BACKGROUND

Basis State's core business is making the connection between 2 types of companies: small startups (<$2M USD annual revenue) and later enterprises (>$50M USD annual revenue). Our services involve understanding the technical needs of the larger enterprises, and how the technical assets of small startups can fill those needs. We use that understanding to facilitate acquisitions.

We mainly offer this service in support of startups that are looking for an acquirer ("sell-side"), but are in the process of offering new services for larger enterprises that are looking for acquisition targets ("buy side").

In addition to startups and larger enterprises, there's a wing of our ecosystem that buys and sells startups, but that we do not clearly understand: investor-operators. Having a strategy for this segment, and a lead list of its entities, is a growth opportunity for us.

THE PROJECT

This project involves helping Basis State incorporate the investor-operator market into our exiting offerings. In order to do this, we need to:

• Know the size of the investor-operator segment and its potential impact to our business
• Understand the subsegments within the investor-operator segments, and how their needs for our services might differ
• Understand the relative importance of the various use cases for our service. For example, investor-operators might be looking for startups to "bolt on" to their larger portfolio companies. Or, they might want to use our service to divest portfolio companies that are not growing.
• Identify any channels for this market. Online communities, open lists/databases, complementary product or service providers that might be strategic partners as we enter the market.
• Have clear criteria for targeting individual entities within the segment, i.e. what signals can we look for to know an entity might be interested in our service.
• Have a list of target entities to jump start our outreach

WHAT WE KNOW SO FAR

In order to have any interest in our service, the investor-operator must be interested in making or finding acquisitions of very small software companies (<$2M annual revenue). Further, they must operate their companies.

The challenge of the operator-investor market is that it is fragmented and goes by different names. Further, each entity has its own specialization, a.k.a. "thesis," which will determine whether or not they are interested in small software acquisitions. Here are some of the known facets of the market.

• Boutique Private Equity - small private equity funds. Most are not interested in small acquisitions, although a subset might have the "bolt-on" use case.
• Operating VCs (or Angels) - this is an emerging segment and a very small portion of VC funds. Most do not operate companies.
• Venture Studios - most build their companies from the ground-up, but some might have an interest in growing their companies through small acquisitions
• Serial Entrepreneurs

WHAT THIS PROJECT PROVIDES

We are a small company. Your work could have a major positive impact on our business. We will share that impact (quantified) so you can claim the success.

Anyone with an interest in M&A, venture capital, private equity, or startups will get first-hand experience with how these industries operate.

Anyone working on this project will be invited to our company Slack channel, and should feel free to ask as many questions as the like along the way. A weekly 30-min. Q&A/status call is also highly recommended.