Illustration: Aïda Amer/Axios
Flashy startup acquisitions with big price tags get all the media attention — as do their investors if they’re getting hefty returns from their venture capital gambles.
Yes, but: There’s a quiet world of tiny acquisitions for equally small businesses that rarely show up on the media radars, as entrepreneur and investor Andrew Gazdecki has witnessed with his marketplace MicroAcquire.
"I made it out of a personal pain," Gazdecki told me of his experiences both selling and acquiring companies.
- The marketplace, which lets companies list themselves for sale without making their name public until they field buyer interest, debuted in January, but activity has notable picked up with the pandemic set in, says Gazdecki.
- So far, 100 of these micro-startups — mostly in business software along with a couple of e-commerce businesses — have been acquired via the marketplace.
- 56 of them had less than $100,000 in annualized recurring revenue, and the average multiple per company was 3.241x for top-line ARR.
- The company has 25,000 buyers signed up and more than 150 startups listed for sale. 95% of startups are in the software-as-a-service category, about half are based abroad, and are usually four to five years old.
- Nearly all are bootstrapped, and Gazdecki says that companies with VC or other outside financing have a tougher time selling.
Between the lines: "The main purpose that I see is usually an individual or small group looking to take over and run the startup," he says, though in some cases the founders do stick around post-acquisition for quite a while or are effectively acqui-hired.
Most recently, Gazdecki has teamed up with Betalist, a site for finding new startups, and introduced a paid premium tier that lets subscribers get early access to newly listed startups before they hit the main marketplace.
- "The biggest complaint started to become that buyers would miss deals," says Gazdecki.
- MicroAcquire isn't entirely unique — others like Flippa and Empire Flippers provide a similar marketplace.
The bottom line: This route is taken by many more companies than those that end up in big headlines.
Editor's note: The headline and story have been updated with the correct spelling of MicroAcquire.