 2018
CHItizen:

How exactly would this ever be the case in reality (LOIs signed but no capital lined up)? I mean I guess it could happen in theory with a fundless sponsor, but those guys typically still have relationships with capital providers, with whom they have presumably been in touch before signing some LOIs.

Angels and VCs are not a good source of capital for this (probably) - way too hands on and too big of a stake within a company. Best bet is probably HNW and family offices.

Thank you for the response. We have partnerships with other capital partners but they do not co-invest. We are looking to fund and execute the roll-up strategy ourselves versus executing target deals for other PE firms.

Aug 14, 2018

Fund of Funds that have Co-Investing capabilities could be interested in this, as these groups tend to back fundless sponsors.

What do you mean by "without a stake/company"?

Aug 15, 2018
m8:

Fund of Funds that have Co-Investing capabilities could be interested in this, as these groups tend to back fundless sponsors.

What do you mean by "without a stake/company"?

We are merchant bankers and have had capital partners in the past fund individual deals. However, for this opportunity, we want to raise the capital to benefit from the upside.

Aug 16, 2018
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