My Thoughts on Building a 6 figure HoldCo.

The micro Holdco. I’m working on is ‘worth’ 6 figures

I started less than a year ago with <$10k

July 2023: I acquired @sourcelyai for $4,000 on @acquiredotcom

In 8 months: $30k in revenue + acquired 4 micro startups <$10k

How I think about my Holdco, from someone just 2 steps ahead:

For me, a holding company is just a fancy way of saying I have ADHD and enjoy working on multiple companies at once.

4 micro startups acquired for <$10,000: 2 SaaS, 2 media: 1 TikTok, 1 newsletter

Now I'm looking at deals $100k+

1. Startup marketplaces are a cheat code

There is an unbelievable amount of alpha in the form of deal flow on a weekly basis on Acquire. The deal flow in the last 3 months has been unlike anything I’ve seen. Marketplaces like @acquiredotcom, @godealwise, @micronsio are changing how founders approach building startups with acquisition opportunities and exit options.

2. Lesser known markets have outsized opportunity

There’s a whole wide world of alternative micro assets that no one talks about much. Insta theme pages, viral TikTok accounts, Facebook groups.

This leads to interesting opportunities like a student tok account for our student tools or a photography account for a friend with a photography SaaS. Many in this world are scammers so please tread carefully. DM me if you have any criteria for media acquisitions like these!

3. Contrary to popular belief, there is lots of opportunity <$10k

Find underoptimised potential. You need the patience to find it and the right skills to capitalize.

Highest possible upside by % is with smaller acquisitions. However, I've realized that smaller companies take as much work as the larger ones so I’m now looking at $100k+

4. Acquisition entrepreneurship in the media + ETA is No. 1 at MBAs

ETA will only get more popular as people realize the opportunity. Many new MBAs, especially those at top schools, are heavily considering search funds and Entrepreneurship Through Acquisition.

As it gets more popular and the media begins to pick up and distribute success stories the space will see a huge surge in demand and prices changing. This will lead to the ecosystem evolving in different ways.

5. We are in a golden age of acquisition

prices are low and the supply is high. It's a buyer's market and now is the time to buy. The popularity of marketplaces has exploded leading to higher supply with high interest rates and a general dip in valuations.

6. Find your competitive advantage and lean into it.

Focus on finding your advantage. For me, it's the fact that I’m a student and a lot of my friends are too (my OG startup at 18 was for students). I’m also super ADHD, prefer working on multiple projects in a day and can context switch quite easily. Hence a holding company focused on education.

I’m good at seeing things in a very straightforward way and how to break down a business to the basics to understand the most effective levers that can be pulled. The Pareto principle comes into play as most of this is identifying the 20% better than others can.

7. Identify the levers to pull early on (Pareto principle: 20% of work-> 80% of the result)

Before acquiring/ starting a business get a comprehensive understanding of the different levers that make up the business and how you can most effectively access these.

With Sourcely, revamping the website and increasing prices doubled our revenue very quickly after acquisition. By identifying these early on we can determine what efforts have the most ROI.

8. Liquidity issues have been solved for with marketplaces (at lower levels)

Cashflow can cause the most problems with holding companies and liquidity issues have been correctly questioned.

I can list one of my companies on acquire and expect to receive buyer interest within a week. This was not possible earlier. This helps solve for many problems inherent with a HoldCo.

9. Acquisition + building in house = lots of leverage

Combining in-house products with acquisitions can lead to unbelievable leverage. Which comes first is up to you and your goals.

Example: Combining a distribution channel with an in-house product or acquiring a product for a distribution channel you own.

10. Pick a niche. Any niche. Acquire in that niche.

11. Systems enable scale. I’m still figuring this one out since I’m not good with systems lol

12. Good product matters as always but creating one is getting easier than ever + Software is getting democratised

Building software is wayyyy easier than it was 6 months ago, especially 2 years ago. If this rate continues software development will no longer be the competitive moat it has been for the majority of businesses that don't require unique tech. (I’m not technical myself so take this opinion how you will. Pls don’t hate me software devs)

Software markets are getting saturated and standing out is extremely difficult. This also means building a good product is much cheaper and faster than before. This is good for some, and bad for others.

Overall it means there is going to be a lot of disruption, leading to outsized opportunities.

13. Distribution is king/ key differentiating factor

As building a good product gets easier, the distribution/ marketing aspect of it becomes much more important as a differentiating factor/ moat. As everyone builds equally good solutions to the problem, those with the best distribution will win.

We’re betting big on distribution with our Holdco with a focus on media businesses that can accelerate a variety of businesses with offerings for their audience.

14. Who you work with is everything

From what I’ve seen anyone who has created $100s of millions in value has made more money for others than they have for themselves. No matter what way you look at it, this is true.

I’ve now realized that by maximizing the value for those I work with, I also maximize my own value.

This is especially true for the holding company model since you can’t reasonably handle so much on your own.

Partner with those who have skills that complement yours, and share the same values and goals. Don’t be greedy and repeat this as many times as you can.

I can not even begin to describe the importance of @elmanmansimov in Sourcely's journey.

I hope y'all enjoyed reading this one :)

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Calling myself out for a couple of things 🤔 + fun facts about the journey

I had to use some classic Twitter click baitey stuff for my hook :)

1. I used money my college gave me as a summer internship stipend to first buy @sourcelyai lol

2. Valuations are imaginary numbers

This makes a 6 figure valuation very hard to say

In acquisitions beauty is in the eye of the beholder.

At the end of the day it’s worth depends entirely on who is willing to pay what for it.

But by applying @acquiredotcom average multiples for similar SaaS startups

@sourcelyai is at $4k MRR x 12 x 3 = $144k

We are also at 90% profit margins, 5-10 hrs/ week maintenance, have over a year in operations and are aiming to sell closer to a 5x multiple.

But valuations are imaginary numbers so I understand any scepticism to valuation numbers. I’m sus of them too because it gives many founders the wrong perspective.

3. @sourcelyai is 80-90% of the holdcos value so it’s not really much of a HoldCo.

4. I started 8 months ago and just decided on a HoldCo at the beginning of this year.

This wasn’t the plan all along and I’m figuring it out as I go.

I very much have no idea what I’m doing and have stumbling through the dark everyday to figure new things out.

5. this time last year I was nowhere. I genuinely can’t stress this enough. I really was nowhere.

I had just broken my foot and was in the cast for 3 months.

Probably one of the best things that happened to me since I just sat in my room and browsed @acquiredotcom

Rest is history? lol

6. I’m maybe 2 steps ahead of many of you guys.

Maybe.

Sourcely is my only massive success that I’ve shared with y’all. Most of my posts and following has come from this one fat dub.

I think many of you are closer to me than you realise.

7. I made 100s of shitty tweets for maybe 5-10 good long form tweets that I have now.

8. none of my points are original knowledge or something.

It’s me aggregating what I’ve understood from others much smarter than me and adding the perspective of my own experience and learning’s to it.

About @sourcelyai

9. Our competitors are much much larger

$30k revenue is just a drop in the sea of our competitors with millions of $$

10. Missed opportunity?

I honestly think a lot about how putting time into my personal brand and other things is a missed opportunity for sourcely.

But it’s a choice I very consciously made so I’m okay with it.

11. We’ve obviously ridden the AI wave and it’s hard to say where we’ll be in a year.

I hope you guys enjoyed this brain dump lol

I just felt a lot of people aren’t always super straightforward and use half truths for the right hook or to seem super successful.