saas.group

We Make $60M/Year Acquiring And Scaling SaaS Companies

February 16th, 2025

Who are you and what business did you start?

I'm Tim Schumacher, and I’m one of the founders of saas.group. We acquire and grow small to medium-sized SaaS (Software as a Service) companies. Our primary customers are actually the SaaS businesses themselves - we buy them, improve them, and scale them up.

What makes saas.group unique is our focus on the "middle market". We're not chasing unicorns or trying to build the next big thing from scratch. Instead, we look for solid, profitable SaaS businesses that are often overlooked by larger investors. These are typically companies doing anywhere from $2M to $10M in annual recurring revenue.

We also are very proud of being founder-friendly. That means we really try to accommodate every possible scenario a founder has for their exit. If the goal is to cash out and move on to the next product or just start spending more time with family, we don’t want to tie these people down with earnouts and make them stay with us even though they’re miserable. At the same time, if a founder feels like they’d like to still be growing their business with us with access to more resources and the help of a great community, we will draft the terms to make sure we work together successfully for years to come.

We focus on a sustainable approach for saas.group, as we do for all of our businesses, and always keep an eye on where we stand according to the Rule of 40%. That means we try to balance 20% growth and 20% profitability to make sure we’re aligned with our long-term goals.

How do you come up with the idea for saas.group?

The idea for saas.group evolved from a combination of experiences and observations. I’ve been investing for a while after my own exit from Sedo.com and always enjoyed the process. I was putting the money into companies I truly believed in. But with angel investments, you have a very limited say in what is actually happening there. I wanted to be more hands-on, to really steer these businesses towards success. At this moment I already knew I wasn’t a 0-to-1 kind of founder but rather enjoyed taking solid working businesses to the next level, bringing the operations up to speed, and finding potential for optimizing.

My “aha” moment really came when I received a proposal from a broker to acquire a SaaS business for just 4X EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This valuation seemed extremely reasonable, especially when compared to the sky-high multiples you see for public SaaS companies or even real estate investments.

This is one of the first emails from that broker

That's when it clicked. There was this whole world of smaller SaaS businesses that weren't getting attention from big investors or private equity firms. They were too small for most institutional investors, but too big for individual entrepreneurs to easily acquire. This gap in the market presented a huge opportunity.

I realized I could combine my desire to be more hands-on with the opportunity to acquire these undervalued SaaS businesses. This would allow me to actively help grow these companies while also creating significant value through adding resources and applying my own personal experience.

To validate the idea, I dug deeper into the market for smaller SaaS acquisitions. I looked at broker listings, talked to founders who were considering selling, and analyzed the financials of various SaaS businesses. Everything I found confirmed that there was indeed a gap to be filled in this space.

My experience building and growing my own companies and investing played out pretty well here. I'd previously co-founded and sold Sedo.com, one of the largest domain marketplaces. This experience gave me a deep understanding of how to scale internet businesses, which was directly applicable to growing SaaS companies.

After the initial validation, I decided to take the plunge and start saas.group. But I knew I didn't want to do it alone. I reached out to some trusted contacts in my network, including folks I had worked with before. That’s how I ended up with Ulrich, at first. We’ve worked together on Sedo, knew how to communicate with each other, and had really complementary skill sets. I knew that I’d be comfortable going at it with him.

We then did an early friends and family investment round to get things off the ground. This was crucial not just for the capital, but also for bringing in some key team members. Tobias was one of the investors from this round and he later ended up joining us full-time.

First ever "leadership meeting" early 2021 (Tobi, Ulrich & me)

There are hundreds of stories where companies failed because of the wrong co-founder dynamics and we are very lucky to nail down our core competencies, bring different strengths to the table, and also have spent quite a bit of time in SaaS already to put our egos aside to make this work. It’s crucial to have the right people when you have a big vision. I’m happy to say that at this moment with saas.group, the team that we’ve brought together is really something I’m deeply proud of.

How did you build the initial version of saas.group?

The first concrete step was acquiring the first SaaS business. This was DeployBot, a continuous deployment tool for developers. I bought it for about $1 million, which I financed with my own money from the Sedo exit.

From day one, DeployBot was bringing in about $50,000 in monthly revenue. As I was working with an agency at the time, about half of that went to development and hosting costs, leaving me with a 50% profit margin. This margin was crucial as it allowed us to start paying back the acquisition cost immediately. Which doesn’t often happen in SaaS. It was really a revelation for me that a SaaS company could start bringing the returns right after I “started” it.

The next steps involved improving DeployBot's operations. The focus was on reducing churn, improving the product, and optimizing marketing. At the same time, I started looking for the next acquisition.

I then repeated this process, acquiring more SaaS businesses like Juicer, Prerender, and ScraperAPI.

It's important to note that not every acquisition worked out perfectly. For example, we ended up selling Sniply after it didn't perform as we had hoped.

