For how much should I sell my side project? 25K ARR
Hi there,
I'm struggling to find a good price for my SaaS tool. After about 18 months of growing and building my remote therapy business, CloudEMDR, I'm going to sell it. I've gotten multiple offers already, but I'm struggling with deciding what the right price to sell it for is, would love your help!
Some stats:
- $25K ARR from 165 paying customers
- over 95% Month over month retention, users rarely complain about the product or its features. There's very clear ProductMarketFit
- Running costs are less than $100/month
Biggest opportunities are in growth:
- SEO (30% of my traffic currently comes from Google without doing anything)
- Pricing and teams plan
On both of these, I've literally done nothing, but all the signs show that they can have a huge impact, as well as other opportunities.
The entire product would be for sale, including the IP, domain, socials, etc, but I wouldn't work on it anymore. The only thing I've done in the past 6 months is answering support e-mails, which takes me about 1 hour per week.
How would you price such a thing? I often read about using multiples, does that makes sense for these types of project?
It goes without saying that if someone in the community is interested, just send me a note :)
CloudEMDR is now available on MicroAcquire https://app.microacquire.com/startup/Nz6eIu4fhVVyVgp1euycKfq0hdt1/k8LdVGENCRkNXqEFrsVf
Nice $ entry, low running costs, great retention, good incoming traffic (not only paid ads)
You can tried to sell to microaquire, and let the price open for demand, and see in the first time the incoming requests from buyers
Thanks Tim, I just put it on MicroAcquire: https://app.microacquire.com/startup/Nz6eIu4fhVVyVgp1euycKfq0hdt1/k8LdVGENCRkNXqEFrsVf
Hey Sam, I am actually building an online financial valuation and feasibility study platform, not done yet ( https://www.frontfigure.com/ )
But let me try to simplify the answer for you to reach a "fair valuation" (actual valuation will then depend on the negotiations), so basically you are right most people do use a revenue multiple, ofcourse that revenue must relate to your comparables, companies your sector in your country (if not country, then atleast area), so first thing I would recommend is to research that multiple for seed rounds for comparable companies. Now something you might notice is that usually the revenue multiple is lower the more advanced the round, this is because with each round (theoretically), growth potential decreases compared to the previous round (This does not apply 100% of the time, but is a consistent pattern if you research it enough). I am telling you this because I see you have huge potential and your revenue is relatively small, so my piece of advice is you have to understand that the average / median revenue multiple that you'll find should be considered the minimum multiple for your company at this stage, I would recommend increasing that multiple by atleast 25-30% to reach your fair valuation figure. Good luck.
Hi @TDajani, that's very interesting, thanks for explaining that. I think the definition of sector or market is the challenge here. I operate internationally, so I wouldn't base it on my home country. Customers are in Netherlands, UK, US, and Australia.
Sector-wise, I think I'd call this healthcare tech, I'm going to investigate on angel list what the average prices of these are.
Sure, in this case you research comparables in your sector in general and if most of the revenue is from a specific country, then you need to take into consideration that country's multiple in that sector, in negotiations you can try to use the higher multiple but take into consideration that the buyer could try negotiate with a lower multiple.
Hey Sam, instead of selling, have you though of partnering? I'd love to speak with you and take care of your Saas while growing it for a percentage of the revenue. It gives you the benifit of more free time on your hand and you don't immediately part with your baby.
Hi @Martie, I have thought about this, but I think by selling it, I make time/space to work on other projects. If I'd collaborate or partner with someone on this, I'd still have to commit to this.
What's your growth rate month on month, and your churn %?
My growth and churn rate have been similar in the last two months because of the summer vacation for most of my users and the fact that I haven't done anything to grow or market the business: 5% growth and 3-5% churn. In the last 12 months, however, I grew about 330%.
Pretty impressive statistics, shouldn't have a problem selling it! Good luck with it.
Hi Sam, that’s a really interesting question. My first response would be why do you want to sell in the first place? This sounds like an amazing business - many here would be jealous of the opportunity! To answer your question the valuation of your business is really just a reflection of future profits + forecasted growth - risk. The health of the business and stability of numbers is what can create those insane multiples for big tech companies. So the real question would be can you forecast what would happen if you didn’t do anything now, can you factor in your potential growth and show that there is minimal risk involved. Something like cohorted net new customers * MRR * churn rate * some growth potential coefficient across a few years depending on the risk. Hope that helps