We ended up selling it to the best possible buyer (and one of Sniply’s oldest customers) whom we believed could still do a much better job than we did. The idea for saas.group, however, is to buy and hold the businesses indefinitely. I prefer to stay positive but realistic in this situation, again given my angel investment experience. These things happen and sometimes even the best teams can’t take the product to the next level.

This taught us valuable lessons about what to look for in potential acquisitions.

Our business model has stayed fairly consistent throughout this process: acquire undervalued SaaS businesses, improve their operations, use profits to pay back acquisition costs, and grow the businesses. Unlike venture-backed startups, we need to focus on profitability from day one, not just growth at all costs.

It's definitely been harder than I initially thought, particularly in terms of integrating different company cultures and technologies. But it's also been incredibly satisfying to see these businesses grow and thrive under our management. It’s a continuous learning process for the entire team. We end up buying businesses with very different setups, tech stacks, and team sizes. Staying true to what we believe in and having a very strong thesis about every business we buy definitely helps but we also want to be flexible with the terms for the founders I mentioned before and make sure teams that join us see the value of the group as soon as possible.

How did you launch saas.group and get initial traction?

To be honest, we didn't have a big, flashy "launch" moment for saas.group. Our approach was much more focused and targeted. Instead of making a big public announcement, we concentrated on reaching out directly to potential sellers and brokers in the SaaS space.

We started by leveraging my existing network. I reached out to founders I knew who might be considering an exit, as well as to brokers who specialize in SaaS businesses. We also started actively monitoring various marketplaces and forums where SaaS businesses are bought and sold.

Our first "sale" was really our first acquisition - DeployBot. I already had some experience buying businesses during my time in Sedo, so in a way, I knew what to expect but it still taught us a lot about evaluating SaaS businesses, the importance of thorough due diligence, and how to structure deals.

The response to our entry into the market was generally positive. Many founders were excited to have another potential buyer in the space, especially one who understood the unique challenges of running a SaaS business. To this day, the importance of builders selling to builders is something founders mention in our conversations. There’s certain trust about working with people who’ve been there and done that over giving a company away to purely financial institutions.

Another key lesson we learned from this soft launch was the importance of building relationships in the SaaS community. We found that many of our best deals came through word-of-mouth referrals from founders we had previously worked with. And we encourage every founder we talk to about a potential acquisition to reach out to the companies we’ve already acquired. We’re very open and honest about the way we work but having a conversation with somebody who’s been through the process can add a lot more clarity. I always say if your potential acquirer doesn’t introduce you to someone they’ve already worked with before, consider it a pretty bright red flag.

For the first couple of acquisitions, we didn’t even have a website for saas.group. We put together something very simple (and not very pretty) but good enough to explain our model and what we were looking for in potential acquisitions. It served as our calling card in the early days, helping us to establish credibility with brokers and potential sellers.

Our first website version

And then second

We made sure to highlight our experience in the tech industry and our hands-on approach to growing businesses. Over time, we've expanded and improved our web presence quite a bit with a strong social media presence, our own podcast, events, and keynote appearances at major SaaS conferences, but that first simple site played a key role in getting us off the ground.

Did I mention we're remote-first?

Our fancy "office" somewhere in the outskirts of Las Vegas

What was the growth strategy for saas.group and how did you scale?

Our growth has primarily come through continuing to acquire new SaaS businesses and improving their operations. We've now done this about 20 times.

In terms of specific tactics, we've found that a data-driven approach works best. We're big believers in the 80/20 rule - focusing on the things that really move the needle. For each business we acquire, we dive deep into the metrics, looking at things like customer acquisition cost, lifetime value, churn rate, and expansion revenue.

We then experiment with different strategies to improve these metrics. This might involve tweaking the pricing model, improving the onboarding process, or investing in customer success. We try a lot of things, measure them rigorously, and aren't shy about stopping experiments that aren't working.

For example, with one of our businesses, we found that improving the onboarding process led to a significant decrease in churn. We then doubled down on this, investing more resources into creating a smoother, more user-friendly onboarding experience.

There’s definitely no one-size-fits-all kind of strategy or a playbook that we use, instead, we apply different strategies to each individual SaaS business we acquire, tailoring our approach to their specific market and customer base.

For all the founders out there, I'd recommend focusing on execution rather than trying to come up with a completely unique idea. In my experience, once you start working on an idea, you'll quickly realize there are already competitors doing something similar. What matters is how well you execute and whether you can do things better than others in your space.

I'd also advise entrepreneurs to embrace experimentation and continuous improvement. Try a lot of things, measure them rigorously, and don't be afraid to stop initiatives that aren't working. Then, when you find something that works, scale it aggressively. It's a simple concept, but it's amazing how many businesses fail to follow this iterative approach.

What were the biggest lessons learned from building saas.group?

Prerender - https://prerender.io/ DeployBot - https://www.deployhq.com/ ScraperAPI - https://www.scraperapi.com/ Juicer - https://www.juicer.io/

and, of course, https://saas.group/

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